B2B telecoms in France: a changing and dynamic market

A huge French market

The fibre revolution is still in progress

Who can do without a broadband Internet connection today? France has understood the need to offer quality connectivity to all, even if there is still work to be done. According toArcep (the French regulatory authority for electronic communications, posts and press distribution), 15.7 million of the 30.9 million Internet accesses recorded in March 2021 had very high-speed access. This figure, which has increased by 11% in one year, is of course largely due to the growth of fibre.

Who is behind this massive nationwide deployment? Many companies are involved and collaborating in the development of this technology: infrastructure operators, distributors, service operators... Different businesses, each with their own challenges and problems, which can also be found in the B2B segment (see below).

B2B telecoms: a €10 billion market in France

Let's talk about B2B! For professionals, it is just as crucial to have reliable, fast and secure connectivity. The B2B segment was worth €9.8 billion in 2018, or 30% of the total telecom market in France.

But in concrete terms, what is behind the term "B2B telecoms"? The various players in the sector can be divided into 4 main activities:

• Connectivity (€4.7 billion in 2018): provision of a fixed Internet connection, via a fiber or copper link.
  
• Fixed communications (€1.9bn): fixed telephony and related services.
• Telecom services (€0.9bn): offers around network optimisation (SD-WAN, MPLS, etc.), network security, VPN, etc.
• Mobility (€2.3 bn): mobile services, including voice calls, video, data, etc.

A market with no signs of slowing down

What about the future of these four pillars? Not all are experiencing the same dynamic. For example, fixed-line telephony is set to decline in importance over the next few years. But this loss of momentum will be more than offset by the growth of other activities, particularly connectivity and telecom services, two branches at the heart of Netwo's DNA. According to audit and consulting firm PMP, the B2B telecoms market is set to stabilize at 9.7 billion euros over the next few years.

However, this apparent constancy hides many upheavals. The sector will undergo profound upheavals under the influence of several trends, to which we are contributing:

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• Migration to fibre: as we have seen, there is still work to be done in this area. The industry giants will see their hegemony challenged. Alternative operators are expected to take market share and new players are expected to emerge (see below)...
• Lower prices: lower prices will benefit customers, who will get better value for money.
• IT automation: the new operators will invest in more automated IS, with substantial gains in efficiency as a result. This will enable them to increase their margins and grow faster.
• Unified customer journey: inspired by the B2C segment, this trend will make customers' lives easier by offering standardised and simplified purchase paths.

So the B2B telecom revolution is underway, and at Netwo we intend to encourage it with a new model. With the ambition to help shake up the established order.

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B2B telecom connectivity market: an Eldorado of VSEs to conquer

Although we also address players in mobility and telecom services, connectivity remains our priority. It therefore seems essential to us to have a detailed knowledge of this very specific sector, which - let's remember - is estimated at 4.7 billion euros.

An overwhelming majority of VSEs

Let's first look at the customers that make up the B2B telecom connectivity market. Looking at their typology, one company profile stands out significantly. Indeed, out of approximately 2.6 million active Internet links, almost 2.3 million belonged to organisations with 0 to 9 employees (in 2019). That's a proportion of 86%! In such a fragmented ecosystem, automation can be valuable for an operator wishing to capture market share quickly.

A market not yet rich in fibre

What are the connectivity needs of these very small businesses? Priority no. 1: migrate to fiber. Today, this technology is far from being in the majority among these small businesses. In 2019, it was only available to 19% of companies with 0 to 9 employees! Copper links (ADSL and SDSL) thus remain largely dominant, while total migration to fiber is planned by 2034. So there's plenty to do!

A boon for alternative telecom operators

So who will benefit from this growth, which is expected to take the B2B connectivity market to €5.2 billion by 2034? The dominant telecom operators? Well, no: according to PMP projections, Orange and SFR will see their influence diminish. The big winners in this trend would be Bouygues Telecom, Free and, above all, the alternative operators. Thanks to an annual growth of 3.4%, the latter should see their cumulative value increase from €469m in 2019 to €778m in 2034. The outlook is therefore promising for the many players in B2B connectivity!

B2B telecoms in France: will the Orange-SFR duopoly soon be over?

