ARCEP is prolonging its public consultation on the economic conditions governing access to France Telecom civil engineering. A draft decision that results in a fair distribution of costs nationwide, regardless of the population density in the area in question, whose outcome is beneficial to sparsely populated regions.

Paris, 12 May 2010

Following a first period of consultation, from 17 December 2009 to 15 February 2010, ARCEP published its draft decision on the economic terms governing access to France Telecom local loop civil engineering ducts on 20 April 2010. This document is currently the subject of a public consultation that will last one month.

To help clarify and deepen this period of consultation, ARCEP is, first, providing players today with a proposal of a simplified pricing model and, second, extending the consultation to 27 May 2010.

Furthermore, following the press release issued by the Association of cities and local authorities for electronic communications and audiovisual media, AVICCA (Association des Villes et Collectivités pour les Communications électroniques et l'Audiovisuel), on 21 April 2010, the Authority wanted to provide a more detailed account of the effect that the measures proposed in its draft decision would have in terms of ultra-fast broadband coverage across the country. These elements are also being made public.

Annex:

The Authority's response to AVICCA

Paris, 7 May 2010

Dear Mr. President,

In a press release dated 21 April 2010, you expressed AVICCA's position on a draft decision that defines the economic terms governing access to France Telecom local loop civil engineering ducts, which ARCEP submitted to public consultation on 20 April.

In your press release you state that "the regulator proposes that cost be proportionate to volume, and therefore to the length of duct occupied. Naturally, the more sparsely populated an area is, the longer the cable will be". Which led you to pose the following question: "Does this mean that ultra-fast broadband will be twice as costly to deploy in sparsely populated areas than in cities?"

In other words, your understanding is that, unlike the price-setting method adopted for the copper network, the draft decision does not allow for tariff balancing between densely and less densely populated parts of the country, which could result in more costly rollouts for less densely populated areas when compared to densely populated areas.

Without bringing prejudice to the amendments that may result from the ongoing public consultation, I would like to provide you with certain factual details today to avoid any misunderstanding on the objectives, content and effects of this draft decision. Indeed, I believe that, sharing as we do the goal of achieving the harmonious development of ultra-fast broadband across the country in the coming years, ARCEP has, contrary to the assertion, consistently worked to take full account of regional interests.

As a result, ARCEP proposes a solution that combines several technical parameters to be able to reach a balanced decision, particularly with respect to the dual objective of effective competition and nationwide ultra-fast broadband coverage.

While it may at first glance appear to offer simple volume-based pricing, the system planned for in the draft decision is in reality based on cost allocation in three distinct stages, each of which meets a complementary set of objectives:

As you can see, the combination of these different mechanisms will result, at the very least, in a homogenous distribution of costs nationwide, regardless of the population density in the area in question and, in all likelihood, in a below-average cost in more sparsely populated areas once several operators have deployed their own networks in very densely populated areas. The draft decision that was submitted to public consultation is therefore one that will have a positive effect on the more sparsely populated parts of the country.

This letter, which is in response to your press release of 21 April 2010 will, like the press release, be made public.

My colleagues and I would be pleased to meet with you to discuss this topic, and any other issue for which ARCEP is responsible and which is of interest to your association.

Sincere regards,