ART gives its opinion on pricing changes for IP/ADSL offers to encourage the development of competition on the high speed market

7 May 2002

As announced on 16^th April in its decision on improving the pricing and operating conditions for unbundling, Autorité de régulation des télécommunications (ART) ruled on changes to the prices of intermediate IP/ADSL offers by which France Telecom resells to Internet Service Providers (ISPs) ADSL lines (access) and traffic routing to connection points to the Internet circuit (collection).

Two separate requests for pricing approval for collection and for access were made for the two offers. These offers are inseparable in terms of the cost formation of players on the value chain, and as a result in determining the conditions of economic viability of their offers.

ART examined these requests in the spirit expressed in its press releases of 11 and 16 April, i.e. with a view to establish, in the best interest of consumers, the conditions for effective competition on every link of the chain : access to clients, data collection and transport by operators for ISPs and, upstream, competition among access providers.

In order to enable the ISPs to benefit from competition among intermediary offers from several operators, operators must be able to soon propose offers to ISPs which compete with France Telecom's IP/ADSL offers. This means that the pricing conditions of IP/ADSL offers ("option 5") will have to be adjusted and include the necessary changes to France Telecom's collection offer to operators ("option 3") in order to make available to operators genuine competition on the ISP offer segment. At the same time, it is clear that this necessary and urgent improvement to option 3 must safeguard the economic incentive for operators to progressively develop their investments in unbundling, once this is the only way they can control access to the client as far upstream as possible.

With this in mind, ART's proposes a staggering of prices in order to both significantly improve the situation of ISPs and to make competition possible for operators by taking advantage of the complementary nature of option 3 and unbundling:

• The monthly fees paid by ISPs to France Telecom could be lowered to around €30 per subscriber, which, given the converging estimates of the average effective bitrate used by each client, would represent a decrease of about 25% in ISPs' expenses

 

• The monthly fee paid by operators for France Telecom's option 3 should be lowered to about €23 per subscriber at the ADSL area and set at €19 at the subscriber's switch, an offer that has not been available to date

 

• Beyond the functional changes to option 3 announced by France Telecom and which would offer a solution to some of the problems found during first-quarter discussions led by ART, additional changes to the technical characteristics of this offer are needed in order to deal with the additional operating expenses it creates in its current configuration.

 

ART is committed to using all the resources at its disposal in order to determine and establish the conditions to ensure the continued development of high-speed Internet, as wished by all market players, on the bases of healthy competition. Therefore, it invites France Telecom to quickly submit for approval its complete IP/ADSL offers which take account of the necessary balances defined in ART's opinion. It also hopes that by the end of May, France Telecom will submit new changes to option 3 which should be consistent with the logic of ART's opinion. These changes must be established through commercial negotiations with operators and bilateral discussions with ART.

The development of high-speed Internet is a major economic and social issue for all consumers nationwide, whether professional or residential. The aim of the framework established by ART is to ensure that every player has the opportunity to participate fully and, on a durable basis, in this major effort both in France and Europe, under conditions that are both equitable and dynamic.