registration document France Telecom 2009 - Orange.com

overview of the Group’s Business
6
OVERVIEW OF BUSINESS
Spain
Universal service
In March 2009, the CMT set the net cost of universal service
for 2006 at 75.34 million euros. The contributions were divided
as follows: Telefónica: 39% (29.30 million euros), Movistar
(Telefónica Moviles España): 30% (22.98 million euros), Vodafone:
20% (15.03 million euros) and Orange: 11% (8.03 million euros).
Orange España appealed the decision concerning the 2006 net
cost and contested the calculation methodology.
In October 2009, the SETSI launched a consultation on
universal service, proposing the extension of universal service
to 1 Mbps broadband, regardless of the technologies used. The
Ministry proposal to extend universal service to broadband will
be discussed in 2010 after the European Commission revises
the Universal S ervice Directive and could have effects in 2011.
Regulation of Fixed Telephony and Broadband
Internet
Z KEY EVENTS
January 22 Wholesale unbundled and broadband
access markets (2 nd round ): CMT decision
regarding access to civil passive infrastructure
and Ethernet regional bitstream access service.
February 12 FTTH: t he CMT approved a resolution on the
sharing of the terminating segment of optical fi ber
in buildings.
September 24 Wholesale offers: t he CMT reduced the tariffs,
improving the alternative operators’ competitive
conditions.
October 1 Telefónica’s retail offers: t he CMT reviewed
the methodology applicable to margin squeezes.
November 19 Telefónica’s civil works: t he CMT approved
the reference offer.
Wholesale Unbundled and Broadband Access
In January 2009, the CMT adopted a fi nal decision regarding
the wholesale unbundled access market (2 nd round ), confi rming
the ex ante remedies. These remedies include access to civil
passive infrastructure (ducts and other passive infrastructure
in the public or private domain) and information obligations
regarding migration to NGA networks.
The CMT also adopted a fi nal decision on the wholesale
broadband access market (2 nd round ), confi rming the fi rst
round remedies for Telefónica and imposing the obligation to
provide an Ethernet regional bitstream access service. The
other remedies include cost orientation (prices must include
a risk premium associated with NGA), cost accounting
and accounting separation, prohibition of anticompetitive
practices, transparency, publication of a reference offer, nondiscrimination,
and notifi cation to the CMT of Quality of Service
key performance indicators (KPIs).
FTTH
In February 2009, the CMT approved a resolution on the
sharing of the terminating segment of optical fi ber in buildings.
The CMT imposes a set of generic obligations to be applied
by all operators, such as reasonable access to the network,
reasonable prices and transparency. Obligations shall be
symmetrical and apply to the operator which fi rst rolled out fi ber
in a building.
Wholesale Tariffs
As a result of Orange actions, the CMT modifi ed the wholesale
tariffs in September, thus improving the alternative operators’
competitive conditions:
■ a decrease of 31% in the shared access tariff (from €3 to
€2.06);
■ a sharp decrease in bitstream access prices (-26% on a
regional level and -23% on a national level);
■ a decrease of Wholesale Line Rental price in order to align
bitstream and WLR prices with naked bitstream prices.
Methodology Applicable to Margin Squeezes
In October 2009, the CMT reviewed its methodology applicable
to margin squeezes. This review had limited impact on
Telefónica’s retail offers. Orange’s claim in December 2008
against Telefónica’s promotion policy is still pending.
Civil Works Access Reference Offer
In November 2009, the CMT approved Telefónica’s civil
works access reference offer. This offer applies to fi ber and
coaxial cable roll-out, including MDF and mobile base station
connections, in densely populated areas. Relations between
Orange and Telefónica have improved on the operational level,
particularly with regard to the provision of regulated offers. In
addition, the signifi cant decrease of wholesale broadband tariffs
in September had a positive effect for Orange España.
The debate on the provision of the future wholesale bitstream
broadband offer continued in 2009: in addition to price
reduction, discussions turned in favor of the provision of
Ethernet services instead of IP services. The current issues are
now on technical confi gurations (Mono-VLAN vs. Multi-VLAN).
This debate is important for indirect access areas (bitstream)
and for unbundled areas, in a context where Telefónica is rolling
out a FTTC network affecting technical or commercial viability of
ULL based services.
Concerning Telefónica’s ducts access reference offer, the
decrease in prices which was carried out is lower than
initially expected but is still well positioned compared to other
European tariffs. However the offer is limited to urban stretches,
façades are excluded and important issues (information
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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