REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

Local loop unbundling
6. OVERVIEW OF THE GROUP’S BUSINESS
6.6 REGULATORY SITUATION
France Télécom has been designated as having significant market power in relation to access to the local loop
and as such it is required to respect a number of obligations in accordance with Decision 05-0277 issued by
ARCEP on May 19, 2005. In particular it is required to:
• offer unbundled access to its local loop at a cost-oriented price;
• provide associated services; and
• publish a reference offer.
On December 15, 2005, ARCEP issued Decision 05-0834 which set out the method to be used for valuing local
loop assets and for accounting for the related costs. The latest edition of France Télécom’s reference offer for
local loop access was published on December, 19, 2007.
Access to the local loop can take one of the following two forms:
• either the incumbent operator provides access to the copper part of its network, between the main MDF and
the termination point located in the subscriber’s premises (full unbundled access to the local loop); or
• the incumbent operator provides access to the high frequency spectrum on this same part of its network and
itself continues to provide a traditional public telephone service using the low frequencies (shared access to
the local loop).
The terms of access to the local loop are determined by a private law agreement that must be submitted to
ARCEP at its request.
On September 17, 2006, Free signed an agreement for access to France Télécom’s local loop reflecting in
operational terms the principles set out in the public reference offer. This agreement replaces earlier agreements
signed in relation to previous editions of the published reference offer.
In accordance with ARCEP Decision 05-0551 which sets the pricing methods for access to the local loop, France
Télécom amended its reference offer by reducing its price to €9.29 excluding VAT as from January 1, 2006.
ARCEP’s analysis of relevant broadband Internet access markets, and in particular Market 11 (unbundling or
Option 1), was completed on May 19, 2005 and resulted in a series of decisions imposing on France Télécom the
obligation to continue to provide its competitors with access to its local network by unbundling.
At the end of 2007, ARCEP conducted a new analysis of the relevant market for access to the copper local loop.
A decision is expected on France Télécom’s obligations in this respect in late spring 2008, and will concern the
period from mid-2008 to mid-2010. ARCEP has no plans to modify the obligations previously imposed on
France Télécom, particularly the obligation to apply cost-oriented prices.
Withdrawal of the approval process
Access to France Télécom’s DSLAMs and the associated collection of ADSL traffic were historically organized
under the terms of a set of contracts (“IP/ADSL” and “IP/ADSL Collection”), and price changes were subject to
an approval process following an arbitration decision issued in 1999 by the Minister for Telecommunications
(see ARCEP Decision 99- 582 in response to France Télécom’s pricing decision 99077 E for Netissimmo and
Turbo IP services.
Decree 2005-75 of January 31, 2005 transferred power to approve the pricing of the universal service from the
Minister for Telecommunications to ARCEP.
As a result, in the context of its analysis of Market 12 (wholesale offers for access to broadband delivered at
regional level or Option 3), ARCEP imposed on France Télécom the obligation to publish a reference offer
relating to broadband access delivered at a regional point of presence. This reference offer – entitled “DSL access
and collection offer” – includes the technical principles set forth in the IP/ADSL and ADSL Connect ATM
contracts.
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