France Telecom stumbles - and points to the future of telephony

Yesterday France Telecom shares tanked nearly 10% on the back of their statement that earnings would fall below expectations in 2006. And today European telco stocks in general have fallen. Why? Well, of course it's all about the triple play silly. You see, if you are a fixed line telco today anywhere in the developed world and you don't have a triple play offering in the market right now - your in deep trouble. For those that do are gobbling your customers.

And France is a fascinating test bed for the future of fixed line telephony, beacuse it has one of the highest penetration of VOIP telephony in the world and has the highest in Europe.

Last year France Télécom predicted that the proportion of VoIP telephony would rise to about 15% of residential traffic by the end of 2005. But it said yesterday that take-up was accelerating and would reach 40% by the end of this year. Look out fixed line operators, what's happening in France will happen in the rest of the developing world at the latest by 2010.

French challengers, Iliad and Neuf Cegetel, have attracted many of the new VoIP users with attractively priced services. Free, Iliad’s consumer brand, has not changed its prices in more than three years. Subscribers continue to pay €29.99 a month, but where they once received only broadband internet access they now also receive television and VoIP, including free international calls to some destinations.

This is the way of the future. And incumbent fixed line telco's without triple plays should watch out. And soon you'll need a quadruple play: TV, VOIP telephony, internet access and mobile services. At least France Telecom has Orange!