Arcep speaks

Farewell address, Paul Champsaur, Chairman of the Electronic Communications and Postal Regulatory Authority, 18 December 2008

Mr. Secretary General, I would like to extend a special thanks to you for being here today and for your overly flattering words. I think that, ultimately, the honour goes to the institution of ARCEP itself.

Eric BESSON, who will be here later, will offer a few concluding remarks.

1- When I began working at ART on 6 January 2003, I was extremely well received by my predecessor, Jean-Michel Hubert – who left the institution in perfect working order – by the members of the Executive Board at the time, the Director General, Jean Marimbert, and by all of the departments, starting with Brigitte Bailly, my colleague in all matters.

Gabrielle Gauthey and I were able to get down to work in an excellent environment. The time since then has passed very quickly, and I would like to extend a great many well-deserved thanks. But, because time is short, with two exceptions I shall not do so here today, and I ask that all those I do not thank personally this evening to forgive me.

These two exceptions are, first, Philippe Distler, the Director General since October 2003 and, second, all of ARCEP’s young staff members.

Philippe Distler is a remarkable Director General. His technical expertise, his wisdom mixed with determination and his soundness of judgement have been extremely valuable to me. We understand each other with a minimum of words and he consistently handled matters with a brisk efficiency. I will remember our frequent, brief, frank and to the point conversations with great fondness.

Over time, the quality of a regulatory authority derives from the quality of its departments. And ARCEP is well endowed in this respect. It is capable of attracting a great many remarkably talented young people who, although they may only spend a few years at ARCEP, are skilled, hard-working and loyal. I will also harbour fond memories of my working meetings with these youngsters who were justifiably proud of the analyses they had produced, but open to discussion and constructive criticism. The greatest wish I could have for ARCEP is that it continue to recruit such gifted and devoted young staff members.

I shall be turning 65 on January 6th of next year and will therefore be retiring. But, don’t worry, I shall not be giving a retirement speech here. Instead, I will confine myself to a few of the lessons learned over the past six years, and to a few of the issues that ARCEP will be facing in the months ahead. And, with such a wonderful audience before me, I will not deprive myself of the pleasure of slipping in a few lessons in economics.

When I arrived in early 2003, European institutions had just adopted a series of directives, referred to collectively as the Telecom Package, which were to be transposed into French Law by the Act of 9 July 2004. These were very sound texts and we could summarise these past six years by saying that ARCEP spent them fully implementing these directives in both letter and spirit. The primary goal of these texts was to open the electronic communications sector up to competition in a lasting fashion, at both the national and European levels. Experience had shown that this sector was propitious to the development of competition whose benefits were considerable. This is due to the vigorous nature of innovation which helps new entrants come onto the market which, in turn, is stimulated by this added competition.

Some wonder about the ability to achieve a balance between competition policy and industrial policy. How to strike a healthy balance and take account of other legitimate public concerns depends on the sector. But, in our particular case, the conclusion is clear: integration of the European market is a fundamental component of industrial policy. Opening the electronic communications sector up to competition had the positive effect of freeing national monopolies from their standoff with national equipment manufacturers, and of allowing equipment makers to target the entire European market.

That being said, the scope of competition is influenced by other principles as well, starting with the principle of neutrality, which is often evoked in the European debate – when discussing wireless spectrum management, for instance. This principle is based on the idea that the market is more able than any public authority to make technological choices and choices over what types of service to market. Unlike the United States, the European Union is not a federal state. As a result, there can be a contradiction between the desire to establish a unified European market and the too strict application of the principle of neutrality in each Member State, while European institutions would be incapable of imposing a great enough harmonisation of their norms and standards. In other words, the existence of a European market with all the ensuing benefits cannot exist without an active policy of European harmonisation which is necessarily more prescriptive than the one in place in the North American market.

I refer to this to illustrate the idea that, naturally, the development of competition has been decisive to achieving efficiency in our economy and so to our prosperity, but also that the type and scope of competition also warrants reflection, taking account of European institutions such as they are.

