Orange Builds on FMC Base

Orange France (Paris: OGE) continues to lead on fixed/mobile convergence (FMC) services and has increased sales of dualmode WiFi/GSM handsets by more than 50 percent in the third quarter of this year. (See France Telecom Boasts Q3 Growth and FT's Q3 Revenues Grow.)

At the end of September, Orange had sold 468,000 dualmode WiFi/GSM handsets for its unlicensed mobile access (UMA)-based services in France, the U.K., and Poland. By comparison, at the end of June, Orange had sold 300,000 dualmode handsets and reported that 200,000 customers had signed up for its Unik FMC service. (See Orange Doubles FMC Customers.)

While Orange focuses on expanding its UMA-based FMC services, there are suggestions that the operator may have recently scaled back its femtocell project. In July, Unstrung reported that the French operator was preparing to launch a request for proposal (RFP). But according to an industry source, UMA is the priority for the Orange group. (See FT Preps Femtocell RFP.)

Analysts are not convinced that Orange has put femtocells on the back burner, but agree that the operator's current convergence activity is centered on UMA.

"There is a lot of sensitivity about being too verbose about femtocells," says Stuart Carlaw, research director at ABI Research . "I think [Orange's] messaging has changed. They don’t want to impact their efforts on Unik."

Orange has had the most success with its Unik service, in terms of subscriber numbers, of any European operator offering the UMA-based dualmode GSM/WiFi services, since it first launched the service in October 2006. (See Orange Launches Unik, FT vs BT on FMC, Gateway Key to BT's Fusion Flop, BT's Flat Fusion , and T-Mobile Launches UMA in USA.)

Part of the reason for the growing service takeup is that Orange bundles the service with its Livebox home gateway and broadband service. Orange had an installed base of 4.7 million Liveboxes at the end of the third quarter this year.

The service is also helped by Orange's network of WiFi hotspots.

"The dualmode solution makes sense for Orange, BT Group plc (NYSE: BT; London: BTA), and T-Mobile International AG because they have a huge installed base of hotspots," says ABI's Carlaw. (See T-Mobile Launches UMA in USA.)

TeliaSonera AB (Nasdaq: TLSN) recently launched its Home Free UMA service in Sweden after offering the service in Denmark for a year, but the operator has not released subscriber figures. And in October, Telecom Italia SpA (NYSE: TI) launched its version of a UMA-based service called Unica as part of a "quadruple-play" offering. (See Swedes Are Home Free With FMC, TeliaSonera Picks Moto, Italian FMC Face-Off, and FMC Fusilli.)

For Orange, publicly committing to femtocells could risk complicating its convergence proposition. Femtocells and UMA services are similar in that operators can use them to offer cheaper voice calls in the home, for example. But 3G femtocells also bring the possibility of expanding cellular data coverage into homes without the handset limitations of dualmode GSM/WiFi services.

"Whether femtocells will bridge that divide between FMC voice and FMC data, we will see," says Emma Mohr-McClune, principal analyst at Current Analysis . "The femtocell promise is that they'll deliver on both."

But femtocells are at an early stage of development, with operators just preparing for trials, and the earliest commercial launches are not expected until the middle of next year. (See Vodafone Picks Femto Vendors.)

"Orange is driving the momentum of UMA this year and working out where it goes from here," says Mohr-McClune.

— Michelle Donegan, European Editor, Unstrung