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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #7568/01 3321405
ZNR UUUUU ZZH
R 281405Z NOV 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 3404
RUEAFCC/FCC WASHDC
INFO RUCPDOC/USDOC WASHDC
RUEAWJA/DEPARTMENT OF JUSTICE WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 02 PARIS 007568 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE EB/CIP TFINTON AND EUR/WE 
FCC FOR TWEISLER 
PLEASE PASS TO USTR JMCHALE AND KSCHAGRIN 
COMMERCE FOR NTIA CSPECHT AND ITA JBURTON 
JUSTICE FOR KWILLNER 
 
E.O. 12958: N/A 
TAGS: ECPS ECON FR
SUBJECT: FCC AND ARCEP COMMISSIONERS DISCUSS NEXT GENERATION 
NETWORKS AND UPCOMING TELECOM ISSUES 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
¶1. (SBU) Summary:  Federal Communications Commissioner Deborah Tate 
discussed telecommunications regulatory issues with her French 
counterpart telecommunications regulator Autorite de Regulation des 
Communication Electronique et des Postes (ARCEP) Commissioner 
Gabrielle Gauthey on November 10.  Gauthey said that France 
compensated for its relatively low cable penetration rates by 
offering pay television and other high-value added telecommunication 
services through its phone lines.  "Triple play" offers with long 
distance telephone service, broadband, and television were among the 
cheapest in the world at USD 36.50 a month.  Investment in fiber 
networks was increasing, however, with France Telecom's competitors 
investing as much as the incumbent.  ARCEP coordinates regularly 
with France's broadcast regulator and other EU member states.  End 
summary. 
 
¶2. (U) On November 10, Federal Communications Commissioner Deborah 
Tate met with her French counterpart telecommunications regulator 
Autorite de Regulation des Communication Electronique et des Postes 
(ARCEP) Commissioner Gabrielle Gauthey on competition in the 
telecommunication industry, next generation networks, European 
coordination, and universal service.  ARCEP International Relations 
Chief Joel Voisin-Ratelle, FCC Western Europe Advisor Tracey 
Weisler, and econoff also attended. 
 
¶3. (SBU) According to Gauthey, cable was relatively undeveloped in 
France, with only a five percent penetration rate.  However, French 
telecom firms provided "triple play" long distance telecom, 
broadband ADSL internet services, and television services over the 
telecom network.  Competition was robust, with many companies 
charging 30 euros (USD 36.50) per month, among the lowest rates in 
the world.  Seventeen percent of French residents obtain their 
telephone services over the internet (VOIP).  All of France 
Telecom's competitors comprise about 50 percent of all 
telecommunications networks.  Many of these competitors have changed 
their business model from renting capacity from France Telecom to 
building their own capacity.  That said, local loop unbundling does 
not take place in all regions of France.  In rural areas, consumers 
can only gain access to two to eight megabits, which is not enough 
for video. 
 
¶4. (SBU) Cable was weak in France for several reasons, Gauthey 
explained.  France Telecom owned France's first cable operation and 
intentionally did not upgrade it so that it would not cannibalize 
its telecommunications operations.  France's efforts therefore went 
into developing its broadband DSL services.  Unbundling the local 
loop has resulted in booming competition.  Nonincumbent operators 
such as Free and Neuf Telecom have driven innovation.  ARCEP has 
also spurred competition through bit stream access, i.e., wholesale 
broadband access.  Finally, France's copper network is newer than 
that in the U.S. and does not have to be replaced. 
 
¶5. (SBU) However, France's fiber network is beginning to expand more 
rapidly.  Telecom provider Free announced that it would invest 300 
million euros (USD 375 million) by the end of 2007 to build a fiber 
optic network that would reach four million households.  ARCEP had 
just issued spectrum for wimax through a "beauty contest," Gauthey 
said.  ARCEP used three criteria to evaluate the packages assembled 
by telecommunication companies:  price, territorial coverage, and 
bit stream or broadband coverage.  In total, 14 regional governments 
applied for a license to ensure their region had adequate coverage, 
and six obtained one, in addition to private companies. 
 
¶6. (SBU) Gauthey said that in recent years, universal service has 
become a less "talked-about" subject, even though the GOF has not 
yet decided whether next generation networks should contribute to 
the universal service fund.  Telecom service providers pay directly 
into this fund, and it does not appear as a separate item on phone 
bills as in the U.S.  Since France Telecom is the recipient of the 
universal service fund, it is supportive of the expansion of its 
coverage to broadband. 
 
¶7. (U) European Union (EU) member state telecommunication regulators 
met regularly to coordinate policy, Gauthey said.   The group is 
discussing appropriate ways to harmonize regulation and whether to 
harmonize termination rates.  It is also reviewing the entire EU 
telecommunications framework in preparation for new directives that 
the Commission will issue next year.  In addition, the European 
Commission is active in deciding whether incumbent telecommunication 
providers are dominant players that are abusing their market power. 
If so, each regulatory has a toolbox of remedies. 
 
PARIS 00007568  002 OF 002 
 
 
 
¶8. (SBU) Commissioner Tate noted that, in the U.S., the FCC was 
discussing how to manage termination fees mobile phone companies 
impose on consumers when they terminate service before the end of a 
fixed contract.  Gauthey noted that the EU was also debating such 
fees, particularly the need to harmonize them.  However, the Conseil 
de la Concurrence (Competition Council), not ARCEP, was managing 
this issue. 
 
¶9. (SBU) Gauthey explained that, while ARCEP was in charge of 
frequency allocation and telecommunications industry oversight, 
another French agency, Conseil Superieur de l'Audiovisuel (CSA), 
oversaw the broadcasting industry and its allocated spectrum. 
Rumors have persisted about a merger between the two agencies, but 
their functions were discrete.  Two ARCEP commissioners meet with 
two CSA commissioners every month to coordinate on overlapping 
issues and issue joint recommendations.  Two issues they discuss are 
spectrum usage and the "digital dividend" or what to do with 
spectrum earmarked for analog broadcasters after television and 
radio switch over to digital transmissions.  She said that the two 
also worked together to pass laws against child pornography and hate 
content on the internet, but CSA does not, in general, want to 
regulate content.   Commissioner Tate responded that the FCC is very 
considerate of protecting children through ensuring transmission of 
appropriate programs.  Congress has allowed fines to increase 
tenfold.  However, FCC looks into indecent programming only upon the 
receipt of a complaint. 
 
¶10. (U) FCC cleared this message. 
 
STAPLETON