ART takes a position on France Telecom's offer

6 April 2001

In September 2000, some telecoms players called on Autorité de régulation des télécommunications (ART) to demand flat rate interconnection for Internet traffic. The pricing of this type of interconnection depends neither on time nor on the volumes of traffic on any given link, but is established on a flat rate basis. The technical means used are basically the same as for classic interconnection, which is priced by the minute.

ART immediately initiated discussions with operators, Internet service providers (ISPs), content publishers and consumer protection associations. It published guidelines on its Web site summarizing the discussions and defining principles to guide players in their negotiations. Following these discussions, in February 2001, France Telecom submitted its initial flat rate interconnection offer for its local switches.

ART recently informed France Telecom of its position on this offer:

- From a technical viewpoint, the methods proposed are satisfactory, given the clarifications provided by France Telecom to the operators in a working group formed by ART, and its assurances on the time required to implement the offer, which will be operational by 1st September 2001

- From a pricing point of view, France Telecom initially suggested a price of FRF 165,000 per 2-Mbit/s access per year. Following discussions between ART and France Telecom, a price of FRF 145,000 was agreed upon.

Based on the data provided by operators and ISPs, ART considers that this offer will allow these players to propose unmetered Internet access offers at prices which should stimulate Internet use with the general public and which are economically viable for the resellers. These prices could be in the FRF 180/month range.

ART notes that, unlike ADSL, cable and wireless local loop technologies, flat rate interconnection cannot avoid the technical constraints related to the use of the switched telephone network, which means that users cannot remain connected for unlimited amounts of time. However, it is a new pricing system which might encourage the creation of pricing formulas which could favour the increased use of Internet by the general public, and thus contribute to the advancement of the information society.