Arcep speaks

Public action: regulation or economic incitement? Address of Jean-Michel Hubert, President of the Autorité de régulation des télécommunications (ART) / World summit of regulators - UNESCO – 1st December 1999

Ladies and Gentlemen,

First, please allow me to thank Françoise Bertrand, President of the CRTC and of the Forum des régulateurs, as well as Hervé Bourges, President of the CSA, for organising this "World summit of regulators". I am pleased to have this opportunity to address a number of regulators from the communication world, whether from the audiovisual sector, the telecommunications sector, or both. As for myself, I will be speaking to you today as a regulator for the telecommunications sector.

For all of us, Internet has already become a key issue in our mission as regulators. And so, it is useful for us to share our experiences in this field, and even more so, because this new method of communication crosses both geographic and sector-based boundaries, thanks to the convergence of digital technologies.

Yesterday, the round-table discussions highlighted current demand for auto-regulation, while demonstrating how important regulatory control and regulation still are. But Internet is not an end in itself. It is but a new tool. This morning's speakers explained the social and international disparities in Internet access. The question of access to telecommunications networks—as a medium for this new method of communication—must remain the focus of our discussions, because the answer that each of our countries gives to this question will be the key to the development of Internet.

As regards Internet access, there is a real risk of division between the richer and less rich countries, that is, most of the world's population. We learned recently in the United Nations Development Programme's latest report that in the late 1990s, 20% of the world's population living in the richest countries shared close to 75% of the world's telephone lines, as opposed to barely 1.5% for the poorest countries.

It is generally considered that one telephone is needed per one hundred inhabitants to meet telecom needs. However, the same report explained that on the eve of the new millennium, one quarter of countries do not meet even this minimum. Even industrialised countries are not necessarily protected. Therefore, our approach must be global. And is not this concern the most complete form of what we call "universal service"?

This is why such a discussion is useful today.


The development of Internet depends on the existence of a federation of telecommunications networks on a global scale, and on the polyvalence of very different types of networks, whether traditional copper pairs, coaxial cables, fibre optics or radio links.

The impressive growth of networks, whether geographically or in terms of bandwidth, benefit all who use Internet. At the same time, the rise in the number of households owning Internet access equipment—computers and fixed or mobile telephones today, digital televisions and UMTS tomorrow—encourage this development. Thanks to these infrastructures, the end user will be given access to the interactive services offered on Internet. And isn't interactivity one of the characteristics specific to telecommunications?

The development of this new medium will also benefit the deregulation movement in this sector. Yesterday's opening of the market and tomorrow's greater competition on the local loop provide operators with a new source of revenue thanks to the increase in traffic—even with concomitant drops in telephone communication rates. This is why the way Internet access is billed to the customer is important: time-based or fixed rate or even based on bandwidth, and paid or free access.

But Internet's development also depends on the capacity and quality of the networks. Yet Internet as it exists today offers no guarantee of access times, bandwidth or routing. Because of its very nature, it is based on a "best effort". We are closely following the pioneering work of the APEC, which is working on drawing up a map of Internet traffic in the Asia-Pacific region. I believe this is essential if all participants, whether private or public, are to appreciate the economic and social impact of Internet.

APEC's important study reflects a concern expressed by Francis Lorentz in his recent report on electronic commerce: in more than half of all cases, connections made in France to European Web sites first pass through the United States. This affects quality of service because of increased access times. Moreover, since pricing conditions are not symmetrical, the cost of Internet access is increased. This situation deserves a concerted European approach.

Thus, access to—and by—the end user is the key issue in the development of Internet.


The predominant situation on the local loop is a key stake in opening the market to competition. Internet access, a decisive factor in the development of the Internet, is at the heart of the concerns of this global summit's organisers. This question has two layers:

At the micro-economic level, the question is how fixed fees for local communications and Internet access can encourage as many subscribers as possible to use Internet. I will return to this in a moment when I talk about what the Authority has done.

At the macro-economic level, the question is how to find solutions at the global level to ensure that telecommunications costs and fees, as well as network connection conditions, encourage a more balanced use of Internet. A number of figures clearly show how great the gap is: with just 19% of the world's population, OECD member countries count 91% of Internet users, 99% of global expenditure in information technologies is made by just 55 countries, there are more computers in the United States alone than in the rest of the world.

I will end my list there, but I could go on and on. Still, let's be optimistic: as the United Nations' report stated so clearly, new information and communication technologies are what are making the globalisation we are experiencing today different from all others. Internet, mobile telephony and satellite networks eliminate many of the restrictions of time and space.

The unprecedented development of new information and communication technologies since the beginning of this decade could not have occurred without a number of factors:

  • previously unimaginable gains in productivity
  • constantly falling prices: imagine that the cost of a three-minute telephone call between New York and London has dropped from 50 dollars in 1960 to 3 dollars in 1990, and just 35 cents in 1999
  • strong growth of telecommunications networks, both in terms of geography and bandwidth. We need only look at how quickly Europe is equipping itself to be convinced of this.

