Last week, the French Parliament and
the French regulatory authority ARCEP took major steps in defining a
regulatory framework that aims at achieving widespread deployment of
Fibre to the Home (FttH). This includes, among others, obligations on
all operators to meet reasonable requests for access to in-building
fibre (at an access point to be defined), an ambivalent position on
fibre unbundling beyond the private property portion, a formalised
civil infrastructure access obligation on France Telecom, and a
decision not to mandate wholesale broadband access over fibre.

Specifically, the following
developments occurred:

  • 23 July 2008: Adoption by the
    Senate (after the General Assembly earlier) of the « Loi de
    modernisation de l'économie », a wide-ranging law, articles
    109 to 120 of which address the telecommunications sector.

  • 25 July 2008: Adoption by
    ARCEP (following the receipt of a European Commission comments
    letter dated 18 July 2008) of the analyses of Market 4 and Market 5
    of the second edition of the European Commission's Recommendation on
    Relevant Markets Susceptible to Ex-Ante Regulation.

Key noteworthy points (small selection
of a wide range of decisions) are as follows:

Fibre access obligation (but... how
symmetric, and how long?)

The Law (Art. 109 VI) imposes an
obligation, applicable to all persons or entities (including network
operators) that have established a fibre-optic line that enables the
provision of very high-bandwidth electronic communications to an
end-user on a private property, to meet reasonable requests for
access to that fibre-optic line, emanating from operators wishing to
provide electronic communications services to that end-user.

The wording of the obligation (which is
remarkable in its own right given that it does not rely on any market
definition or finding of single or joint dominance) is of particular
interest, because: (i) it does not specify the physical location of
the access point, but it indicates that the access point is to be
situated « outside the limits of the private property »
(unless ARCEP approves the access point being inside) and « must
enable the effective connection of third-party operators, under
conditions that are reasonable from an economic, technical and
accessibility perspective
 », (ii) the access point could be
different depending on the identity of the provider, and (iii)
nothing is stated about fees that will be applied for these fibre
access connections (but it is clear that fees will apply).

The Law (Art. 109 VI) also modifies
existing legislation to ensure that disagreements about conditions
for such fibre access are subject to ARCEP's dispute-resolution
powers under the existing Art. L. 36-8 and enhances the existing Art.
L. 36-6 in a manner which enables ARCEP to make an ex-ante
determination of the « technical and financial conditions »
of the new symmetric fibre access obligation.

T-REGS Note: The physical
location of the access point is subject to major disagreements
between operators (in part due to different strategies and network
architectures (e.g. P2P vs GPON) but more substantially due to the
economics of FttH roll-out). It seems clear that this debate will
continue in the next several months, and that the offers of providers
(in terms of location and in terms of wholesale fees) will differ. It
is widely expected that ARCEP will have to make an ex-ante
determination of the « technical and financial conditions »
under in application of its new powers. In this regard, it is also
important to note that ARCEP's Market 4 decision of 25 July 2008
(page 76) indicates that it « will consider extending fibre
access obligations if the regulatory measures are insufficient to
guarantee competition 
»; the European Commission indicated
in its letter dated 18 July 2008 (page 11) (which predates the
adoption of the Law) that it « encourages ARCEP to consider
imposing other remedies in relation to market 4, in case the adopted
law would not be sufficient to ensure effective competition in
combination with duct access 

Furthermore, the Law (Art. 110)
modifies existing legislation to emphasise, in a technology-neutral
manner, that operators designated as having significant market power
on the local sub-loop are required to make available an access offer
for this segment of the network, at reasonable tariffs. This
technical and tariff offer must cover all elements to ensire that
subscribers can benefit from high and very high speed services.

T-REGS Note: This asymmetric
obligation of sub-loop unbundling is remarkable, as it is established
by law as opposed to by market analysis. However, the Parliamentary
debates indicate that it does not aim to achieve sub-loop unbundling
for very high bandwidth services (e.g. using VDSL2 on metallic
sub-loops or FttH on fibre sub-loops) but is rather aimed at enabling
the shortening of very long metallic loops in remote areas,
particularly by direct investments of local authorities wishing to
stimulate viable xDSL over the legacy metallic loops. Fact is,
however, that the text of the law does not specify the intention or
the technology. It would not be surprising if, in the future (ARCEP's
M4 decision of 25 July 2008 continues to mandate metallic sub-loop
unbundling for a period of 3 years), interpretations could evolve...

Potential fibre access monopoly?

The Law (Art. 109 II) prevents
landlords from refusing the installation and maintenance of
fibre-optic lines for very high-bandwidth electronic communications,
unless they invoke « serious and legitimate objections ».
The Law then goes on to specify that « a serious and
legitimate reason is the pre-existence of fibre-optic lines that
enable meeting the needs of the requesting party
 ». In such
circumstances, the landlord can demand that the connections are
achieved by using the existing lines. Further stipulations address
circumstances in which a decision was already taken by the landlord,
a maximum of six months earlier, to proceed to the installation of
fibre-optic lines.

