VZCZCXRO2322
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #0647/01 0511640
ZNR UUUUU ZZH
R 201640Z FEB 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 5027
INFO RUCPDOC/USDOC WASHDC
RUEAFCC/FCC WASHDC
RUEAWJA/DOJ WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 02 PARIS 000647 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/CIP, EUR/WE, AND EUR/ERA 
DEPT PLEASE PASS TO USTR JMCHALE, KSCHAGRIN, AND CHINCKLEY 
FCC FOR TWEISLER 
COMMERCE FOR NTIA CSPECK AND ITA JBURTON 
JUSTICE FOR KWILLNER, JHORVATH, TBURROWS 
DEPT PLEASE PASS TO FTC FOR HSTEVENSON 
BRUSSELS FOR USEU JUNDERWOOD 
 
E.O. 12958: N/A 
TAGS: ECPS ETRD FR
SUBJECT: ARCEP RESPONSE TO COMPTEL 1377 COMPLAINT 
 
REF:  JANUARY 31 USTR/HINCKLEY-SULLIVAN E-MAIL 
 
¶1. (U) Summary.  On October 9, 2006 French telecoms regulator ARCEP 
issued a decision on the business leased lines market, which 
introduced a more transparent framework for price setting.  ARCEP 
hosts a meeting every other month with all operators, including 
France Telecom (FT), to compare prices that FT is offering to 
operators, and to pressure FT to lower rates.  The October 9 ARCEP 
decision required unbundling not only at France's 10,000 local 
exchanges, but also at its 40 regional exchanges.  ARCEP is forcing 
FT to share its ducts with other operators so the latter can develop 
their own fiber networks.  ARCEP consults OECD and European 
Regulatory Group benchmarks in rate-setting, and monitors France 
Telecom rates periodically.  ARCEP reps say they have not received 
complaints from operators about the amount of time it takes to 
receive a line, nor regarding pricing.  End summary. 
 
Reaction to the Comptel submission 
---------------------------------- 
 
¶2. (SBU) On February 14, econoff met with French Electronic 
Communications and Postal Services Regulator (ARCEP) International 
Division Deputy Director Joel Voisin-Ratelle and FTTx and Unbundling 
Head Sebastian Soriano to discuss Comptel's submission to USTR as 
part of the 1377 review of compliance with telecommunications trade 
agreements.  Both expressed surprise at Comptel's comments since 
ARCEP was working closely with Verizon on its operations, and no 
other U.S. carrier had approached ARCEP directly about the length of 
time needed to gain access to unbundled loops or interconnection 
pricing. 
 
Rate Setting Process 
-------------------- 
 
¶3. (U) ARCEP has a transparent rate setting process that extends to 
all types of wholesale offers including Local Loop Unbundling (LLU); 
bitstream wholesale offers in which FT activates the end customer's 
copper pair with its own access equipment and routes the Internet 
flows to the closest delivery point between its backhaul network and 
that of the alternate provider; and access to FT's regional 
exchanges so that the alternate provider can meet the needs of 
Internet service providers that have not deployed national networks. 
 ARCEP requires FT to provide full Local Loop Unbundling (LLU) at 
cost-oriented tariffs. 
 
¶4. (U) On October 9, 2006, ARCEP issued a decision on the business 
leased lines market, which the EU Commission approved.  Soriano said 
this decision introduced a more transparent framework for price 
setting, and greater investment by the incumbent and alternative 
operators in fiber optic networks to businesses' premises.  Soriano 
outlined a new system of monitoring the fairness of competition 
between operators on the wholesale and retail markets.  ARCEP hosts 
a meeting every other month with all operators, including FT, to 
compare prices that FT is offering and to pressure FT to lower 
rates.  In this way, ARCEP is ensuring that FT does not offer lower 
prices to its end-user customers than those provided to competitors. 
 ARCEP initiated this process based on its experience with local 
loop unbundling in which operators met with FT as a group to apply 
pressure to lower rates, Soriano explained.  Finally, Soriano 
indicated that the October 9 ARCEP decision required unbundling not 
only at France's 10,000 local exchanges, but also at its 40 regional 
exchanges, which he said is a unique requirement.  FT has to publish 
a reference offer for products and services that provide access to 
France's regional exchanges. 
 
The Wholesale Market -- ARCEP Carefully Monitors Rates 
--------------------------------------------- --------- 
 
¶5. (U) Soriano said that ARCEP carefully monitors wholesale rates, 
particularly for Ethernet and Bitstream, which is an ARCEP 
"priority."  As a result, ARCEP is forcing FT to share its ducts 
with other operators so that they can develop their own fiber 
networks.  He stressed that ARCEP has received no complaints on 
rates so far.  ARCEP consults OECD and European Regulatory Group 
benchmarks in rate-setting and monitors France Telecom rates 
periodically. 
 
No Delays in Receiving Lines 
---------------------------- 
 
¶6. (U) Soriano and Ratelle said that operators had not complained to 
 
PARIS 00000647  002 OF 002 
 
 
them about the time it takes to receive a line.  If operators want 
to deviate from FT's reference offer (as negotiated with ARCEP) to 
structure unique packages, Soriano allowed that there could be a 
delay.  In practice operators were not complaining to ARCEP about 
postponements.  However Soriano and Ratelle said they were preparing 
for such an eventuality. 
 
Stapleton