And so, national telecommunications regulators are the first concerned by these questions. The advantage of this type of summit is that it gives us an opportunity to share our experiences. Let me now return to what the Authority has done.


As the networks regulator, and as such, responsible for defining the access conditions to networks open to the public and the connection of these networks, the Authority seeks to create conditions that will encourage the development of Internet in France. Its action, which is part of the opening of the sector to competition, does not aim to restrict through over-regulation, but to remove the obstacles to competition—primarily in two directions: by introducing new access methods and high speeds, and by lowering communication costs.

Introducing new access methods and high speeds: since its inception in January 1997, ART has sought to encourage the development of Internet on cable, a medium which early seemed the ideal alternative solution as a means to both guarantee the convergence of the technologies and to create true competition on the local loop.

Thanks to our arbitration between the public operator and cable operators (which was upheld by the Paris appeals court), we have established the technical and financial conditions for the provision of Internet access on certain cable networks. This was a first step.

Today, ART is focusing on unbundling the local loop, as ADSL technology is implemented. Following our consultation held on the development of competition on the local market, we tried to find a solution which would allow the new operators—that is competitors of France Telecom—to offer high-speed services using xDSL technologies. And we wanted them to be able to do this under the same conditions as those France Telecom enjoys when developing its own services.

This effort also focused on alternative solutions, such as the local radio loop, satellite access, and of course UMTS, which in a few years will offer both wide-band and mobility services. The first local radio loop licenses to be granted soon, and then those for the constellations of second-generation satellites, as well as UMTS, should all make high-speed services available for the long term, with new prospects for interactive multimedia services.

Lowering communication costs: this is the second key focus for the Authority. This concern is expressed in the public notices we submit on France Telecom's pricing proposals. It also leads us to continue discussions with participants—primarily through public consultations and calls for comments—on subjects as varied as "Free Internet", Internet telephony and UMTS. Dialogue is an essential element in the success of the regulation mission.

To lower communication costs, fees benefiting the consumer must be reconciled with respect for the rules of competition. It is in this spirit that we have given our opinion on topics such as "Internet in the school", fixed rates and "Free Internet". It is interesting to note here that the expression "Free Internet" is a misnomer since ISPs are paid through earnings generated by telephone traffic, advertising or electronic commerce. It would be more appropriate to speak of "subscription-free" Internet offers.

This is how, this past spring, we accepted the "20 hours/100 francs" offer from France Telecom.

Thus, the Authority can use its experience in two directions:

  • first, in regulating telecommunications networks, by defining access conditions to networks open to the public and the connection of these networks, ensuring that all users can communicate freely

- second, through economic regulation, by making effective and loyal competition possible between network operators and telecommunications service suppliers, to the benefit of users.


As an independent administrative authority, it is logical that the ART's action reflects the government's priorities. And in fact, the information society action program is a government priority.

As regards Internet regulation, until now, there have clearly been two trends in regulating content: one is as little regulation as possible, and the other imposing "governance".

Since the first trend tries to regulate as little as possible, it reflects a liberal attitude to content, seeking to make the players responsible for respecting a certain number of principles of professional conduct: this is the practice of auto-regulation.

The second trend preaches intervention from public powers, and in certain cases, would even impose "governance" on a global scale, in order to grant as many people as possible access to the new information and communication technologies.

In August of this year, our Prime Minister stated that the "network" needs a form of "adapted regulation", thus combining regulation et auto-regulation. This led him to open discussions with the goal of creating a body bringing together both public and private players for discussion and professional conduct. The Authority approves of this initiative, which supports both regulation—to encourage economical Internet access for all—and auto-regulation—to make all players responsible for the content transported.

This discussion also has its place in the context opened by the European Commission's recommendations following its consultation on the "Convergence" green book: the need for a clearer distinction between regulation of the container and of the contents.

These are goals specific to public action.


Internet has become both a national and international means of communication, which should encourage access for all to more and more personalised information, as well as to a more immaterial economy, based on electronic commerce.

Still, and I shall end on this note: encouraging the development of Internet in the world must not mean imposing a method of development over another on countries which might otherwise have made other choices. Internet cannot become a universal tool for a single dominant mindset.

Based on the results of the consultation held by the CSA with over sixty regulators around the world, we realise that our concerns as a regulator are shared by many:

  • the public sector's key role is reaffirmed, and it should be present as any other Internet player
  • the need for discussion on a global scale on the importance of regulation

Given such fundamental stakes, the technical, economic and legal telecommunications model can be naturally applied to Internet. In its mission as regulator, the Authority has taken into account this new aspect of the economy of communication networks, with its constant goals defined by the July 1996 law of telecommunications regulations: the development of the market, employment and competition, to the benefit of consumers.

I thank you for your attention.

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