ART publishes a summary of the consultation on the development of competition on the local market

29 October 1999

On 1st April 1999, Autorité de régulation des télécommunications (ART) launched a major public consultation on the development of competition on the local market in France. This consultation, which closed in early June aimed to determine the issues related to the competition on the local market and to gather the opinions of players on the various options:

- access to the copper pair (option 1): in this option, in exchange for remuneration, France Telecom provides the copper wires on which third party operators install their transmission equipment. This option allows operators to define the services they offer their clients, both in terms of speed and quality, and in the areas of deployment.

- access to a virtual permanent circuit (option 3): France Telecom installs and operates the transmission equipment and concentrates traffic to delivery points where third party operators collect it. This option can be available only in areas where France Telecom has deployed its own services. In particular, it would be accessible, for high-speed Internet access, only in areas already opened by France Telecom.

- access to bitstream (option 2): this option is a combination of option 1 and option 3. In particular, France Telecom installs part of the necessary transmission equipment, the new entrant provides concentration and routing. Like option 3, it would be available only in areas where France Telecom is already present for the type of service.

- resale of local traffic (option 4): France Telecom sells local traffic to another operator, allowing the operator to offer its client an integrated service offer including local calls. The third party operator provides the commercial services for this traffic and is free only to set the prices it will charge its clients. However, it does not define the service since it simply resells France Telecom's service.

- resale of subscriptions (option 5): this option is an extension of the previous one: it also includes the telephone subscription.

More details of these options are included in the annex.

ART received 37 responses, most from operators and equipment manufacturers (cf. list in annex).

Competition on the local loop and the issues

All contributors, except for France Telecom, share the observation made in ART's consultation document, that competition has developed little on the local loop in France. Almost all of them consider that the issues concerning development of competition on the local loop concern primarily high-speed services for which there is growing demand both from business and residential customers.

These contributors consider that the need for development of competition on high-speed services has grown recently due to the appearance of xDSL technologies on copper pairs. In this context, an expansion of access offers for the end client by implementing one or more of the options described in the document is, generally, considered essential.

The options

The vast majority of contributors favour the implementation of one of the first three options described in the consultation document (access either to the bare copper pair, to bitstream, or to a permanent virtual circuit). Only five contributors oppose regulated access to the incumbent's local loop. Two others emphasize that the conditions for implementation should not slow the development of alternative infrastructures; the need to consider other means of access—wireless local loop, constellations of satellites—has been mentioned by several players, especially equipment manufacturers.

Many contributors recommend remaining open to several solutions in order to allow as much flexibility as possible, given the different needs of different players.

When the contributors rank their choices, the most frequently favoured option is access to the copper pair (option 1). It is considered the only one able to guarantee true independence of the new entrant in defining its services.

Access to a permanent virtual circuit (option 3) is generally seen as a desirable—or even indispensable—addition to this first option, either to allow a new entrant to more quickly offer its service until the copper pair is unbundled—which takes longer to implement—either to give access to certain types of lines which are difficult to access, or to complete the geographic coverage of its offer. However, a few contributors recommend using option 3 as the main solution, because they believe that options 1 and 2 would benefit only a limited number of players and would lead to the creation of oligopolies.

Access to bitstream (option 2) is rejected by almost all players. It is considered to offer no or few advantages over option 1, but to present greater implementation difficulties. Its realisation appears unrealistic in the short and medium term.

The resale of local traffic and subscriptions (options 4 and 5) are generally considered as temporary measures. A few contributors recommend limiting their availability in time and controlling their use in order to avoid skimming practices by certain players who would not have to invest in local infrastructures.


The contributors recommend a pragmatic approach, by not considering implementation problem resolution as a prerequisite to an agreement in principle, for option 1.

Thus, while acknowledging the difficulties related to co-location and the coexistence of xDSL equipment which could be different on the same group of cables, in general, players think that these can be overcome through appropriate rules. The contributors insist on these operational procedures while emphasizing the need to make them as efficient as possible: using electronic channels, on-stop shopping, etc.

Concerning regulation, most contributors consider it indispensable that specific, sufficiently precise measures be adopted for unbundling to become effective. This point seems particularly crucial for sharing technical information on France Telecom's networks.

Concerning pricing principles, all contributors favour cost-oriented pricing. Opinions are divided on the types of costs to be included (LRAIC or historic costs) and on geographic averaging of tariffs.

Based on the comments it has received, ART will initially and in the short term, seek a solution which will allow new entrants to offer high-speed xDSL services under conditions equivalent to those under which France Telecom was authorised to develop its own services. ART will also devise a timetable for defining and preparing for the implementation of a second stage corresponding to the expectations of the market, as they were expressed in the public consultation.