T-REGS Note: This stipulation
puts the decision on whether there is a single or there are multiple
access infrastructure options on private property firmly in the hands
of landlords, in conjunction with the decisions of entities
(including network operators) that will install the infrastructure on
private property (e.g. decisions on the number of fibre strands, the
fibre specifications, etc.). This raises questions on the
implications for end-to-end quality of service, and in particular
repair times.

The same article stipulates that, when
the fibre-optic lines (on private property) are installed by an
operator of a public electronic communications network, the costs for
this installation will be borne by this operator.

Civil infrastructure access
obligation on France Telecom

ARCEP's decision on Market 4 (wholesale
(physical) network infrastructure access at a fixed location) is
precedent-setting, in that it defines the relevant market as not only
including metallic loops/sub-loops (although not cable-tv as it is
considered unsuitable for unbundling), and also dark fibre (in the
access network), and, this is where the major innovation resides,
civil works infrastructure (in the access network). The market
definition also explicitly comprises not only the infrastructure
constituting the wired local access network of electronic
communications network operators, but also the civil infrastructure
and fibre infrastructure of local authorities within the perimeter of
the local wired access network.

ARCEP established that this market is
national in scope (metropolitan France and overseas territories), and
that France Telecom (FT) has significant market power on the
wholesale market for access to these infrastructures.

The existing obligations on FT for
metallic local loop/sub-loop unbundling are broadly maintained and
the existing FT fibre backhaul offer in the context of metallic loop
unbundling is confirmed and hence becomes the subject of a firm
regulatory obligation. Fibre unbundling is not mandated in the ARCEP
Market 4 decision.

Art. 11 of the ARCEP decision
introduces a new civil infrastructure access obligation on FT, which
covers the infrastructure relevant to the local access network,
including ducts and chambers used to connect both residential and
business customers, a process for « de-saturation »
of the local access infrastructure (i.e. to ensure that construction
occurs where there are capacity constraints), and procedures for
access to information and updating of such information relating to
civil infrastructure access. Art 12, 13, 14. of the decision add that
this access must be provided on non-discriminatory conditions
compared to FT's self-supply (including procedures and internal
transfer pricing), that a reference offer for local infrastructure
access must be published (the conditions of which are detailed in
Annex 1.B), and that FT is subject to a cost-orientation obligation
(including a specification that the fees must reflect the « space
occupied or immobilised by such acces
s », which can be
subject to a more detailed ARCEP decision subsequently). Further
obligations (including accounting separation etc.) apply.

Wholesale broadband access: cable
excluded after all, no fibre bitstream

ARCEP's decision on Market 5 (wholesale
broadband access) includes wholesale bitstream provided over metallic
twisted-pair loops/sub-loops, and over fibre access, but following
comments contained in the European Commission's letter dated 18 July
2008, ARCEP excluded wholesale bitstream provided over cable-tv
(whereas previous ARCEP drafts, including the draft with which the
French Conseil de la Concurrence agreed, had included cable in the
relevant market). Powerline, WiFi and WiMax are also excluded from
the market definition.

ARCEP established that this market is
national in scope (metropolitan France and overseas territories), and
that France Telecom (FT) has significant market power on the market
for wholesale broadband access.

The existing obligations on FT for
wholesale broadband access at regional level over metallic local
loop/sub-loops are broadly maintained and extended to include
Ethernet bitstream where FT has installed DSLAMs capable of Ethernet
(although an explicit decision is made not to mandate multicast over

Bitstream over fibre is not mandated,
on the grounds (expressed solely on page 63 of the decision), that
this would neither be necessary nor proportionate, notably given that
fibre in the access network is not inherited from the monopoly
period, and that the Market 4 decision imposes civil infrastructure
access (access to the infrastructure inherited from the monopoly
period) and that the Law puts forward « fibre mutualisation » (T-REGS Note: this term is not in fact used in the Law)),
i.e. a symmetric obligation on all providers to grant access (the
geographic extent of which remains undefined). ARCEP does add (also
on page 63) that, in case the regulatory approach it has selected
would not suffice to achieve effective competition, the approach
could be amended, and as the case may be, involving additional
obligations on France Telecom.

The full text of the documents referred
to in this T-REGS news item can be accessed via the
links below:

Loi de modernisation de l'économie, as
adopted (not yet published)

ARCEP Decision 08-835: Market 4

ARCEP Decision 08-836: Market 5

European Commission comments letter on
ARCEP notification of Markets 4 and 5 (in English).

For a discussion of these important
developments, please contact Yves Blondeel