ART approval of France Télécom's reference interconnection catalogue for 2002 expected to create significant savings for consumers

30 November 2001

Autorité de régulation des télécommunications (ART) approved France Télécom's technical and pricing offer for 2002 today.

Interconnection: a market worth over FRF 6 bn

The interconnection catalogue sets wholesale prices between France Télécom, the operator with significant market power, and other operators. Thus, it is the main element used in regulating interconnection.

Since France Telecom has major influence on a telecommunications market, it is obliged to publish a technical and pricing offer-called a "catalogue"-which establishes the conditions under which competing operators can connect to its conveyance network.

In 2000, the interconnection market represented sales of over FRF 6 bn for France Télécom, with volumes of more than 35 billion minutes.

Every year, the creation of the catalogue requires long and in-depth discussions with all operators-primarily during interconnection committee meetings-and negotiations with France Télécom.

The following elements are new to this year's catalogue:

·Internet access: the flat-rate interconnection offer

The flat-rate Internet interconnection offer allows operators to pay for interconnection according to the number of accesses used, that is, regardless of the number of minutes transported. This offer now applies to all Internet connections.

ART had begun work in late 2000 on creating this flat-rate offer, which was applied by France Telecom on 1st September. This makes France one of the few European countries offering flat-rate interconnection.

Two types of flat-rate offers are available: operators can choose between an offer "with overflow", that is, when flat-rate circuits are all occupied, the operator can switch the additional traffic to other circuits which are billed on a time basis; and an offer "without overflow". This option is offered on the subscriber's switch available for interconnection.

- Prices for the offer without overflow have been set at €15,600 for local calls and at €30,000 for regional calls. Both options represent a 30% decline for operators in the price per minute for Internet traffic over 2001.

- The price for the offer with overflow, which already existed in 2001, has been set at €21,000 for local calls, representing a 5% price decrease. The overflow possibility is kept, temporarily, at the regional level, for €38,000, representing an 11% price decrease

These measures should make it possible to provide French surfers under economic conditions which are among the best in Europe for Internet access.

New decreases for voice services:-6% to -23.5%

Basic prices have dropped sharply with respect to 2001:
- -6% for local calls (local level interconnection). This traffic represents 30% of interconnection sales.
- -16% for regional calls (single transit). This traffic represents 65% of de interconnection sales.
- -23.5% for national calls (double transit). This traffic represents 5% of interconnection sales.

These prices make France one of the most advanced countries in Europe as far as basic prices are concerned.

Opening competition for local calls: eliminating the local exchange

In its decision dated 18 July 2001 approved by the Secretary of State, ART eliminated the sorting of local calls, thereby totally opening local calls (i.e. calls within département) to competition.

This is a particularly important market, which, in 2000, represented a volume of 109 billion minutes, out of a total of 149 billion minutes of calls made from fixed phones, for approximate sales of FRF 30 bn. Local calls generally represent 30% of a typical phone bill.

Subscribers using pre-selection who are offered its extension to local calls, must first be notified in two letters, to ensure that they are fully aware of their options. In this way, they retain full freedom of choice.

These measures, affecting flat-rate Internet connections and voice, will make access to the local market fore economical for France Télécom's competitors, thereby contributing to regional development.

Additional measures

Improvements have been made to the existing offer in order to meet the needs expressed by competing operators:

- A 30% decrease in the surcharge paid to France Télécom for calls made from public telephone boxes. This surcharge represents ¾ of payments made to FT by prepaid card operators.
This decrease should have a direct impact on the services rendered to consumers by prepaid card operators.

- A 50% decrease in the cost of "ad hoc" services: these are services billed by France Télécom to other operators for modifications to the interconnection architecture (e.g. technician intervention).

- A 30% decrease in the price for implementing pre-selection on a subscriber line.

- The third-party shared revenue billing offer will be extended to all price bracket-including those over € 0.337 per minute (including VAT)-upon publication of the decree adapting the ethics framework.

Consumers at the heart of the catalogue

The improvements made to this fifth interconnection catalogue, after negotiation with France Telecom, will:
- encourage the development of the information society, with major decreases in the cost of flat-rate interconnection for Internet services
- favour regional development, with declines in interconnection prices at the local level
- support competition, with better access for France Télécom's competitors at the local interconnection level, and more streamlined investments

Approval of this catalogue marks a new stage in the development of competition, under equitable conditions, of the French telecommunications market. It improves France's position in Europe.