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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #0002/01 0030556
ZNR UUUUU ZZH
R 030556Z JAN 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 3979
INFO RUCPDOC/USDOC WASHDC
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RUEAWJA/DEPARTMENT OF JUSTICE WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 03 PARIS 000002 
 
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E.O. 12958: N/A 
TAGS: ECPS ETRD FR
SUBJECT: French telecom officials discuss next generation network 
regulation, spectrum management and customer service 
REF:  Paris 7728 
 
Summary 
------- 
 
¶1. (SBU) French telecom regulator ARCEP is using persuasion to 
cajole telecommunications operators that are constructing next 
generation fiber optic telecom networks to rent their infrastructure 
to competitors ("unbundle the local loop").  While historic operator 
France Telecom is resisting, their competitor, the Iliad Group, has 
offered to do so.  The Senate has amended a bill providing for the 
conversion of television from analog to digital.  Rather than ARCEP 
and the broadcast regulator deciding how to reuse the spectrum 
formerly earmarked for analog television, a parliamentary-led group 
would do so.  The National Assembly must agree before this change is 
made permanent.  The GOF is considering a law that would facilitate 
class action lawsuits in the telecom sector, as well as eliminate 
charges consumers pay while waiting for telecom customer service 
representatives to answer the phone.  End summary. 
 
¶2. (U) On December 13, 2006 Embassy econoff met French Electronic 
Communications and Postal Regulator ARCEP European Regulatory 
Framework Implementation General Directorate Aurelie Doutriaux, 
International Division Director Anne Lenfant, and International 
Division Deputy Director Joel Voisin-Ratelle.  ARCEP officials 
discussed the deployment of next generation high-speed optical fiber 
networks, the upcoming changes in French spectrum management, and 
consumer protection. 
 
Next generation networks: the infrastructure challenge 
--------------------------------------------- --------- 
 
¶3. (SBU) Doutriaux, the highest ARCEP official present, set the 
scene by describing ARCEP's approach to regulation of next 
generation networks.  ARCEP had called for operators to cooperate 
and share the burden of investing in fiber access networks.  She 
pointed us to a speech delivered at the IDATE (Institut de 
l'Audiovisuel et des Telecommunications en Europe) Conference on 
November 16 by ARCEP Chairman Paul Champsaur, in which he estimated 
the cost of a national roll-out of such a network at "several tens 
of billions of euros" over a decade.  As a solution, ARCEP would 
encourage the pooling of civil engineering infrastructure work and 
of the cabling of buildings.  To promote this policy, ARCEP is part 
of a working group that the ministries of industry and housing 
established, which also includes telecommunications operators and 
property management representatives. 
 
Next generation networks: the competition challenge 
--------------------------------------------- ------ 
 
¶4. (SBU) At the same time, Doutriaux stressed that ARCEP's 
preference is for fiber networks that are open to alternative 
operators (point-to-point access) to prevent monopolies.  To that 
effect, ARCEP, in June 2005, established the Public Initiatives 
Networks Committee (French acronym CRIP), a consultative body of 
local authorities and network operators to make proposals on "how to 
combine the quick extension of fiber and preserve the future of 
competition."  Through increased dialogue between local network 
operators and local authorities, ARCEP hopes to avoid the regulatory 
problems that have surrounded the plans of Deutsche Telekom (DT) to 
exclude competitors from its fiber networks on grounds that DT 
should be allowed to recoup its 3 billion euro investment. 
 
¶5. (SBU) So far, only the Illiad Group, owner of telecom operator 
FREE, has announced that its fiber infrastructure would be open to 
alternative operators on a wholesale basis.  Doutriaux noted that 
Illiad chose to allow other operators to use its fiber network 
without any pressure from ARCEP.  Illiad will be offering high-speed 
broadband over its own fiber optic network in Paris starting in the 
first half of 2007.  (Free already operates a 20 MB ADSL service 
throughout most large French metropolitan areas.)  Free announced 
that it would spend one billion euros between 2008 and 2012 to 
construct a fiber optic network in France. 
 