One of the outstanding features of the Telecom Package of 2002 was the fact of laying down the principle of achieving a healthy balance between sector-specific regulation and application of common competition law based on the same concepts. Common competition law is incapable of managing the transition from a monopoly to a state of normal competition, hence the need for sector-specific regulation and a dedicated regulatory authority. For some, the operational complexity of sectors subject to specific regulation and the possible areas of uncertainty that result from the interaction of the respective powers of two independent authorities is an argument in favour of endowing the sector-specific regulator with at least a portion of the powers of the horizontal authority, which in France is the competition authority (Conseil de la concurrence). Some countries have gone in this direction. I do not think it advisable.

The two methods of exercising power – ex ante sector-specific regulation and ex post anti-trust sanctions – are profoundly different and would not blend well together in the hands of a single institution. Furthermore, the collaboration between the competition authority and ARCEP has been exemplary. It should also be said that, by its very essence, sector-specific regulation is transitory. Its success creates conditions that make it possible to lift it progressively and replace it with the application of common competition law. This is what has been happening over the past several years: ARCEP has lifted all retail market regulation and has considerably scaled back the scope of regulation it imposes in wholesale markets.

The electronic communications sector in France has thus entered fully into the logic of the European texts. One particular virtue of this logic is that it forces a greater distinction, precision and in some cases separation of the different missions that we generally agree fall under the heading of public responsibility. The economy benefits as it gains an added transparency along with clear and stable rules to follow. Public decision-making is also improved as it is more proportionate and better informed. One good example is the systematic performance of public consultations and the creation of open, lasting and very vibrant committees which have been added to the older consultative committees. They are, by order of seniority, the interconnection committee, the expert committee for the introduction of new techniques, the public initiative networks committee (CRIP) and the consumer committee. Since ART became ARCEP and been mandated to regulate postal activities, systematic public consultations have been extended to that sector as well. Moreover, the latest committee to be formed, namely the consumer committee, addresses matters that concern not only electronic communication services but also postal services. The quality of the contributions to these committees, and here let me thank all their members, is proof that regulation is not achieved by ARCEP alone but rather by a much larger body of interested players who feel some responsibility.

When I spoke of lifting sector-specific regulation, I was thinking of asymmetrical competition regulation, in other words regulation that defines and applies the obligations imposed only on the dominant operators. By alluding to public missions other than the development of competition and by naming the various committees, however, I implicitly introduced another concept, namely that of symmetrical regulation, in other words regulation based on obligations that are imposed on all of the market’s players.

I shall not go into all of the various components of symmetrical regulation or the reasons for its growing importance, which holds true as much for postal affairs as it does for electronic communications. It should be pointed out that symmetrical regulation is most often co-regulation exercised jointly by the government, which possesses regulatory powers, and by ARCEP which provides its expertise and proposes texts that the government can ratify. Parliament also contributes, as revealed by the telecommunications portions of the law on the development of competition for the benefit of consumers and the law on modernising the economy, for instance. I shall confine myself to three points here: users’ rights, technological or frequency management choices and regional development.

By users I mean consumers as well as businesses, and especially small businesses. The fruits of competition depend a great deal on consumers’ capacity to make the most informed decisions possible. Second, users should be protected by rules or codes of conduct that are adopted by all vendors. Here, I salute the efforts in this direction of the relatively new French Telecommunications Federation (Fédération Française des Télécommunications) and the French Association of Mobile Operators, AFOM (l’Association Française des Opérateurs Mobile) notably in increasing the autonomy of individuals with disabilities. It is clear that interconnection, interoperability, the deployment of new networks and having equipment that is available everywhere and to everyone in the French and European market supposes technological choices that are made together and harmonised.

I shall go into a little more detail on the matter of regional development and the role of local authorities. Paradoxically, the emergence of competition and the affirmation of sector-specific regulation has forced a new approach to these issues. It is in the best interest of those who live and work in a given region to have competition develop there as fully as possible. Local authorities are now well aware of this, while being legitimately devoted to ensuring that these services be available to all under proper conditions. They have thus sought to equip themselves with the legal means to achieve this – I am thinking here of Article L.1425-1 of the local and regional collectivity code, CGCT (Code Général des Collectivités Territoriales) – and with the expertise that enables them to be involved in bringing electronic communication services to their region. Through the CRIP, ARCEP has put its expertise and some of its instruments at their disposal. At the request of Parliament, the Authority recently finalised a report that provides an inventory of public initiative networks. I am proud of the quality of the dialogue that has developed between local authorities and ARCEP, and I have been particularly impressed by the commitment and competence of regional government representatives that emerged during my conversations with them.

