ARCEP begins the third cycle of analysis for fixed telephony markets by launching the first public consultation on its "Assessment and outlook" and its market analysis document.

Paris, 23 February 2011

Today ARCEP is launching a public consultation on its analysis of the fixed telephony market which will run until 23 March. In early summer, the Authority will adopt its decision concerning the years 2011 to 2014, coming to replace Decision No. 2008-0896 which sets the current regulatory framework and which will be in effect until July.

  • Scope of the fixed telephony market analysis

Fixed telephony includes wholesale and retail access to the telephone service, and telephone communications at a fixed location.
Regulations governing retail telephone calling markets and the wholesale intra- and inter-regional transit market were lifted in stages during the first round of market analysis (2005-2008) and in the early part of the second cycle (2008-2011).

The wholesale offers that will be regulated as a result of this new market analysis will be wholesale line rental (VGAST), carrier selection, call origination at a fixed location and call termination at a fixed location.
ARCEP is therefore continuing its efforts by focusing on the economic bottlenecks of interconnection and access, and particularly on call origination and termination, and plans to continue to move in the direction of symmetrical regulation as the fixed telephony market is evolving towards a state of effective competition.

  • Main changes compared to the market analysis decision that is still in effect

The main issues in this third cycle of market analysis concern call termination and call origination at a fixed location.

On the matter of call termination, the implementation of the European Commission recommendation of 7 May 2009 will result in a completely symmetrical pricing scheme being imposed on all operators, and in tariffs coming in line with the long-run incremental costs of a generic efficient operator (pure NGN), which will likely lead to a significant decrease compared to current prices.

On the matter of call origination, the Authority has observed disparate development trajectories for the various components that make up the overall call origination service: on the one hand carrier selection and narrowband Internet access and, on the other, call origination for value-added service (VAS) numbers.

Call origination for carrier selection and narrowband Internet access are indeed on the decline, and France Telecom continues to enjoy a structural monopoly over these services. On the flipside, calling traffic to VAS numbers originating on alternative operators' local loops is increasing steadily.

ARCEP has therefore observed that call origination to VAS numbers could soon account for the majority of call origination traffic. Moreover, the two types of call origination play a role in market competition and belong to very different value chains.

As a result, the Authority believes it would be desirable to differentiate the form of tariff regulation governing the different components of call regulation, and is proposing:

o to maintain the obligation to charge cost-oriented prices for carrier selection call origination and for narrowband Internet access provided by France Telecom;
o to ban France Telecom from charging excessive prices on call origination services to VAS numbers by imposing multi-annual tariff supervision, as part of a longer-term transition towards a system of symmetrical regulation of these services for all operators, which could be introduced in the fourth cycle (2014 - 2017).

The Authority is also taking this opportunity to issue a reminder that call origination services to all operators' VAS numbers, including France Telecom, are governed by symmetrical regulation introduced by Decision No. 2007-0213, which stipulates that "all operators that control access to end users for routing calls must grant all reasonable requests from operators to make these numbers accessible to these users. The operator must grant these requests under objective, transparent and non-discriminatory conditions".

Based on its analysis, ARCEP also plans on prolonging the other obligations that are currently imposed on France Telecom in accordance with Decision No. 2008-0896.

  • Timetable

After having received all of the responses to this first public consultation, the Authority will submit its revised analysis to the Competition Authority for commentary, and will launch a second public consultation.

Once it has received the opinion of the Competition Authority and the second set of feedback from the sector's stakeholders, ARCEP will then submit a draft decision to the European Commission and to national regulatory authorities in the other European Union Member States. This draft decision will also be subject to third and final public consultation in June. It will be during this final public consultation that the details of the obligations will be specified, and particularly the parameters of the multi-annual tariff supervision scheme (call origination for France Telecom VAS numbers and call termination for all other operators).

Once this final stage has been completed, ARCEP will adopt its final decision.

Linked documents

Smiley The public consultation (pdf - 2.11 Mo)(pdf - ) Smiley