registration document France Telecom 2009 - Orange.com

6 REGULATIONS
overview of the Group’s Business
The European regulatory framework
The current European regulatory framework for electronic
communications has two main parts: one relating to economic
market regulation and one focusing more on universal service
protection and protection of consumer rights. It consists of one
‘Framework’ directive (2002/21/EC) and four specifi c directives:
■ “Authorizations” (2002/20/EC);
■ “Access” (2002/19/EC);
■ “Universal Service” (2002/22/EC);
■ “Privacy and electronic communications” (2002/58/EC).
The scope of the economic regulation relates to relevant
markets defi ned in a European recommendation that is revised
periodically. The latest (recommendation 2007/879/EC of
December 19, 2007) comprises seven relevant markets (1) .
These markets, identifi ed by the Commission, must be the
subject of a market analysis undertaken by the National
Regulatory Authorities (NRAs). Under the regulatory framework,
the National Regulatory Authorities may also regulate markets
which are not on the list of relevant markets provided by the
Commission, if and only if, specifi c national factors so justify and
provided the Commission does not object.
Key European regulation events in 2009
Key Events
May 7
June 18
June-July
Nov. 24
European Commission Recommendation on
fi xed and mobile call termination rates
New European regulation on roaming
Public consultation on the second European
Commission Draft Recommendation on next
generation access networks (NGA)
Adoption of the reform of the European
regulatory framework
European Commission Recommendation on fixed and
mobile call termination rates (FTRs and MTRs) adopted on
May 7, 2009; the Recommendation sets out a clear reduction
in MTRs with a view to reaching, as of 2013, levels of between
one and two euro cents per minute and eliminate asymmetries
between operators. This Recommendation also stipulates
reductions for FTRs .
More precisely, the Commission recommends that national
regulators apply the following principles:
■ symmetry in each country between the various operators’
fi xed call termination rates on the one hand and mobile call
termination rates on the other, with a four-year limit set on the
duration of a transitional asymmetry on call termination rates
from which a new entrant may benefi t;
■ call termination rates geared towards the ‘avoidable cost’
of this service for an ‘effi cient operator’ (i.e. between one
and two euro cents per minute for MTRs and a lower range
for FTRs );
■ a period of transition until December 31, 2012, with this
regulation scheduled to come into force in early 2013.
The impact of this Recommendation for the France Telecom
group will depend on the decisions taken by the National
Regulatory Authorities in each country.
Generally, the reduction in call termination rates has a negative
impact on wholesale revenues. However, a uniform reduction
in MTRs has a mainly neutral effect on wholesale profi tability
for fi xed and mobile operators such as Orange in France.
The impact on wholesale profi tability may even be favorable
in countries where Orange has a negative interconnection
balance, such as Spain.
On the retail market, the Commission’s approach may lead fi xed
and mobile operators to modify their retail offers, for example by
developing abundance offers.
The biggest uncertainty concerns changes to retail fi xed-tomobile
rates.
(1) M1: Access to the public telephone network at a fi xed location for residential and non-residential customers.
M2: Call origination on the public telephone network provided at a fi xed location.
M3: Call termination on various individual public telephone networks provided at a fi xed location.
M4: Wholesale (physical) network infrastructure access (including shared or fully unbundled access) at a fi xed location.
M5: Wholesale broadband access.
M6: Wholesale supply of leased lines terminating segments, irrespective of the technology used to provide leased or dedicated capacity.
M7: Voice call termination on individual mobile networks.
168
2009 REGISTRATION DOCUMENT / FRANCE TELECOM