Update 5 August 2008: The 'Loi de modernisation de l'économie' was published in today's Journal Officiel.

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 National 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 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 ensure that subscribers can benefit from high and very high speed services.

T-REGS Note: Establishing a market definition by law (the local sub-loop is not defined as a separate market in the European Commission's Recommendation on Relevant Markets Susceptible to Ex-Ante Regulation) and predetermining a specific remedy by law as opposed to by market analysis is remarkable. However, the Parliamentary debates indicate that this stipulation does not aim to achieve sub-loop unbundling in the manner in which it is generally understood in Europe (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, and that the text of the law explicitly mentions 'very high bandwidth'. 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 of this legislative stipulation could evolve...


Potential fibre access quasi-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 specific 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 as to 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 install the infrastructure on private property (e.g. decisions on the number of fibre strands, the fibre specifications, etc.). The addition of the word 'specific' (underlined above, which occurred upon review by the Senate and the discussion of this matter is reflected in the Senate debate) indicates that landlords must take account of requirements for Service Level Agreements (SLAs) for business-grade connections, for example in business-only or mixed residential/business premises.

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 access, 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 Ethernet).

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: the Law does not in fact use the term mutualisation)), 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 (in French only) via the links below:

Loi de modernisation de l'économie, as adopted (update - published on 5 August 2005)

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.