REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

6. OVERVIEW OF THE GROUP’S BUSINESS
6.6 REGULATORY SITUATION
The Company has entered into an agreement with France Télécom under which France Télécom provides access
to its databases for the purpose of publishing directories and/or providing information services. The contract
provides that France Télécom may terminate the agreement in the event of a modification affecting the structure
or control of Iliad’s capital or Iliad’s ownership or management.
Free has signed an agreement with a number of players operating in the directory and information service
markets (including France Télécom, Pages Jaunes, Le Numéro and Télégate), under which Free supplies a list of
subscribers which states any restrictive options chosen by customers (such as ex-directory requirements or
prohibiting the use of personal data for marketing purposes).
Consequently, the information services of the main market players such as Le Numéro, France Télécom, Pages
Jaunes and Télégate now cover the end-customers for whom Free provides telephone access.
In response to the problems encountered relating to operators setting up a universal directory, since year-end
2005 ARCEP issues a report in which it measures the progress of the universal directory.
Contribution to universal service funding
The universal service comprises (i) the provision of a good quality telephone service at an affordable price, (ii) a
directory enquiries service and directories in printed and electronic forms, and (iii) access to public payphones
located on public property. Each of these three components must include special facilities for disabled users, so
that they can be assured of access to services under conditions equivalent to those enjoyed by other users.
Following the enactment of Law 2003-1365 of December 31, 2003, France Télécom is no longer designated by
law as the operator responsible for provision of the universal service, and in future the operator or operators
required to guarantee the provision of universal service will be designated on the basis of calls for tender. Three
calls for tender, relating to each of the three components of the universal service, were published in the French
Official Gazette of November 25, 2004. In March 2005, France Télécom won the three calls for tender and was
designated as the operator responsible for provision of each of the three components of the universal service.
In accordance with the said law, the cost of the universal service is now shared between operators pro rata to their
revenues derived from telecommunications services “excluding revenues from interconnection and access
services subject to the agreements defined in paragraph I of Article L.34-8, and other services provided or billed
on behalf of third party operators ” . The publication of implementing Decree 04-1222 of November 17, 2004,
relating to public service obligations and the funding of the universal electronic communications service
provided a regulatory framework for the definitive calculation of the net cost of the universal service as from
2002. The net cost of universal service obligations, after taking account of intangible benefits, was estimated by
ARCEP at €124,989,000 for 2002 (Decision 04-1068), €53,271,000 for 2003 (Decision 05-0426), €33,283,000
for 2004 (Decision 05-917), and €33,123,000 for 2005 (Decision 07-0191).
Finally, Decree 2005-75 of January 31, 2005 governing price controls for the electronic communications
universal service, supplements the provisions of Article R.20-30-11 of the Post and Electronic Communications
Code. It defines the cases in which the prices for the universal service proposed by an operator responsible for
providing one of the components thereof may be subject either to a price cap over a number of years, or to prior
approval or rejection by ARCEP.
Government initiatives relating to information society networks
The growth of the Internet is particularly dependent on the roll-out of infrastructure capable of sustaining the
ramp-up of bandwidth-hungry services. This type of infrastructure is already in place or is in the process of being
developed, such as optical fiber networks, cable, satellite, wireless networks (including standard 802.11) and
UMTS networks.
In November 2002, the French government launched the RE/SO 2007 plan “for a digital republic in the
information society” with a view to making up the ground lost by France in the information society sector. This
initiative, aimed at increasing access to broadband, was underpinned by a twofold objective: (i) to reach a target
of ten million broadband Internet subscribers in France within the following five years, and (ii) to enable every
local district in France to access broadband by 2007. The plan was focused on supply, by creating a favorable
environment for developing infrastructure, content and services, while developing a climate of confidence
intended to ensure the effective protection of users and to promote the development of e-commerce.
Iliad – Registration Document 2007 - 53