Operators' turnover grows by 13% and volumes by 28% in one year

Paris, 17 December 2001

<font size="3">France's Telecommunications Regulatory Authority (ART) issued an opinion on 16 November in relation to the dispute between Liberty Surf and France Télécom, which mainly concerns the right of an Internet access provider (IAP) to choose the ADSL modems that it wishes to distribute to its customers.</font>


  • <font size="3">The subject of the case</font>


<font size="3">Liberty Surf, a telecommunications operator, signed an IP/ADSL contract with France Télécom that authorises it to recel Netissimo, France Télécom's mass-market offer. Under this contract, Liberty Surf may only offer customers ADSL modems that have been pre-selected by France Télécom.</font>


<font size="3">Liberty Surf wanted to offer its customers ADSL modems other than those produced by the two manufacturers chosen by France Télécom, in order to differentiate its commercial offering from that of the incumbent operator.</font>


<font size="3">According to France Télécom, these modems should be considered as transmission equipment forming an integral part of its network, until procedures for standardising ADSL modems have been completed, that is until 2003. France Télécom therefore believes that it is entitled to select the ADSL modems that can be connected to the network.</font>


<font size="3">Liberty Surf requested on the contrary that the network termination point, currently defined in France Télécom's technical interface specifications as being situated after the ADSL modem, be moved to the telephone jack. In this way, the modem would become an item of terminal equipment like a traditional telephone, and users and access providers would be free to choose their equipment.</font>


  • <font size="3">ART's decision</font>


<font size="3">ART deemed it necessary to conduct an analysis of the current market for residential Internet services:</font>


  • <font size="3"><u>the transmission of data originating from residential ADSL users</u>: France Télécom provides the great majority of these services via its ATM network. Other operators' market share is either nonexistent or marginal;</font>

  • <font size="3"><u>the Internet access market</u>: These services are provided by IAPs. Wanadoo dominates the residential ADSL market. </font>


<font size="3">As regards this dispute, ART deemed that, although the standardisation of ADSL protocol was not advanced enough to immediately define the telephone jack as the network termination point, Liberty Surf's request was nonetheless a reasonable one. </font>


<font size="3">ART therefore is asking France Télécom to guarantee a minimal quality of service for modems that it would not previously have recognised and to put in place an open, transparent procedure for testing and referencing modems offered by IAPs.</font>


  1. <font size="3">Concerning ADSL modems</font>


<font size="3">ART decided that France Télécom should offer Liberty Surf an amendment to the IP/ADSL contract within three months of notification of the decision. This amendment would expressly authorise Liberty Surf to connect modems that are not recognised by France Télécom to the incumbent's network, on condition that they comply with the regulations in force, that is, that they have been assessed for conformity with essential criteria and that they bear the CE mark. </font>


<font size="3">In addition, the incumbent should offer Liberty Surf a second amendment defining a procedure that is stable, transparent, non-discriminatory, <em>inter partes</em> and explicit, to allow Liberty Surf to submit modems of its choosing to the testing procedure defined by France Télécom. The modems selected at the end of this procedure should be added to the list of France Télécom-recognised modems. </font>


<font size="3">2 . Concerning the network termination point</font>


<font size="3">ART feels that it is important to establish a standardised framework in which users can enjoy the widest choice of terminal equipment and be sure of interoperability.</font>


<font size="3">ART will initiate discussions with players concerning the definition of the termination point and the development of ADSL interfaces as soon as possible.</font>

  • <font size="3">A decision made against a backdrop of a fast growing market</font>

<font size="3">ART hopes that this decision, made in the context of a market that is in rapid technological development, will promote competition and boost the high-speed Internet sector in France.</font>

<font size="3">The opening of the modem market has already led to greater diversification of distribution channels for "subscription and ADSL modem packages", which IAPs are starting to sell in supermarkets.</font>

<font size="3">Eventually, the sale of computers with pre-installed ADSL modems – many computers are already being sold with traditional modems built-in – should contribute to make high speed Internet access commonplace in France.</font>