Local loop

France Telecom publishes new reference offers that include regulated wholesale tariffs for 2012.

Paris, 23 January 2012

In the first half of 2011, ARCEP carried out a public consultation on annualized investment cost methodologies for France Telecom's copper local loop. It also performed technical work in preparation for its report to the Senate on these costs, and on changes resulting from the switch from copper to fibre.

In the wake of this consultation and this work, ARCEP considered that its method, which is based on economic amortisation of the incumbent carrier's actual costs, does not induce either excessive compensation or provision for replacement of fixed assets, and appears to comply with the ruling from the Court of Justice of the European Union against ARCOR and with European Commission recommendations. ARCEP nevertheless believes it necessary to take into account, first, the increased longevity of the civil engineering, which is an essential infrastructure that can be reused for the deployment of optical fibre networks, and second, on the contrary, the accelerated obsolescence of copper cables which are due to be replaced by fibre optic cables.

In its Decision No.2012-0007 of 17 January 2012, ARCEP amended its Decision No. 05-0834 of 15 December 2005, setting the cost assessment method to be used for the copper pair, by progressively shortening the amortization period of copper cables from 25 to 13 years while at the same time progressively increasing the amortization period of civil engineering assets from 40 to 50 years between now and 2021. This scheduled increase should result in a decrease in France Telecom's full unbundling tariffs after 2012.

Pursuant to the publication of this decision, and in accordance with its regulatory obligations, France Telecom amended the tariffs subject to cost-oriented pricing obligations imposed by market analysis decisions. Of particular note, the price of full unbundling has decreased from €9.00 to €8.80.

France Telecom has proposed bringing these changes quickly into effect, which would have positive repercussions for alternative operators:

- the price decreases will be applied retroactively, as of 1st January 2012;
- the remaining price changes will come into effect on 1st February 2012.

These changes to France Telecom's prices will translate into a decrease of more than €50 million in alternative operators' expenses in 2012 from the incumbent carrier's total income of €2.4 billion.