List of contributors

9 Telecom Réseau
Belgacom France
Bouygues Telecom
France Telecom
Level 3
Lyonnaise Communications
Tele 2 France

Matra Nortel Communications

Grolier Interactive Europe

Conseil Régional de la Réunion
Force Ouvrière
American Chamber of Commerce
Renaissance Advisors Limited

Philippe Galteau
Christophe Drouot
Jean-Michel Duniau
Kalid Hassani

The five options

Five options were identified in ART's consultation document.

Two of them are related to resale: the resale of local traffic and the resale of subscriptions (options 4 and 5 respectively). Three others offer unbundled access to the incumbent operator's local loop. This access can be:

- physical unbundling of the local loop where the new entrant operator has direct access to the copper pair: unbundling of the copper pair (option 1)

- access to transmission capacities: access to bitstream and access to a permanent virtual circuit (options 2 and 3 respectively)

These options are described below.

1. Unbundling of the copper pair (option 1)

This option consists of providing bare copper pairs to an entrant operator, which installs its own transmission equipment on these pairs. The new entrant operator is co-located on the premises of the operator owning the local loops. To this end, a co-location offer (physical, virtual or distant) must also be defined.

In this option, except for the local loop itself, the entrant operator controls all elements it needs to provide the service. This option can be used to provide high-speed services, but also low-speed services.

Such an option is already used in some countries, such as Germany for low speeds and the United States for all types of services (high and low speed). However, their implementation is relatively recent.

This first option supposes that new entrants deploy a horizontal network to the distribution frame.

It also requires that the incumbent operator and entrant operators define operational methods to:

- qualify the copper pairs for which unbundling is requested

- manage interferences related transport and distribution cable loads if xDSL technologies are used, in accordance with the standards established by the players

- operate and maintain cables (and in particular procedures for line disruptions taking into account the shared responsibility of the operators)

Finally, it requires, in order to determine the sharing of responsibility between the incumbent operator and new entrants, that the "unbundlable" copper pair be defined, and in particular its physical limits (network interface between the entrant operator and the incumbent operator and user interface between the client and the entrant operator).

2. Access to bitstream (option 2)

In this option, the incumbent operator offers the new operator access to bitstream on its local loop. End xDSL equipment is installed and operated by the incumbent operator, which manages bandwidth. A co-location offer in the local centres must also be defined for the operators entrants' high-speed multiplexors (SDH, ATM, IP).

The implementation of a similar solution is currently being studied in the United States.

Each piece of xDSL equipment is dedicated to a new entrant, and low and high bandwidth might be shared with the incumbent operator.

There are three possible methods within this option: a client of the new operator can remain a client of the incumbent operator for telephony services, choose to become a client of the new operator for all services (telephony and high speed), choose to become a client of the new operator for telephone service and client of the incumbent operator for high-speed services. In each of these cases, access to high speed is permanent. The reality of a possible separation of telephony and data flows between the two operators could be a source of conflict with each party wanting control of the separating filter, an element that is indispensable to controlling service quality.

This option limits competition between offers because the incumbent operator has greater control of access to the subscriber (in particular in terms of bitstream, etc.). It also requires that the new entrants deploy a horizontal network.

3. Access to a permanent virtual circuit (option 3)

This option is defined as the provision of high-speed data transport between the subscriber and the operator's point of presence, since a virtual circuit is assigned to each high-speed connection. The local loop operator delivers the multiplexed data of the new operator's clients to one of its points of presence. This option is being implemented in certain countries of the European Union.

Like the bitstream access option, a client of the new operator can remain a client of the local loop operator for voice telephony services or choose to be a client of the new operator for all services (telephony and high speed).

This solution eliminates co-locating new entrant operators on the local loop operator's premises. However, the conditions under which it is available (connection interfaces, transfer method, bitstreams, sites to which traffic is delivered, size of the area served by a site, etc.) must be stipulated.

Like option 2 and for the same reasons, this option limits competition between offers more than option 1.

This option does not require a priori horizontal deployment because traffic is delivered grouped to delivery points. Minimum required deployment to benefit from this offers depends on the definition of these delivery points.

4. The resale of local traffic (option 4)

For an incumbent operator, this option consists in selling local traffic to another operator, in order to allow the buying operator to provide its clients with a complete basket of services. The new entrant operator provides the commercial services related to this traffic and has total freedom in setting the prices it will charge its clients.

There is no real exchange of traffic between networks. The incumbent operator is responsible for routing calls, but bills this service to the entrant operator, rather than to the user of the line.

In such an option, which can be considered for telephone or high-speed traffic, the entrant operator does not control the definition of the service because it sells the incumbent operator's service.

5. The resale of subscriptions (option 5)

This option is an extension of the local traffic resale option. It corresponds to outsourcing as part of a sales contract, by the incumbent operator, of a number of subscriber management activities. The entrant operator covers the commercial services for the client.