Infrastructure and service operators: key to the market

How is this market structured? Across the B2B telecom value chain, there are eight types of companies, from wholesalers to resellers, aggregators and software publishers. We are not going to detail all these activities here, but rather focus on two key businesses:

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• The infrastructure operators As their name suggests, these players own their own network infrastructure. Their aim is to deploy and operate these telecommunications networks as effectively as possible. To do this, they market access to their infrastructure to service operators (or commercial operators), but have no direct relationship with the end customer (except in the case of companies involved in the entire value chain).
• The service operators These companies act as the link between infrastructure operators and B2B customers. They sign agreements with the former to gain access to their networks, and then create commercial offers for the latter. These offers are then sold to companies, either directly or indirectly via resellers.

Orange and SFR: two giants cornering the market

However, not all players are playing on equal terms in the B2B telecom sector. With their infrastructure and historical position, two of them are currently crushing the competition: Orange and SFR. In 2019, the duopoly had 85% of the B2B connectivity market share, with Orange alone accounting for 65%. In comparison, Bouygues Telecom's 5% does not seem to allow it to challenge the hegemony of the two giants.

The future of B2B connectivity belongs to alternative operators

And the remaining 10%? These market shares are held by alternative operators, small companies that are trying to hold their own against Orange and SFR. To achieve this, they generally target VSEs and SMEs, and seek to differentiate themselves through superior quality of service, personalized offerings and greater proximity to their customers. And because there's strength in numbers, dozens of them have joined forces to form the AOTA (Association des Opérateurs Télécoms Alternatifs).

These small players therefore have a lot to offer in the B2B telecom sector. And these advantages will enable them to gain ground on the duopoly. According to projections by PMP, their market share in the VSE segment will rise from 5.7% in 2019 to 10% in 2034, and from 19.5% to 25% in the SME segment.

Alternative telecoms operators: what challenges do they face?

But for these forecasts to become reality, alternative operators will have to face several challenges. We are well aware of these challenges and know how to help these organisations overcome them.

5 issues identified by the operators themselves

We went to meet the various players in the B2B telecom ecosystem. In the course of our discussions, we identified five major difficulties:

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• Lack of communication between actors: it is often difficult to obtain and share up-to-date information between different partners (e.g. an infrastructure operator and a service operator).
• Too many manual processes: due to low automation, a large number of actions are still carried out manually: invoicing, contracting, etc.
• Difficulty in differentiating offers/distinguishing from the competition: for example, it is complicated to create customised offers for customers.
• Inadequate IS architecture: over the years, IS bricks have been superimposed on each other, but without taking into account their compatibility.
• Lack of efficiency in customer interventions: a lot of time is wasted in solving customer problems.

Impacts throughout the customer journey

Today, these pitfalls affect the various market players differently. Who is most affected by these difficulties? Service operators and resellers, at all stages of the customer journey. How do you create relevant offers when you don't have access to the infrastructure operators' up-to-date catalogues? How can you offer customised packages without having an agile IS capable of adapting quickly? How can you ensure quality after-sales service if communication with suppliers is not fluid?

At Netwo, we intend to answer these questions, as well as all those asked by telecom operators. With one watchword: simplicity.

A new vision of the service operator profession

Netwo: the solution that simplifies B2B connectivity

In order to challenge the domination of Orange and SFR, it is therefore in the interest of service operators to decomplex their activity. This is precisely what our solution proposes:

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• Access to a marketplace of telecom infrastructuresat the best price.
• Acomplete and intuitive platform that makes it easy to manage your entire business.
• Easy integration with the IS, thanks to our API-first approach.
• Automation of low value-added tasks.
• Tailor-madeoffers in a few clicks.
• ... and many other advantages!

For a B2B telecom market that favours alternative operators

By simplifying the service operator business, we intend to support the development of existing alternative operators. But not only that. We also want to encourage new companies to enter the market. By using Netwo, they can quickly access network infrastructures and easily build their offers on our platform. In this way, they can become a fully-fledged telecom operator with just a few clicks: it's the one-click operator.

And it is not only the new players who will benefit. Because, at the end of the chain, it will be the end customers who will benefit from better offers, truly adapted to their needs and with a quality of service that meets their expectations.

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