To conclude, I should like to cite some of the major issues to which ARCEP will need to devote its energies. I have chosen four: postal regulation, the new European framework for the electronic communications sector, the deployment of optical fibre in the local loop by several operators and, finally, the convergence between networks and content, notably audiovisual media. In each case, I will refrain from offering any recommendations, rightly leaving decisions on the matters in the hands of our successors.

The postal sector will be fully opened up to competition in 2011. In the meantime, the conditions for achieving a harmonious coexistence between the legitimate demands of the public service and the development of competition will need to be specified. This coexistence should benefit businesses first of all, as they are by far the largest purveyors of mail items. The existing texts, European directives and the French Law of 20 May 2005, are good but rather general. There is thus still a need for the regulatory texts that the government is preparing, to specify the obligations of the public service and the means for managing and financing them. The quality of postal regulation and a proper implementation of public service obligations will depend on the quality of these texts. Naturally La Poste will have a central part to play in this implementation.

On the topic of the new European framework I should like to salute the work performed by the European Parliament and the European Council. Their joint efforts are expected to culminate very soon in the a new set of directives that promise to be excellent. It will not mark a revolutionary departure from the 2002 framework, as a revolution was not needed. Nor will it constitute a new status quo. Over the past few years, the very success of sector-specific regulation in European Union Member States has revealed the increased need for their harmonisation, whose emergence current institutions do not allow. It is hoped that, in future, the European Regulators Group, the ERG, will operate in such a way as to establish clearer positions, with the help of the European Commission. In other words, it is hoped that the European Commission and the ERG will collaborate more actively with one another as the Commission needs the ERG’s expertise and the ERG needs the Commission’s legitimacy in the area of harmonisation.

Our country has taken the challenge of optical fibre rollouts in the local loop very seriously, with all that that implies in terms of investments and new services. We have equipped ourselves with a legislative and regulatory framework which, it is true, is tailored to our own national characteristics but which is also more evolved than what we find in a great many other countries, in Europe and elsewhere, and which has elicited an admiring interest. Thanks to the success of broadband, there is a very good chance that several operators in France will have the means and the desire to invest in optical fibre rollouts. I am delighted by the commitments made last Tuesday by all of the operators concerned, during a meeting organised by the Ministers Besson and Chatel. ARCEP is determined to follow all of this very closely and to extract conclusions as quickly as possible on the specific points that still need to be made to properly flesh out the regulatory framework.

I have already had the opportunity to express myself on the matter of convergence, and will not expand any further on it. The inexorable rise of problems tied to convergence requires the French State to examine its organisation and adapt it if necessary. This is what Eric Besson said on 20 October during the unveiling of the Digital France 2012 (France numérique 2012) plan – quoting, on this very point, the President of the Republic. This harkens in particular to the respective remits of the CSA and ARCEP, while naturally taking account of the role played by the competition authority.

To conclude, I should like to insist on one essential principle: the regulator’s independence, independence from public powers and from all market players, vendors and users. This independence can be exercised fully even if the regulator maintains a strong relationship with all of these parties and acts within the limits set by the law and regulations. ARCEP’s independence has been perfect. I would like to thank all those who may have been tempted to tamper with it, but who understood and respected the need for it.

This independence relies fundamentally on the existence, composition and operation of the Executive Board. Final ARCEP decisions are made collectively by its Executive Board. None of them are drafted ahead of time. The independence, wisdom and capability of each member of the Board are all critical to establishing effective regulation. So, naturally, I must thank Gabrielle Gauthey, for both her hard work and her commitment. She has been a remarkable spokesperson for ARCEP before a broad array of audiences, both internationally and with local authorities in France. I wish her all the very best in all her future endeavours. I should also like to extend my most heartfelt thanks to the five other members of the current Executive Board who will be members of the new Board as well: Edouard Bridoux, Nicolas Curien, Denis Rapone, Patrick Raude and Joëlle Toledano.

I wish all the best to the new Board.

And now I will hand the floor over to Gabrielle.

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