Publication of the report to the Senate on France Telecom local copper loop costs, and changes during the transition from copper to fibre

Paris, 1st December 2011

ARCEP has just submitted a report to the Senate on France Telecom local copper loop costs, and changes during the transition from copper to fibre. This report, which comes in response to a request from the Senate Committee on Economic affairs, following a report published by Senator Maurey on 6th July 2011, relates to “access conditions on the copper network and provisions for network renewal”.

ARCEP has based its report on an in-depth analysis of stakeholders’ responses to the public consultation on costing methodologies, which was held in the first half of 2011, and on the multilateral work performed with the operators this past autumn on the transition from copper to fibre.

First, it appears that the criticism from certain players that tended to confirm the existence of a “provision for renewal” do not apply to the method chosen by ARCEP for setting the costs of France Telecom local copper loop assets. This method, which is based on economic amortisation and actual costs, is in line with the ruling from the Court of Justice of the European Union against ARCOR and European Commission recommendations, in addition to having enabled the development of very strong competition in the French broadband market since 2005, with alternative operators in sound financial health and among the lowest prices in the world for innovative and content-rich offerings.

Second, to ease the transition from copper to fibre, ARCEP deemed it necessary to take into consideration not only the increased lifespan of the civil engineering – resulting from its reuse for the deployment of optical fibre networks – and of its physical longevity but also, on the contrary, the accelerate obsolescence of copper cables which are due to be replaced by optical fibre ones. These technical measures are currently the subject of a public consultation that will run until 15th December. Before the end of December, ARCEP will issue a decision that specifies these amortisation periods. After which, depending on the ARCEP decision and the provisional cost elements which must be audited, France Telecom will then be required to publish the new tariffs for its reference offers.

By maintaining the actual cost methodology, and by making the necessary technical adjustments that will enable a smooth transition from copper to fibre and help avoid undesirable effects, the Authority is strengthening a framework that is favourable to optical fibre rollouts, providing the market with positive incentives and giving players the clarity and stability they need for their future investments.