Orange has announced a range of new services aimed at catching up with the competition in the fixed and mobile broadband markets. These include a new version of its Livebox home gateway and new mobile applications for VoIP and messaging. While the new products close the gap with its competition in France and respond to the growing threat of over-the-top services, they offer little in the way of innovation and are unlikely to contribute significantly to revenues. At best, the operator may have a few more ways to minimize churn.
The new Livebox Play will be available next February - or two years after rival Free introduced its Freebox Revolution with the same features. All the other major players on the broadband market - SFR, Numericable and Bouygues - have also since introduced more advanced boxes with access to online content, gaming etc. One can only hope that the extra time has allowed Orange to work out all the bugs and deliver a top user experience.
The same as its rivals, Orange is likely to increase the price of its triple-play offers by a few euros with the introduction of the new box and additional features like cloud storage. The small boost to revenues is needed as Orange's broadband ARPU has been stagnant for over a year. The extra features should at least help reduce churn.
On the mobile market, Orange announced a number of initiatives to combat the rise of over-the-top messaging and VoIP services, although again these may be too little, too late. The French market recorded its first drop in SMS traffic in the third quarter, down 3.7 percent from Q2, according to regulator Arcep.
Orange is planning to expand the Joyn messaging service developed by the GSMA across its European markets, but this will not launch in France until the summer of 2013, after Orange has introduced LTE devices on the market. It is still too early to say whether Joyn will catch on among consumers, and much will depend on support from handset manufacturers.
In the meantime, Orange has announced its own OTT application, Libon. This offers similar features to Skype or Google Talk, but with the downside of only working between users with the app installed. To call outside the Libon community, users need to take a monthly subscription. As Orange's mobile plans in France already allow VoIP use, there is little incentive for customers to switch to the unknown platform. A strategy may be to pre-install the app on smartphones in order to capture first-time mobile internet users, but Orange's presentation did not suggest it plans to promote the app widely.
More interesting is its announced partnership with Facebook, to build a call button into the social network. This would allow Facebook users to call each other directly from the Facebook site, including groups calls, without needing to know each other's phone number. With over 60 percent of French smartphone users saying they use Facebook on their phone (source: Mediametrie), it's clearly a good idea to try and monetize this audience. However, it's unclear how Orange will earn money from the 'Party Call' service, and it's not expected to launch until next summer at the earliest.
In the end Orange is taking very similar steps to other established operators, such as the recent strategy presented by Vodafone. Particularly in France, where first fixed and then mobile prices fell rapidly with the introduction of 'unlimited' offers by Free, value-added services will be key to holding on to customers and gradually growing ARPU. The only problem is Orange's slow response to this challenge. Its inability to grow revenues through innovative services may explain why its network upgrades are also progressing at such a slow pace: In addition to the new services presented, Orange said it will not launch LTE for consumers in France until next spring.
