Paris, 2nd September 2015In response to an application by Free, ARCEP has settled a dispute over the price charged for active equipment hosting solutions at Orange “NRA” subscriber connection points and “NRO” fibre concentration points (FCP), and for “LFO” fibre backhaul solutions when they are used to relay traffic from mobile base stations connected to telco networks over optical fibre.As mobile data traffic continues to increase at a tremendous rate, as the result of improvements being made to mobile access networks (and notably 4G rollouts), Free – which has relied heavily on local loop unbundling on the legacy copper network to connect its mobile base stations – has begun to invest in its own fibre rollouts to replace the copper pairs it has been leasing from Orange. To be able to pursue this strategy, Free will need to make a more efficient use of Orange hosting and backhaul solutions. Orange hosting and backhaul solutions already enable other operators to relay fixed network traffic from wireline local loops, both copper and optical fibre, as well as traffic from cellular sites which are connected to telco networks by unbundled copper pairs. In December 2014, the incumbent carrier introduced an offering for each of these solutions, and planned on charging an added fee to route traffic from alterative operators’ mobile base stations that were connected via fibre. Free challenged this added charge.The application from Free dovetails in every respect with the growing fixed-mobile convergence trend. Technological developments over the past ten years have resulted in fixed and mobile networks becoming less and less specialised, which has enabled their convergence. This process initially only concerned core networks. It is now progressively extending to backhaul and local loop links. Convergent operators consequently seek to exploit, when supplying mobile services, the most part of their fixed infrastructure, in particular backbone networks, as well as backhaul networks.
Schematic representation of a broadband and superfast broadband fixed and mobile electronic communications network architecture
Concerning the hosting solution
ARCEP concluded that Orange cannot charge Free an addition fee for this new application. Indeed, current regulation[1] stipulates that the prices charged for hosting solutions at Orange subscriber connection points and fibre concentration points to relay traffic from mobile base stations connected to a fibre network must be cost-based.
Concerning the backhaul solution
ARCEP concluded that Orange could not charge Free an additional fee when the latter was employing its “LFO” fibre backhaul solution to backhaul traffic from cellular towers connected to telco networks over optical fibre, in addition to fixed network traffic.
In particular, the Authority concluded, on the one hand, that charging different prices for passive fibre backhaul links depending on the use being made of them and the type of network connection being used by cellular sites, runs counter to the objectives of fair and effective competition that is beneficial to users, and of fostering innovation and technological neutrality and, on the other hand, that there was no evidence to justify Orange’s appropriation of the value derived from its competitor’s own investments.
The publication of this decision takes into consideration trade secrets that are protected by law.
[1] ARCEP Decision No. 2014-0733 of 26 June 2014 on the definition of the relevant wholesale market for physical network infrastructure access (including shared or fully unbundled access) at a fixed location, on the designation of an operator enjoying significant power in this market, and on market obligations imposed on this SMP operator as a result, also known as “market 4 analysis”.