REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

6. OVERVIEW OF THE GROUP’S BUSINESS
6.6 REGULATORY SITUATION
Pursuant to the Framework Directive and Articles L.37-1 to L.38-3 of the Post and Electronic Communications
Code, ARCEP is required, under the supervision of the European Commission and on the recommendation of the
French competition authorities, (i) to define the relevant markets applicable in France, (ii) to analyze these
markets and to identify operators or undertakings which have significant market power (SMP) in these markets,
and (iii) to decide whether or not to impose on these undertakings regulatory obligations (or “measures”)
commensurate with the competition problems which have been identified and which will ensure a certain level of
competition in the relevant market in question.
In 2004, ARCEP launched a public consultation process in the 18 relevant markets likely to be affected by
specific regulations.
The first phase of this analysis was completed at the end of 2007. Descriptions of each market analyzed during
this first phase, along with a table tracking market developments, can be found on ARCEP’s website at the
following address:
http://www.arcep.fr/index.php?id=8173&L=1tx_gspublication_pi1%5Btypo%25255#7813 (in French only).
ARCEP has also published a table describing for each relevant market in the first phase of the analysis the
obligations applicable to operators that are considered to have significant market power.
This table can be viewed at http://www.arcep.fr/fileadmin/reprise/dossiers/marches/marche-obligoperateurs2.pdf
(in French only).
The second phase of the analysis began in late 2007. The list of the relevant markets concerned is provided
pursuant to European Commission Recommendation 2007/879/EC of December 19, 2007. The table tracking the
progress of this phase can be viewed on ARCEP’s website at the following address:
http://www.arcep.fr/index.php?id=8173 (in French only).
At March 30, 2008, the main relevant markets on which Group companies do business had been analyzed by
ARCEP. The findings of ARCEP’s analysis for certain markets are outlined below:
• In 2004, operators with significant power in the market for termination of fixed and mobile voice calls on
individual mobile networks in mainland France (SFR, Bouygues Télécom and Orange France) and in the
overseas dependencies (SFR and Orange Caraïbes), were notified by ARCEP of their obligations. These
obligations essentially concerned the orientation of tariffs towards the cost of providing call termination
services and the publication of a reference offer. ARCEP is currently working on a project aimed at
specifying the scope of relevant costs to be taken into consideration, and is drawing up technical and
economic models to be reconciled with mobile network operators’ audited accounts. The long-term objective
of this process is to achieve a reduction in mobile call termination rates between 2009 and 2012
proportionate to the cost of calls made from fixed lines.
• With respect to Markets 11 (access to the local loop) and 12 (broadband access at a regional point of
presence), ARCEP completed its analysis in June 2005 and imposed access obligations on France Télécom.
ARCEP is to conduct a new analysis during 2008.
• With respect to the fixed telephony wholesale markets, ARCEP published its decisions on September 28,
2005. Twenty-three operators, including Free SAS, were considered as having SMP in the market for the
termination of geographic calls on their respective networks, and are subject to obligations relating to access,
interconnection, non-discrimination and transparency, as well as an obligation not to engage in excessive
pricing. In Decision 06-0551 issued by ARCEP on May 30, 2006, the scope of the principle of excessive
pricing was specified, putting an end to the legal disputes that arise periodically between France Télécom
and alternative fixed-line operators concerning call termination rates. For 2007 and 2008, the call
termination charge on the fixed-line networks of alternative operators has been set at €1.088 per minute,
excluding VAT. ARCEP is to conduct a new analysis during 2008, based on the view that call termination
charges should be symmetrical. The focus of the analysis to be conducted from late 2008 to 2012 will be to
determine (i) the extent to which call termination charges applied by alternative operators should converge
with those applied by France Télécom, and (ii) the price structure applied to call termination services by an
efficient operator.
Iliad – Registration Document 2007 - 47