MuniWireless

With the prospect of two new appointees to ARCEP (the French regulator) to replace Paul Champsaur and Gabrielle Gauthey, both of whom were instrumental in bringing more competition into the French telecommunications market, a war of words has erupted between ARCEP and the French operators, notably, France Telecom.

During the tenure of Paul Champsaur, who has been president of ARCEP for the last six years and is retiring at the end of the year, France has seen a significant increase in the number of DSL connections. In an interview for the French Magazine Challenge, Champsaur says: “Because we have regulated ADSL, forcing France Télécom to open its lines to other service providers and encouraging competitors to invest in their own networks, France now has the best price offers in Europe for high speed access. The French are the first in the world using voice and television over the Internet.”

But where is the fourth mobile operator?

Champsaur pointed out that the cellular market, which is not regulated in France, has turned into a “tight oligopoly “with three operators where no new entrant on the market is permitted. For many months now, a fourth mobile operator license has been available. The CEOs of the three existing mobile operators have insisted that a fourth mobile operator would be terrible for the French market. Indeed, the existing operators are actively lobbying to prevent Iliad from obtaining the fourth license. Martin Bouygues, the CEO of Bouygues Telecom, says: “If the government authorizes a new entrant to do ‘ultra low cost’ in mobile, it could result in a price war that would cost 10,000 to 30,000 jobs.” Nothing like a bit of fear-mongering from a telecom operator to cheer us up during the holidays.

Intense lobbying for ARCEP’s Presidency

In a recent speech to analysts at Société Générale, Didier Lombard, CEO of France Telecom said rather confidently: “The fourth mobile operator! This is over.”

He explained that the next President of ARCEP, who has not been designated yet “would be more operator friendly than the previous one”. It looks like France Télécom already has its own candidate for ARCEP’s Presidency — Claude Mallet — “a patriot who is more concerned about helping national champions than boosting competition”. The quote was reported in “Le Canard Enchainé, a satirical newspaper in France. It looks like Lombard and Mallet (who was General Secretary of Defense) are old friends.

In his interview, Paul Champsaur replies: “A fourth operator would put pressure on the competition in this field. To “fill” its network, the new operator would be encouraged to be more open to MVNOs. Orange, Bouygues Télécom and SFR are not very open to facilitating MVNO activity on their networks. In this period of economic crisis, when governments are facilitating private investments, why let this frequency go unused?”

ARCEP accuses France Telecom of blocking competition

With regard to the Digital Plan in France, which was launched recently by the Sarkozy administration to push fiber and very high speed access to the home, it looks like nothing has moved ahead since it was launched last quarter. Champsaur says that France Telecom is giving its competitors a wholesale offer allowing them to install their fiber in its ducts but with a twist:

“It is in the terminal part (in the buildings) that France Telecom is blocking competitors because it wants to impose its own technology (GPON). This may be a handicap to others like Iliad-Free, which has chosen a different solution (Point to Point Active Ethernet). ARCEP proposed to test a solution at a low additional cost to put more fiber in the buildings. This would allow each one to implement his own technical solution.  Since last summer, I’m still wondering why France Telecom is blocking at this point?”

Champsaur acknowledges that all operators are now actively deploying fiber in the ground, but the vertical (terminal part in the buildings) issue has been a sticking point, delaying real deployments.

France Telecom denies it is blocking progress

In a press release, issued the same day of the Champsaur interview, France Télécom acknowledges the problem and says it has already signed an agreement with SFR last September. “Iliad-Free has refused all proposals. Free wants the deployment of a multifiber solution which has not yet been tested . . . the position of the regulator (ARCEP) doesn’t give the operators the needed legal clarity to decide on their investments.”

Locking the market through technology

Our feeling is that France Télécom is relying on its historical ability to get into the buildings and install fiber to create fiber local loop which it controls through the technology. A recent law called “Loi de Modernisation de l’Economie” passed in France last July 2008 requires that this fiber local loop into the building be installed at no cost to the occupants and should be shared between operators to give the users freedom of choice and the ability to change providers. However, the order detailing how this is to be effectuated has not yet been passed.

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