Broadband is becoming the driving force for growth in the French Internet access market.
Wanadoo, the leading Internet service provider and portal owned by government-run France Telecom, said two-thirds of the 1 million new customers it registered in 2002 were for broadband. Those consumers pay $32 monthly as opposed to $8.60 for narrowband access to wanadoo.fr.
“Broadband has become a mass-market product,” said Yves Parfait, vice president of Internet access at Wanadoo Interactive. “It was a product more dedicated to skilled people and hi-tech users, and now it's reaching the more popular public.”
Wanadoo has 4 million Internet accounts in France, or roughly 6 million users, up 33 percent from 2001. It has another 2.7 million accounts in Britain through its Freeserve service, 1.5 million in Spain through Eresmas and a few users in the Netherlands to round out at 9 million accounts in Europe.
But the home market is where the action is. Overall Internet penetration is almost one-third of the 28 million French households, or roughly 9.5 million accounts. Though this does not compare with the 60 percent to 65 percent penetration in the United States, France shows appetite for growth.
“What's important is the speed to catch up,” Parfait said.
France has 1.4 million broadband customers, of which 1.1 million are Wanadoo customers. ISPs like AOL, Free, Deutsch Telekom's T-Online, Italy's Piscali and cable companies account for the rest.
Several factors drive broadband's local popularity. The “always-on” capability leaves telephone lines free. There is better navigation and speed. And small to medium-size businesses are steadily switching to broadband.
“We think it'll grow because the price has decreased and the range of product is extending,” Parfait said.
Customer care played a key role in Wanadoo's growth. The company employs 3,000 people in its call centers nationwide to handle issues raised by customers. It also offers network services and communication tools online.
A major benefit arising from broadband's rapid adoption is the time spent online. Parfait said the average Wanadoo narrowband customer spends 11 hours online monthly. The broadband customer spends 40 hours.
“The challenge we face is it's more a question of utilities,” Parfait said. “We have to convince the people that the Internet is useful for them. So it's a question of promoting usage in their daily life, and for that we have to invest in communication and promotions. We also have to convince people to buy more computers.”
Still, the rising online use is sure to please advertisers. Though Wanadoo has a vast roster of national advertisers, small businesses comprise an important market. For example, the Yellow Pages section on the site boasts 240,000 advertisers from the small-business ranks, accounting for $100 million out of Wanadoo's $2.15 billion revenue in 2002.
Parfait now aims to raise broadband penetration in Wanadoo's customer base from 25 percent last year to 33 percent this year. In two years' time, half of Wanadoo's ISP customers are projected to be broadband users.