Paris, 30 November 2005
ARCEP is submitting its analysis of the leased line market for public consultation for a period of five weeks. Leased lines (which are the high-speed “pipes” by which firms connect their sites) represent more than €2 billion in annual sales. ARCEP may be required to impose obligations on France Telecom in order to allow these markets to develop, by facilitating the exercise of fair competition among all players, and to improve high-speed service for businesses by encouraging all operators to invest in optical fibre infrastructures.
- Technical definitions
Leased lines are electronic communications capacities connecting several points of an operator's network which are reserved for the use of a single end user, whether a company or an operator. There are two types of leased lines: “traditional” ETSI standardised leased lines (analogue and digital), and alternative interface capacity services (Ethernet, ATM interface, etc).
- Market delimitation
The market analysis covers markets 7 (“provision of leased lines to end users”), 13 (“wholesale provision of leased line terminal segments”) and 14 (“wholesale provision of trunk segments”), of the European Commission’s “relevant markets” recommendation of 11 February 2003.
Our analysis of retail product substitutability led us to include “traditional” leased lines and alternative interface capacity services in the same market, regardless of their speed (from a few kbit/s to several hundred Mbit/s). On the other hand, we did not include in the market more integrated services with high added value, such as virtual private IP networks, or less sophisticated services such as equipment rental.
Two services were identified for wholesale markets: the link between a client site and the operator’s backbone network, called the “terminal segment”, and the links between network nodes, called “trunks”. In this second category, we distinguish between “intra-regional” circuits (e.g. between Paris and Lyon) and “inter-regional” circuits (e.g. between Guadeloupe and Metropolitan France).
From a geographic viewpoint, the markets (except for the trunk) cover Metropolitan regions, overseas departments and the territorial unit of Mayotte.
- Operator with significant market power
The analysis concluded that France Telecom has significant power on the retail capacity services market and on the wholesale terminal segment and trunk markets.
- Obligations to remedy competition problems
ARCEP continues to work toward two major objectives:
- Facilitating the rapid development of competition by allowing alternative operators to replicate France Telecom’s retail services.
ARCEP plans to require France Telecom to propose wholesale offers suited to the replication of its own retail offers. In order to fulfil this objective, ARCEP is required to impose on certain wholesale markets obligations of access, transparency, non-discrimination, pricing controls (in some cases), and accounting obligations. ARCEP expects to require France Telecom to publish reference offers for the most critical services, and to publish service quality indicators for these offers.
- Promoting long-term competition and encouraging the deployment of fibre optic infrastructures, by both the incumbent and alternative operators.
To this end, ARCEP is not imposing a cost-orientation obligation for wholesale services on trunk segments of over 10 Mbit/s (optical fibre). As well, regulation of the retail market will be lighter than under the former framework, and will aim to avoid shutting out alternative operators. Therefore, ARCEP wishes to raise the current obligation of prior notification of all tariffs, and to replace it with three lighter obligations : obligation of non-discrimination, obligation to not practice predatory pricing and obligation of cost accounting.
As for the minimum set of leased lines, ARCEP is not responsible for choosing obligations; this depends directly on the European and national regulatory framework. In application of the Post and Electronic Communications Code (articles D. 369 et seq.), obligations of transparency, non discrimination, cost accounting and cost-oriented tariffs will be imposed on the four products identified by the Code.
Once this public consultation has been closed, ARCEP will examine all the comments it receives. It will then submit an amended version to the Conseil de concurrence (France’s competition authority) for its opinion. After considering the opinion of the Conseil de concurrence, ARCEP will submit its draft decision on the analysis of leased lines markets for examination by the European Commission and other EU regulators. Finally, after considering the observations received, ARCEP will adopt its decision sometime in 2006.
Linked documents
fixe(@)arcep.fr 
before 6 January 2006. The draft market analysis (pdf - 1.12MB) (pdf - 1,1 Mo)