REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

6. OVERVIEW OF THE GROUP’S BUSINESS
6.4 EXTENT TO WHICH THE GROUP IS DEPENDENT ON PATENTS OR LICENSES, INDUSTRIAL, COMMERCIAL OR
FINANCIAL CONTRACTS OR NEW MANUFACTURING PROCESSES
• contracts granting the Group access to the subscriber through interconnection and unbundling agreements
entered into primarily with France Télécom;
• contracts with suppliers of optical fiber;
• contracts with service providers involved in rolling out the optical fiber.
At the end of 2007 the Group entered into an agreement with France Télécom for the use of its civil engineering
infrastructure. The agreement allows Free to test and evaluate all processes needed for it to deploy fiber optic
cables in France Télécom ducts.
IRU agreements involve the granting by local authorities or private operators such as Neuf Télécom and
Completel of the right to use the optical fibers which make up the Group’s network. Under these long-term
agreements, a single up-front payment is made when the fiber is made available. A description of these
agreements is provided in Section 6.4.2 of this registration document. The risk to the Group of the non-renewal
of these agreements is described in Section 6.4.2 of this registration document.
Interconnection and unbundling agreements provide the Group with access to its subscribers, either by means of
the France Télécom network in the case of interconnection agreements or directly in the case of unbundling
arrangements. As described more fully in Section 6.6.1 of this registration document, the interconnection and
unbundling agreements, respectively, allow the Group to (i) interconnect its own network with the France
Télécom network by means of a physical connection to one of the incumbent operator’s switches and (ii) take
advantage of direct access to a segment of the network between the subscriber’s telephone socket and the main
distribution frame to which the subscriber is connected in order to achieve the closest possible proximity to the
subscriber. In the case of interconnection agreements, the incumbent operator charges fees based on the
transmission capacity made available to the operator. In the case of unbundling, the amounts charged by France
Télécom are essentially limited to the rental of the copper pair, the splitter and the copper tie cable that connect
the subscriber’s modem to the operator’s DSLAM. France Télécom is required to offer both interconnection and
unbundling to all alternative operators.
The Group is also party to less strategically important supply agreements, primarily with suppliers of electronic
components, the assemblers of the Freebox modems and DSLAMs, and with advertising agencies.
The amounts charged to the Group by the incumbent operator under interconnection and unbundling agreements
as well as amounts re-billed by the Group to France Télécom in connection with the “pay-as-you-go” access
offering and the reverse look-up directory service are subject to review by ARCEP.
6.5 BASIS FOR STATEMENTS MADE BY THE GROUP REGARDING ITS COMPETITIVE POSITION
The statements made in this registration document in relation to the Group’s competitive position are primarily
based on market analyses published by ARCEP.
6.6 REGULATORY SITUATION
The Group’s business activities are subject to the specific legislation and regulations of both France and the
European Union governing the electronic communications sector (including telecommunications and Internet
access) and the information society.
6.6.1 Regulation of electronic communications networks and services
The EC regulatory framework for electronic communications
1990 – 2003: strengthening of the regulatory framework to allow the opening up of the markets
Between 1990 and 1997, the EU legislator enacted a series of Directives providing for the abolition of national
monopolies in the telecommunications market as from January 1, 1998. The EC telecommunications regulatory
44 - Iliad – Registration Document 2007