¶6. (SBU) France Telecom (FT), on the other hand, has been very 
cautious about very high broadband development, Doutriaux continued, 
and is not making its network available to competitors, opting 
instead for a Passive Optical Network (PON), which allows no 
unbundling.  FT launched a pilot project in certain areas of Paris 
last July reaching 500 customers and plans to deploy its fiber 
network by March 2007 in Paris.  By June 2007, it plans to start 
 
PARIS 00000002  002 OF 003 
 
 
high broadband service in Lille, Lyon, Marseille, Poitiers, and 
Toulouse.  It is aiming to have 150,000 to 200,000 clients by the 
end of 2008.  (Note:  ARCEP announced on December 19 that it would 
initiate a "administrative inquiry" to clarify why FT did not plan 
to offer unbundling.  Additionally, cable operator Noos announced in 
December that it will offer 100 MB internet service over its cable 
infrastructure.  New fiber optic telecom operator Erenis also 
announced that it aims to service 150,000 households by the end of 
¶2007.  End note.) 
 
 
Next generation networks: the revenues challenge 
--------------------------------------------- --- 
 
¶6. (SBU) Lenfant said that deploying very high-speed networks was 
only justified if they supported new applications, service 
offerings, and access to content.  In that perspective, the current 
relationship between content publishers and networks would need to 
change, Lenfant noted.  Some of the revenues earned by service 
providers would go to access providers, and electronic 
communications operators would help finance the content's creation, 
and audiovisual content in particular. 
 
¶7. (SBU)  To finance this "new model," ARCEP is discussing the 
extension to Internet access providers of the tax that France-based 
television stations pay to support new content production, provide 
grants and subsidies to French films and producers of audiovisual 
works, and contribute to the production of high-definition and 
mobile-television formats (French acronym COSIP tax).  However, 
those in ARCEP supporting the extension of the COSIP tax to telecom 
operators would support doing so on the condition that "all 
operators have access to all content." 
 
Spectrum management after the switch to digital 
--------------------------------------------- -- 
 
¶8. (SBU) Lenfant and Doutriaux said that the Senate had changed the 
GOF draft bill mandating the conversion from analog to digital 
television (reftel) by 2011.  The bill originally specified that 
ARCEP and audiovisual regulator Conseil Superieur de l'Audiovisuel 
(CSA) would manage the spectrum freed up by the switch by 2011 from 
analog to digital television.  During its review of the bill, the 
Senate adopted an amendment that established a new "Commission on 
the Digital Dividend," which would include the ARCEP and CSA 
Chairmen, as well as the National Frequency Agency (NFA) Director 
General.  This Commission would also include eight French 
Parliamentarians, with one of them presiding.  If approved by the 
National Assembly during its review of the draft bill, this new 
commission will decide how to reallocate the freed up spectrum. 
 
Consumer Protection 
------------------- 
 
¶9. (SBU) Although France has healthy competition in its telecom 
sector, its Achilles heal is its poor customer service.  Frustrated 
customers have launched a plethora of lawsuits seeking compensation 
for services that do not work.  Econoff asked whether ARCEP plans to 
address this issue with a customer service complaint website or any 
publicly available statistics to shame operators into improving 
their service.  Lenfant and Doutriaux explained that, unlike the 
FCC, ARCEP does not have any competency in consumer protection 
matters but is consulted on consumer issues affecting the telecoms 
and electronics sectors.  Last summer, the French Government 
consulted ARCEP on its draft bill on consumer protection, which 
contains one important provision concerning electronic commerce. 
Presently, consumers of French telecom services pay for customer 
assistance calls to all telecom operators (usually about 0.12 
euros/minute).  The waiting time to all operators, including FT, is 
quite substantial; more than 30 minutes of waiting time is common 
place.  The GOF-draft bill proposes that the waiting period during 
such calls be free of charge, although consumers would still pay for 
the call once connected to the customer assistance service. 
¶10. (SBU) More generally, the draft bill aims to introduce class 
action lawsuits in the French legal system.  Lefant pointed out that 
the telecom sector needed class action lawsuits to decrease the 
number of cases clogging the French court system.  She noted that 
last October, the French consumer association "Que Choisir" filed 
not one but 12,530 requests for damages against three mobile phone 
companies accused of illegal collusive behavior, requesting a total 
 
PARIS 00000002  003 OF 003 
 
 
of only 750,000 Euros. The consumer association succeeded in making 
its case for a collective legal remedy.  However, it is far from 
certain that the bill will get through Parliament before the end of 
the session in February 2007.  Parliamentary debate is to start in 
late January or early February, and there are many more GOF bills to 
be discussed during that time. 
Hofmann