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Cable Technology Feature Article

October 31, 2014

Numericable Acquisition of SFR Approved

By Gary Kim, Contributing Editor

French cable TV operator Numericable’s purchase of Vivendi's SFR (News - Alert) mobile operation has been approved, conditionally, by the French Competition Authority.

As part of the approval, Altice, the owner of Numericable, will have to allow competitors wholesale access to its cable network.

Specifically, Numericable will provide Orange (News - Alert), Bouygues Télécom, Free and other MVNOs access to its cable TV and broadband network. That measure will enable ISPs to market their retail offers using the Numbericable network.

That wholesale access requirement has been a staple of French cable TV regulation, though not the U.S. practice. Some might question how much longer different sets of regulation that favor U.S. cable operators, as compared to telcos, can continue, in that regard.

Numericable also will divest some assets, including the Completel DSL network, to “an operator capable of driving competition on the market.”

Numericable also will provide wholesale access to the SFR and Completel optical fiber access networks, to providers of business customer services.

Those provisions will last for a minimum of five years, and might last a decade.

The approval means a cable TV operator now also is the second-largest provider of telecom and mobile services in France. That has a parallel in the U.S. market, where Comcast (News - Alert) ranks among the top providers of triple play services.

Though it once made sense to rank fixed network and mobile communications operators separately from cable TV companies, these days there is growing similarity, and often nearly-complete similarity, between product lines sold by the largest cable TV and telco providers.

At some point, an unfair regulatory regime, where telcos are more heavily regulated than cable TV operators, has to be harmonized. The issue will be whether cable TV should be regulated more, or telcos regulated less, as that harmonization is conducted.

At another level, the acquisition illustrates the need for scale and scope as a tough French communications market forces suppliers to gain both size and product variety.

The traditional way of dealing with declining average revenue per user or account has been to seek additional volume. That is why scale requirements grow, and why it is widely believed consolidation of suppliers is inevitable.

Different solutions are required when demand for traditional products shrinks. In that case, the strategy of gaining scale is not a permanent solution. Instead, suppliers must find new products to sell.

That is why efforts to gain scope are leading cable companies to buy mobile assets, telcos to buy entertainment TV assets and mobile operators to buy cable assets. 

Edited by Maurice Nagle

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