Stephane Richard takes the stage in Paris.
France Telecom-Orange CEO Stephane Richard appeared at the LeWeb conference in Paris this morning, to talk about the company's latest moves and mobile offerings.
He was asked first about the iPad though, which Orange has just started selling with a subsidy in several European countries.
"We are quite confident in the potential of our distribution network to be successful in selling the iPad," he said. "I'm sure this will be a very popular gift for Christmas..."
Does it make sense to subsidise the device? "It is basically the same economic model as the model for smartphones or any kind of phone," said Richard.
"It's a contract with a tariff plan and access to the network, with a two-year commitment."
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Richard said that the iPhone 4 has been "surprisingly successful" for Orange, and claimed that Orange is the second-largest seller of iPhones behind AT&T.
"We have sold more than three million iPhones so far: it's about 6% of the total amount of iPhones sold in the world," he said.
Does that get special treatment from Apple? Richard gracefully batted back the question. "As you know, they are quite tough in business... it's a win-win partnership quite clearly."
In France, one in three phones that Orange sells is a smartphone, including iPhone but also other devices. iPhone is about 20% of those sales, said Richard.
Does he see Android overtaking iPhone in France? "The ambition of the Android platform is clearly not comparable to the Apple model," said Richard.
"iPhone is a niche - a large niche, a very attractive niche, but a niche... Android has a global target, with a lot of devices coming from a lot of different manufacturers... Clearly Android has potential to grow much more than Apple systems."
Richard said that today, mobile data traffic accounts for a "much larger" part of Orange's bandwidth than voice.
"In two years time, we think there will be ten times more data traffic in the network than today," he said. "It's good news: it means that there are new users, and there is an area for growth."
However, he admitted that it's a challenge for Orange to manage this traffic and invest in his networks, raising the question of the business model for mobile data.
"We don't have any problems in terms of managing the capacity today. But clearly we have to anticipate the future. Ten times more traffic in two years time? It's huge! We have to prepare the next generation, especially the 4G and LTE equipment."
Richard was asked about unlimited data tariffs, and admitted that Orange is having to adapt its approach to tariff plans.
"I think we are going to progressively switch from unlimited data," he said.
"In the face of a traffic explosion, clearly we have to be more efficient in the network management, and that will lead us to work on specific plans that will give differentiated access according to quality of service, and probably the period of time in the day or week."
He was keen to stress that this isn't necessarily about consumers paying more, but about managing the "scarce resource" of bandwidth.
"Nobody can accept the situation where 10% of people are consuming 70% of the resource," said Richard, confirming that this is the case today on Orange's network.
Is there a danger that Orange and other operators will become just big pipes for apps and content sold by other companies? "We have pipes, but we are not pipes. We are a lot more than pipes," he responded.
Orange has its own mobile TV app in France for iPhone and other handsets, so it is making its own content apps.
However, he warned that the revenue from apps is "very marginal, even for Apple and other service providers... The point is that as telcos, we want to be contributors to the innovation and new services."
Richard also talked about NFC technology and other network services as providing an essential role for operators in the applications ecosystem.
Orange has also created a fund to identify talented app developers and invest in their businesses. But it also has its own team of 40 developers in Shanghai, "creating applications for Android based phones... so we are both investors and players ourselves."
Richard was asked about Orange's plans for mobile advertising - can it really compete with Google?
"We are humble and modest," said Richard. "Clearly Google is number one in the world... At the same time, Google is going to face some problems that we knew in the past, which is to develop when you have more or less a monopolistic situation."
Richard was also quizzed on an infamous operator meeting in France, which was portrayed in the media as an 'anti-Apple' group, plotting to undermine the control exerted by Apple and Google over the direction of the mobile industry.
"There is no coalition of bad people entering into a kind of war against them," he said. "At the same time, we are in a fast-changing ecosystem... and there is a need to be more coherent, and to exchange more between operators, because we are going to face more challenges in the future."
"It's co-operation, but it's also a message - which is first, we still exist. We are able to talk within each other. And we have a common view on how the landscape is progressively evolving. We're facing the same challenges, and we are prepared to take a more... not aggressive, but pro-active initiatives in the future."
Richard says Orange has decided to take a more active role in industry body the GSMA - an example of this new approach.
"We are not naive, we are looking at everything that's going on in this world, and there are probably much more interesting things for our customers to come from the telcos by developing co-operations between us."
