Local governments have significant impact on broadband competition in France

The French Parliament, in a recent law called “Modernisation de L’Economie” ordered ARCEP, the telecom regulator, to study the impact of “local collectives” (local government cooperatives) on broadband coverage and speed in France. ARCEP released the results of its study just before Christmas. It is considered to be legacy of Paul Champsaur (president of ARCEP) and Gabrielle Gauthey (ARCEP member), both of whom are leaving at the end of the year. During the last six years, Gauthey and Champsaur have been the key players within ARCEP, where they urged local governments to be more active in deploying communications infrastructure.

The increased participation of local collectives in infrastructure deployment began with the passage of a new law (the “code of territorial collectives” passed by the French Parliament in June 2004).  Article 1425-1 authorized them to finance, establish, exploit and delegate the exploitation of infrastructure networks for telecommunications. At the same time, France Telecom CEO Thierry Breton started pushing a plan called “Departements Innovants” to each of the 50 Department Assemblies (Conseil Général)  in France promising them high speed access with France Télécom in their territory, but also undermining or even preventing  any action from the local collectives. Many of them signed an agreement which was mostly kept secret.

The 1425-1 initiated a growing movement called “Réseaux d’Initiative Public” (RIP or Public Initiative Networks) of local collectives financing and establishing for themselves an infrastructure network in their territory. The goal of these neutral and open networks (in general, fiber) was to unbundle the local loop for DSL. The collectives outsourced the management of the network to a private firm or a consortium, whose task was to lease capacity to operators at the same price, giving them access to the France Telecom central offices (NRA) and to the copper local loop. The purpose was to provide alternative DSL access to the end user. This was a key element in increasing competition between access providers in France; it also gave small operators access to end users. The movement accelerated when ARCEP regulated the “dark fiber lease offering” (LFO) of France Telecom, requiring it to publish a unique tariff for leasing its dark fiber to operators.

On 1 December 2008, ARCEP found that 116 Public Initiative Networks had been launched at the metropolitan, departement or regional level (there are 22 regions in France). This means that each of these projects covers more than 60,000 people. Among them, 56 projects are already live with a commercial offering, 13 projects are still in the consultation process, and about 10 are in the preparation phase. The 56 working projects have raised €1.4 billion in investment with 50% of this amount coming from the private sector (telecommunications). Today, 40% or 1650 of the France Telecom central offices are unbundled by Public Initiative Networks, corresponding to 4.8 million users’ lines.  It is estimated that without the Public Initiative Networks, about a third of France Telecom central offices (or 1000 for 1.9 million households) would not have been unbundled. They are generally located in what is called DSL white zones.

Public Initiative Networks have had a significant effect on enterprises. ARCEP’s report shows that in territories where a Public Initiative Network is live, there are 10 times as many local enterprises with a fiber connection than in territories where there is no Public Initiative Network. In total, these Public Initiative Networks have brought high speed broadband to 2300 economic activity zones in France, with broadband costs 20% to 30% lower than what France Télécom had initially proposed. In some places, the networks have facilitated the emergence of local operators targeting the professional market.  On the end user market, the networks have resulted in lower prices or higher broadband speeds.

For Gabrielle Gauthey, another major effect of the Public Initiative Network is its role in preparing France for FTTH access. “Because the bandwidth demand on the networks continues to grow, the territories will have the basic infrastructure to feed it and connect to the coming optical local loop.” Gauthey thinks it is better to create an equalization fund to facilitate investments in FTTH in less populated areas. ”The fund could be set up with  the money from wireless auctions. We should also consider how public investment attracts private capital.”

After showing how most of the Public Initiative Networks have evolved to respond to needs which were not initially considered, the reports ends with recommendations on how to facilitate the deployment of Public Initiative Networks in France. One recommendation made to collectives is to allow firms doing road work to lay spare fiber ducts. The report also pointed out that there should be Geographic Information System (GIS) information providing the government with a database of existing networks everywhere in France. Several laws are to be promulgated to give more power to the local collectives to be able to collect information on the networks in their territory and keep track of the services they offer.

In one of her last interviews as a member of ARCEP, Gauthey said: “We have been able to anticipate the coming of fiber so that we avoided the re-creation of a monopoly out of the historical operator (France Telecom) or the creation of local monopolies. We also struggled at the European level to include the fiber ducts in the scope of the ex-ante regulation and to define what is called “symmetrical regulation” as a tool to require operators to share the terminal part of the optical local loop.”

© 2008 MuniWireless. All Rights Reserved.

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