Check Against Delivery.
Seul le discours prononcé fait foi.
Ladies and Gentlemen,
The electronic communications sector is driven by successive cycles of innovation that generate successive investment cycles. Today, NGN access networks open a new cycle, with the replacement of the copper lines by optical fibre in the local loop.
Development of a sustainable competition in the long term, requires that a sufficient number of operators engage in this new investment cycle. Climbing the next rung on the ladder of investment is possible. Regulation of broadband, focusing on local loop unbundling, has encouraged investment by operators in the roll-out of national and regional fibre networks. These operators had sufficient economic space in unbundled areas to invest in their own infrastructure. As a consequence, competition has flourished on all the value chain except for the local loop. We believe that competition on all the value chain including the local loop is possible for FTTH networks, i.e. in concrete terms the deployments of several fibre local loops duplicated by competitors in a significant part of France is not out of reach.
As a consequence, ARCEP believes that in France, vertical separation of the incumbent is not the appropriate solution to foster competition upstream.
We have identified three major questions for FTTH deployment :
- The first one, to facilitate the deployment on the public domain, is the access to France Telecom’s civil engineering infrastructures (trenches, ducts…) ;
- The second one, to facilitate the deployment of fibre on the private domain, i.e. in the buildings, is the sharing of the terminal part of the fibre to the customer’s premises ;
- The third question is the intervention of local authorities, as "facilitators" for the FttH rolls-out.
You understand that the keyword for our policy is competition based on infrastructure sharing and, as a consequence, cost sharing.
Access to civil engineering
Access to existing civil engineering infrastructures changes considerably the economic equation for deploying a new fiber optical local loop. Civil engineering (trenches and ducts in the public domain, in building wiring up to customer premises) is the highest cost item. It represents between 50% and 80% of the total cost per subscriber.
Thus it is not economically viable for an operator to rebuild the whole civil engineering. Today operators are indeed using existing infrastructures to roll out their FttH networks. France Télécom is using its own ducts inherited from the former monopoly (and largely used for copper lines) to roll out its fiber loop whereas first alternative operators’ deployments are limited to areas where alternative infrastructures exist, such as in Paris with the sewage system or in Montpellier with the municipal ducts.
ARCEP considers that the incumbent’s ducts have the characteristics of an essential facility and that their access must be guaranteed on non discriminatory terms and conditions to competitors.
To get information on France Telecom’s ducts network, ARCEP has commissioned an audit in 10 towns in France, to evaluate available space. A sample of 1000 chambers was audited. The conclusion of this audit is that France Telecom’s civil engineering has a reasonable spare capacity.
It seems therefore possible for several operators to deploy in France Telecom’s ducts, under several conditions :
- to use appropriate engineering rules that optimize the available space and the usage of the ducts ;
- to have a transparent, non discriminatory, cost oriented access to the ducts ;
- to share part of the capital costs by coordinating work (by sharing studies for availability e.g.).
Under these conditions, several operators should be able to deploy FttH networks in the streets.
Today, France Telecom has made a commitment to give access to its ducts under non-discriminatory conditions. France Telecom communicated a first version of its offer to the main operators in December 2007.
The offer’s principles are encouraging, but experiments are now in process to improve the operational aspects. Operators are today opening France Telecom’s manholes to check the ducts availability and see how they can deploy in the ducts. Access to the infrastructures will include all relevant information, as for example maps or chamber locations. France Telecom will publish an improved offer next summer, when it will be fully operational.
At the same time, ARCEP has started a new broadband market analysis . Following the new Commission recommendation, ARCEP has defined a new relevant market that includes access to all passive infrastructures of the local loop – namely copper loop and sub-loop, on one hand and fibre and ducts on the other hand. ARCEP believes that the appropriate remedies for this market are unbundling of the copper loop and access to France Telecom’s ducts in a transparent and non-discriminatory way. ARCEP has launched a public consultation on this new broadband market analysis, and will publish the results soon.
Access to buildings
Access to buildings is a serious bottleneck for all players. FttH deployment means rewiring buildings and apartments. For two reasons, it is doubtful that there will be more than one roll out of in-house wiring:
- the first one is that it is probably not economically viable ;
- the second one is that landlords and building managers will probably refuse to grant access to more than one operator.
Consequently, sharing of the last part of the optical fibre local loop among operators is necessary. It means that one operator wires the building and gives other operators access to its network.
Today, the current French legislative framework does not require fibre sharing and ARCEP is not empowered to mandate it. The government has recently announced law proposals, to require operators to share the last part of their fibre network, under the control of ARCEP.
Since the beginning of the year, ARCEP has initiated technical work with the operators on the means of sharing and the localisation of the adequate points of mutualisation.
On one hand, these points of mutualisation have to be close enough to the houses to give incentive to infrastructure competition. On the other hand, it is not sure that sharing of in-house wiring and access to ducts alone will be sufficient to guarantee sustainable competition especially in low-density area.
Role of municipalities
Finally, I would like to speak about another major player in this new investment cycle: the local authorities. To encourage the deployment of FttH networks, municipalities can indeed play a key role :
- first, as administrator of the public domain, they are in charge of the public area management and of granting rights of ways : they can provide local information, coordinate work, authorise lightweight civil engineering, facilitate negotiations with property owners ;
- secondly, they can lay extra-capacity ducts and encourage their sharing ;
- finally, they can also deploy dark fibre ;
Local authorities are likely to facilitate and foster the rollouts of NGN access networks, and some of them have already moved to accelerate the deployment of new fibre local loops on their territory.
However, these actions have to be done cautiously. The European Commission has not yet defined its rules regarding public intervention in fibre access networks, and the actual jurisprudence is too light to help. The acceptable balance between regional development concerns and necessity of maintaining private investment incentive is still uncertain.
I thank you for your attention.