ARCEP submits a report on the application and impact of Article 17 of the Law on the development of competition for the benefit of consumers (aka the Chatel Act) aimed at improving electronic communications retail market fluidity.

Paris, 30 July 2010

Article 17 of Law No. 2008-3, dated 3 January 2008, on the development of competition for the benefit of consumers, commonly referred to as the Chatel Act, introduced Articles L. 121-84-6 and L. 121-84-7 into the Consumer code. The aim of these articles is to reduce certain impediments to switching operators and to improve the liquidity of electronic communications retail markets by focusing on two leverage points in particular: the length of consumers' contractual commitments with their operators and cancellation fees.

Two years after the Chatel Act came into force, and in accordance with the law, based on the data at its disposal, ARCEP has produced an initial status report on the application of the Act and the impact that its provisions have had on retail markets.

On the mobile telephony market

Operators have only partially implemented the provisions contained in the Chatel Act, and the methods used for doing have drawn some criticism. The Authority also notes that competition remains limited, with the majority of consumers still bound by long contractual commitments to their operators.

On the fixed telephony and broadband Internet access market

As the law did not introduce any changes to cancellation fees, it has had little impact on the liquidity of the retail market. It is nevertheless more liquid than the mobile market, although the introduction of bundled fixed and mobile offers could create more rigid retail markets.

Based on the findings of this progress report, ARCEP is proposing several measures that would contribute fully to meeting the legislator's objectives

* Listing cancellation fees on subscribers' invoices

ARCEP recommends that customers' monthly invoice include the fees they will be charged if they cancel their account (possibly before their contract expires) on the date the invoice was issued.

If operators do not apply this measure voluntarily, Article L.121-84-7 of the Consumer code could be amended to enforce it.

* Supervising the terms governing contract cancellation before the end of the twelfth month

In an effort to harmonise operators' practices, ARCEP recommends that operators allow consumers to cancel their subscription ahead of time, before the end of the twelfth month of their contract, in exchange, at the very most, for payment of the outstanding balance up to the end of the twelfth month of the contractual commitment, plus one quarter of the outstanding balance for the remaining twelve months.

If operators do not apply this measure voluntarily, Article L.121-84-6 of the Consumer code could be amended to enforce it.

* Indicate the procedure and code for unlocking a mobile handset on invoices

ARCEP recommends that the code for unlocking mobile handsets be indicated on customers' invoices, once they have used their flat rate for six months after purchase. The associated procedure and steps to follow should also be made easily accessible - and clearly understandable - to subscribers on both the Internet and by phone, and through the operator's retail network.

The Authority notes that, instead of implementing such a measure, operators could opt to voluntarily abandon their handset locking policies, thereby freeing themselves of any obligations associated with unlocking.

If operators do not apply this measure voluntarily, the Consumer code could be amended to include it.

* Assimilate "deferred service activation fees" with cancellation fees

To improve transparency on "deferred service activation fees" - from the start of the contract and during its lifespan should the amount of the fees change in any way - which are generally charged when a contract is cancelled, ARCEP recommends that these fees be included clearly in the scope of application of Article L. 121-84-7 of the Consumer code by assimilating them with cancellation fees.

Implementing such a measure will require an amendment to Article L. 121-84-7 of the Consumer code.

In addition to the measures proposed in this report, ARCEP will be publishing a set of actions and proposals by the end of 2010 aimed at improving relations between operators and consumers.

 

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