Accustomed to more muted exchanges, the Senate Economic Affairs Committee experienced a moment of great tension on Wednesday, March 22. Taken to task by Senator Patrick Chaize, Xavier Niel raised his voice to threaten to leave after only three-quarters of an hour of hearing.
The founding president of Iliad, Free’s parent company, had nevertheless begun his intervention calmly by recalling the benefits of the opening up of competition in the market initiated in France in 1998. The liberalization of the telecoms market has made it possible to bring out three operators alternatives to the historic player, Orange, including Free, the latest entrant.
25 years later, Iliad claims, with nearly 46 million subscribers in France but also in Italy and Poland, the place of sixth European operator. In 2022, the group achieved revenue of 8.4 billion euros, driven by pro forma organic growth of 6.9%.
Rates among the lowest in Europe
The unprecedented presence of four operators on national soil allows France to benefit from fixed and mobile telephony prices that are among the lowest in Europe and even in the world. “At equivalent purchasing power, the United States charge prices 3 to 4 times higher,” observed Xavier Niel. Known for its particularly aggressive pricing policy, Free is no stranger to this moderation.
The telecom troublemaker then recalled that his group had a positive impact on the French economy. Second largest employer in the sector behind Orange, with more than 10,000 direct jobs in France, it reinvests around 25% of its turnover in its networks, after rising to 30% in previous years.
@milliardaire_inspiration how he turned it off ? #pouvoirdachat #inflation #fyp #pourtoi ♬ Trap Money so Big (Remix) – Iqbal12
Indebted, the operators had to sell their assets – antennas, pylons – to TowerCo to free up cash and maintain their investments. Investments that are far from complete since it is now a question of financing the generalization of fiber and 5G coverage throughout the territory while improving the resilience of existing networks.
Tighten the copper network shutdown schedule
However, the French regulatory framework would jeopardize this bright future. Xavier Niel first of all castigated the timetable for the closure of the copper network, which he considers too extensive. Its extinction is scheduled for 2030 for an end to subscription of commercial offers in ADSL from January 2026.
The boss of Free suggests speeding up the tempo. According to him, it is a mistake to leave 5 years between the announcement of the end of copper in an area and its actual cessation. He proposes to reduce this period to one year, the additional years bringing, in his eyes, “nothing more”.
In a given territory, “75 to 80% of people eligible for fiber optics will spontaneously take out a subscription. They understand the whole point of switching from ADSL to fiber. households that must be convinced by demonstrating education. Finally, there are still 10 to 15% of irreducible people. ADSL works and they do not want to change it.”
The “irreducibles” of ADSL
If the closure of copper only occurs in five years, these “irreducible” will wait, according to Xavier Niel, the end of the deadline. “As long as they are not forced, they will not migrate. The end of the commercial offers has no impact on them.” What prevents us from rapidly extinguishing large cities?, he asks while evoking experiments in small and medium-sized towns, including Lévis-Saint-Nom in the Yvelines. “It works very well.”
While asking the question, the captain of industry already has the answer: the unbundling rate. This price paid by the three alternative operators – SFR, Bouygues Telecom and Free – to Orange to access its copper network constitutes for the latter “a situational rent”.
An annuity that the incumbent operator would have all the more interest in maintaining as an increase in the unbundling tariff is envisaged by Arcep, the regulatory authority for the telecoms sector. For Xavier Niel, nothing justifies this increase. “It is not by giving more revenue to Orange that we will encourage it to accelerate the closure of copper.”
“Arcep goes to bed in front of Orange”
The manager also points out that Orange has built up a captive clientele by selling its ADSL subscriptions ten euros cheaper than fiber (19.99 euros against 29.99 euros per month in the catalog of Sosh, the low brand -cost of Orange). “By increasing the unbundling rate, we give market share to Orange”, concludes Xavier Niel who believes that Arcep is “complementary to Orange and lies ahead of Orange”.
“Authorizing deregulation in these areas is a mistake, he continues. Arcep would lose all power of action over Orange, which could decide to keep the copper network longer, while retaining a de facto monopoly in these areas. None of the country in Europe has increased its unbundling rates.”
An “unfair” tax
Xavier Niel then took on another of his hobbies: taxation. “With energy, telecoms is certainly the most overtaxed sector in this country. It is a French specialty to tax telecoms.” Among the sectoral taxes, he points to a particularly “unbearable and unfair” one: Ifer.
Collected for the benefit of local authorities, this flat-rate tax on network companies (Ifer) is indexed to the number of antennas and frequencies emitted. “The more an operator deploys its networks and its capacity is increased, the more this tax increases”, summarizes Xavier Niel.
With the deployment of 5G, Ifer should increase sharply from 270 million euros in 2022 to 500 million in 2027. While the Government has been promising to reform it for three years, this tax would be “unfair” because it does not not apply in the same way to all operators.”
“Reduced to its turnover, Free pays twice as much Ifer as Bouygues Telecom and SFR and that will be three times more in 2027”, chokes Xavier Niel, noting that the two operators pooling their networks (RAN-sharing) share the cost of this tax. Failing to see the removal of Ifer, the boss of Free recommends a cap on this tax, or even its replacement by a tax on turnover.
For a New Deal 2
If he does not like taxes, Xavier Niel appreciates, on the other hand, the support plans for the sector. He would therefore like to see the mobile “New Deal” renewed. Initiated in 2018 by Arcep and the Government, this plan aims to accelerate mobile coverage in the territories.
In return for public funding, the operators each undertake to deploy 5,000 new mobile sites by 2026, at the rate of 600 to 800 sites per year in the areas identified by the public authorities and local authorities. Halfway through, Iliad has already deployed 2,300 mobile sites.
To give visibility to the actors of the sector, Xavier Niel therefore proposes a New Deal 2 in order to cover the last white and gray areas. This made Senator Patrick Chaize jump, moreover, president of Avicca, association of communities involved in digital technology.
Pass of arms between Xavier Niel and a senator
While the cost of the New Deal rises, according to the elected official, between 3 and 5 billion, he says he is “more than against this New New Deal” which qualifies as “dishonesty”. Avicca and InfraNum, the federation bringing together all the players in the fiber optic chain in France, are promoting a digital “Good Deal”, a plan financed in whole or in part by the expected increase in Ifer recipes.
Visions that are difficult to reconcile and which therefore gave rise to this particularly tense exchange between the senator and Xavier Niel. The first asking the second if the aggressive prices charged by Free were sustainable over time. The founder of Iliad then had a good time rebelling, recalling that he froze his prices while all his competitors increased theirs, participating at his level in the fight against inflation. We find this pass of arms in a video that has gone viral on social networks.