EC Backs French Regulation

BRUSSELS, Belgium -- France Télécom will be required to provide, for a transitional period, market players with wholesale nationwide high-speed access to France’s telecoms network. This regulatory measure, proposed by the French national regulatory authority for electronic communications, ARCEP, was authorised today by the European Commission. The measure will apply until competing network operators have built a sufficiently wide backbone network and a large enough customer base to enable them to invest further in regional high-speed (“broadband”) services, such as access to the web and services connecting subscribers’ premises to the network (“local loops”[1]). The Commission asked ARCEP to review this market again within a year to fully take account of new market developments which could enhance competition in the wholesale nationwide broadband market in France.

“The measures authorised by the Commission today for a transitional period of one year should give market players legal certainty and confidence to invest more in regional broadband and local connection services over the next year”, said Information Society and Media Commissioner Viviane Reding. “This in turn should enhance the quality and variety of services available to consumers and accelerate the take-up of broadband connections in France”.

The regulatory measures proposed by the French telecom regulator ARCEP aims at opening up competition to supply wholesale broadband in the French market. It includes products of the “Option 5 nationale”-type already supplied by France Télécom to alternative network operators and ISPs. This product enables competing market players to provide retail services directly to end-users. It complements the two other types of wholesale broadband access regulation, namely unbundling of local loops and regional bitstream products, which were previously assessed by the Commission.

France Télécom’s market shares, its capacity to supply the whole range of broadband products at both wholesale and retail level, its size and its control of the local infrastructure, led ARCEP to conclude that France Télécom is dominant on the wholesale nation-wide broadband access market. ARCEP considers that competition in this market will be facilitated if France Telecom is obliged, inter alia, to ensure internal accounting transparency between its wholesale “network” branch and its retail “ISP” entity as the recent reintegration of Wanadoo into France Telecom may have potential consequences on retail competition.

The Commission approved the regulatory measures of ARCEP today in a “Letter with Comments” under Article 7 of the EU Framework Directive on Electronic Communications. In its comments, the Commission stressed that lack of transparency in internal transfer conditions and potential market squeeze could materialise only in the short term. The Commission therefore believes that the regulation proposed by ARCEP should be limited in time. Consequently, ARCEP is invited to (i) ensure full enforcement of existing obligations on local loop unbundling and regional bitstream as soon as possible and (ii) review the present regulation within one year.