Altitude Telecom claims WiMax is doing well in France

At a recent conference on the 2008 financial results of Altitude Telecom, CEO Jean Paul Rivière expressed confidence about Altitude’s WiMAX business im France. Most of Altitude’s revenues come from large enterprises. The company sells VPN IP MPSL, which means migration to an all-IP network for voice and high speed data access using end-to-end high speed Ethernet networks. Rivière says: “We help enterprises migrate their activities to full IP networks, and the demand is booming because our services are more affordable than those from our competitors (France Telecom and SFR). We are an IP operator for enterprises.”

Altitude Telecom has positioned itself as an alternative operator, an early adopter of IP MPLS in France. It uses a more flexible approach with IP Centrex instead of IP PBX, allowing externalization of the entire communications system of a company and a converged approach, mixing fixed and wireless high speed access on the same lower tariff and support frame.

“Our revenues for the year have been up 40% to €76 million accounting for 26,000 sites in France (4,500 to be added soon with a new significant contract). We also operate wireless networks for local government collectives, mostly on WiMax, and this represents between one-fifth to one-third of our revenues,” explained Rivière.

In 2008, Altitude Telecom invested €10 million in a data center to progressively move into the hosting business for data. “Altitude gets into the cloud,” proclaimed Rivière. For him, the financial crisis has had absolutely no effect on the company’s activities as small and medium-sized businesses are still rapidly moving to IP-based communications. Altitude expects conservative revenues of €95 million for 2009, and admits that most of the earlier predictions have already been fulfilled with actual orders.

Altitude as an early WiMax player in France

Altitude was one of the first WiMAX operators in France. In 2003 it was the sole owner of a nationwide WiMAX license, but at that time, the company could not deploy WiMAX because of the dearth of WiMAX equipment and devices. Altitude sold the license for €36 million (for which it had paid €800,000) to Free (a subsidiary of Iliad) and bid for new licenses which were being auctioned by ARCEP in July 2006. Under a new joint venture named Maxtel, established with SAPPR (a company that manages motorways in the eastern and southeastern parts of France), Altitude won 13 regional licenses. A year later, via a new company named Altistream, a full subsidiary of Altitude Telecom, it got back 11 of the 13 licenses (Maxtel went out of business). The cost of the acquisition of these frequencies is unknown. Today, Altitude Telecom manages WiMax networks for 16 French Departements (territorial administrative entities) which have decided to deploy WiMax infrastructure. Altitude Telecom is the largest WiMax operator in France serving 80% of the 8,000 WiMax French subscribers on licensed frequencies (3.5GHz). It has installed 500 WiMax base stations. Despite Rivière’s optimistic view of the WiMAX business, he says, “We have two major problems: antenna phobia and France Telecom’s interconnection tariffs. ”

Where to place antennas: a nightmare for wireless operators

For the antenna problem, the French government recently decided to set up a think tank whose task is to come up with reasonable measures relating to antenna siting by the end of the summer. There are few scientific studies on the effects of WiMAX antennas. Rivière jokes: “You know, our ancestors, the Gaulois, were afraid of the sky falling on their heads, and today, we are afraid of antennas . . . This may last for sometime.”

Altitude also manages approximately 2,000 wireless local loop connections for 350 enterprises around Paris. It uses proprietary wireless technology at 26 GHz. Altitude is buying 350 km of fiber to one of the three major fiber network’s owners in Paris (SFR, Colt, Completel) to be able to complement its wireless local loop offer to the companies.

Unfair competition from France Telecom

Questioned about the slow deployment of WiMax in France, Rivière asserts that the cause is not technical but is the result of an implicit alliance among the major telecom companies to keep their proprietary technology around GSM and its extensions.

“I see LTE winning,” he says, “but not on technical or financial grounds. It is only because the incumbents do not want WiMax. It is much easier, and much cheaper to install a WiMax network than a telco network using GSM or LTE, to reach the same results. LTE is in the telcos’ world, it is proprietary, but it does not exist yet and it is no revolution. Its effect is just to prevent new entrants. WiMax already exists, it works well and is not proprietary, and you can lower the cost because the structure of the network and the technology are open, which is not the case with 3G or LTE.”

With regard to Bolloré Technology, which owns WiMAX licenses for 20 regions in France (covering almost the entire country) but has not made any commercial development, rumors have been circulating that the company will be switching from WiMAX to LTE. Rivière claims that such a move would be purely opportunistic.

He also criticizes ARCEP, the French regulator, which has allowed France Telecom to have two different tariffs for the same type of connection. The tariff that France Telecom proposes for itself (and to local government collectives) to build a NRA ZO is ten times lower than the tariff it wants to charge Altitude to connect a WiMax base station.  The connection is identical. NRA ZO is a solution proposed by France Telecom to local collectives to extend the reach of fixed DSL lines in rural areas that are too far from a central office. “NRA ZO is directly and unfairly competing with WiMax, and France Telecom has no WiMax licenses,” says Rivière. Nevertheless, he is confident that the “hands-off” policy of the previous ARCEP administration will end now that ARCEP has a new president.

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