Orange Agrees to Distribute Netflix Video Service in France

Orange SA, France’s largest phone company, reached an agreement to distribute Netflix Inc.’s video-streaming service in the country, Chief Executive Officer Stephane Richard said today.

“We’ll be adding Netflix to our set-top box services starting November,” Richard said during a conference in Paris today. “We’ll also work, in parallel, with our French partners to reinforce their media offerings.”

The deal, which would give Orange a share of revenue for carrying Netflix, would provide the world’s largest video-streaming company with access to more than 10 million television-service subscribers, two weeks after it was released in six European nations including France and Germany. The Los Gatos, California-based company already has a similar distribution deal with Bouygues SA, Orange’s smaller French rival with about 2 million broadband subscribers.

Pierre Louette, deputy CEO at Orange, told Bloomberg News in an interview yesterday that the carrier was closing in on an agreement with Netflix. “Probably we’re going to have the two kinds of deals,” for promoting the service on set-top boxes connected to televisions as well as letting Netflix broadcast using Orange infrastructure, he said.

Netflix CEO Reed Hastings yesterday declined to comment on negotiations with operators.

Orange shares fell 0.2 percent to 11.39 euros at 10:31 a.m. in Paris trading, paring the advance to 27 percent this year. Netflix fell 2.7 percent to $438.80 in New York yesterday, paring the gain to 19 percent in 2014.

Traffic Concern

European carriers are concerned that traffic from video applications such as Netflix may eat up most of their network capacity while adding little to their revenue. They are therefore seeking compensation from the likes of Netflix, as well as Google Inc. and Facebook Inc.

After meeting telecommunications executives in Brussels yesterday, CEO Hastings argued that Netflix shouldn’t have to compensate carriers for videos it loads directly onto their networks.

He also said that network operators shouldn’t be allowed to grant more bandwidth to content providers in exchange for a fee, supporting the so-called net neutrality rules proposed by European regulators. Vodafone Group Plc CEO Vittorio Colao is among executives opposing the regulation.

“If a customer wants to pay more, why do you pretend that you can shape our industry?” said Colao, adding that he’s an avid Netflix customer. “Don’t tell us what our business model should be. It does not make sense. If you’re unhappy with our quality you can go somewhere else.”

Austria, Belgium

The Netflix service starts at 7.99 euros ($10) in France and Germany, similar to its price in other markets. Netflix also began service in Austria, Belgium, Luxembourg and Switzerland last month. It was already available in the U.K., the Netherlands and Nordic countries.

Belgacom SA experienced a “huge peak in traffic” on its network at midnight when Netflix started its service in Belgium, said Dominique Leroy, the company’s CEO.

Netflix accounted for a large share of traffic on Orange’s Internet network in France when it started service, Louette said, though he added that this may be temporary if customers were just satisfying their curiosity.

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