ARCEP releases the report containing an initial assessment of local authorities’ involvement in the electronic communications sector, drafted for submission to the Parliament and the Government

Paris, 23 December 2008

In 2004, the Law introduced Article L. 1425-1 of the local and regional collectivity code, CGCT (Code Général des Collectivités Territoriales) which defines the terms under which local authorities can become involved in the electronic communications sector. They can establish infrastructure and network, and operate them by acting as a carriers’ carrier adhering to the principles of fair and free competition. Local authorities can be directly involved with end users only in cases where there is a proven lack of private initiative.

A great many local authorities have taken advantage of this original provision which allows for public involvement in a competitive sector, under certain conditions. Indeed, since the sector was opened up to competition in 1997, no operator, including the operator responsible for providing universal service, has been subject to any obligations in terms of broadband Internet coverage or regional optical fibre coverage.

Article 118 of the Law on modernising the economy stipulates that, “the Electronic Communications and Postal Regulatory Authority, ARCEP, shall submit a report to Parliament and to the Government by 31 December 2008 which provides an initial assessment of local authority involvement, pursuant to Article L. 1425-1 of the local and regional collectivity code, CGCT. This assessment will specify the impact of this involvement in terms of national coverage levels, the development of competition, prices, the services on offer, and the various legal formats this involvement has taken. It will also include an analysis of the different means that are capable of ensuring broadband Internet access for all, and the possible means of financing this access.”

To produce this report, ARCEP drew first on the shared experience of local authorities and telecom operators within the Public initiative networks committee, CRIP (Comité des réseaux d’initiative publique) which it has been chairing for the past four years. On 3 December 2008, the Authority held a seminar to achieve a close collaboration between the players in view of drafting this report, which also includes the main results of a study commissioned from the Sorbonne Economic Centre (Centre d’économie de la Sorbonne) and the firm AVISEM, for quantifying the impact of local authority involvement.

The report reveals that public authority involvement has been positive.
It has increased broadband coverage nationwide and provided ultra high-speed access to businesses. It has also had a significant impact on the development of competition, which has helped decrease prices.

On the whole, over the past four years, local authority involvement has had a gearing effect on private investment.
The positive outcome of this involvement derives in large part from having a legal framework adapted to the situation, from local authorities’ newfound expertise and from the dialogue between public and private sector players within the CRIP.

The report indicates that local authority involvement is expected to contribute to increasing the speed of regional services in the coming years.
The creation of a fund for helping to cover local authorities’ infrastructure and network study and investment costs would contribute to accelerating the move to higher speed services.


Public initiative networks: key figures

Investments

1.4 billion euros, of which more than 50% from private investment funds

 

Impact on unbundling

 

40% of central offices unbundled by relying on a public initiative network, covering 4.6 million lines.

30% of these central offices, representing 2 million lines, would not have been unbundled without government involvement.

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