ARCEP proposes to remove ex ante regulation from the wholesale market for broadband access offers delivered at the national level

Paris, 20th July 2006

ARCEP launches a public consultation on a draft decision which proposes to remove ex ante regulation from the wholesale market for broadband access offers delivered at the national level.

• Transitory remedies were imposed in 2005

In its decision dated July 28, 2005, ARCEP considered that the wholesale market for offers delivered at the national level required ex ante regulation despite the fact that it had not been included in the list of relevant markets defined by the European Commission.

ARCEP had observed a lack of visibility caused by Wanadoo being reintegrated in France Telecom, as well as limited development of wholesale offers delivered at a regional level.

Ex ante regulation aimed at discouraging and detecting anti-competitive behaviours of the incumbent operator. It was a lighter measure than the regulatory constraints which had weighed on France Telecom under the former framework. The measure was imposed for a period of one year.

ARCEP is now re-examining its analysis in compliance with the observations made by the European Commission at the time.

• Towards a removal of ex ante regulation on this market

ARCEP believes that the wholesale market for broadband access offers delivered at the national level no longer requires ex ante regulation.

Indeed, the characteristics of the market have significantly changed over the past year:

- Its weight compared to the broadband markets has decreased (14% of ADSL accesses at 31 December 2005, compared with 18% at 31 December 2004 and 33% a year earlier);
- Competition has improved over 2005: France Telecom controlled 40% of market share in value at the end of 2005, against 60% six months earlier. Competition should increase even further with the arrival of a new supplier in autumn 2006. This dynamic can be explained by the development of unbundling and access offers delivered at a regional level, which have removed the entry barriers on this market.

ARCEP also considers that the ex post regulation applied by France's competition authority, Conseil de la concurrence, will be sufficient to remedy any failure on the market. The upcoming application of cost accounting and account separation obligations imposed on France Telecom, as well as the cost models published by ARCEP, should help detecting any anti-competitive behaviour.

Therefore, ARCEP proposes to conclude that ex ante regulation is no longer relevant on this market and removing regulation.

• The implementation timetable

The document published today is submitted for public consultation until 4th September 2006.

Once it has considered all comments received, ARCEP will submit its analysis to the Conseil de la Concurrence for its opinion, then submit its draft decision to the European Commission and the national regulatory authorities (NRA) of other member states of the European Union.