REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

6. OVERVIEW OF THE GROUP’S BUSINESS
6.6 REGULATORY SITUATION
On June 21, 2004, the government introduced Law 2004-575 on “confidence in the digital economy”, aimed at
adapting French legislation to growth in the digital economy and at raising confidence in the use of new
technologies. This law, which rounded out the transposition into national law of the EU Directive on electronic
commerce, sets out the provisions governing the liability of access and hosting providers and also deals with the
domain name addressing system and encryption. In addition, it amended the previous provisions of the General
Local Authorities Code in order to facilitate the roll-out of telecommunications infrastructure by local authorities
(new Article L.1425-1).
Broadcasting of audiovisual services via ADSL
The transmission and broadcast of radio and television services (whatever the means of signal transmission) falls
within the scope of the 2002 Telecoms Package and is consequently subject to the control of the national
regulatory authorities.
The oversight powers of the French broadcasting watchdog, the Conseil Supérieur de l’Audiovisuel (“CSA”)
were extended by Law 2004-669 to cover all radio and television services, whatever their method of transmission
and broadcast. This law also introduced more flexibility for rules governing the broadcast of radio and television
services, by allowing such services to be broadcast on a network that does not use frequencies allocated by the
CSA – including broadcasting via ADSL – subject solely to prior declaration to the CSA.
In its capacity as a broadcaster of audiovisual services via ADSL, Free is subject to the regulatory “must-carry”
provisions, i.e. the obligation for a provider of services via cable, satellite or ADSL to carry certain audiovisual
services on its network. “Must carry” involves two legal requirements: (i) the service provider – i.e. cable
operator or satellite operator – has to carry certain channels, and (ii) the must-carry channels have to agree to be
carried by the operator or service provider.
Concerning the broadcast of audiovisual services via ADSL, the new must-carry obligations are governed by
Articles 34-2 and 34-4 of Law 86-1067 of September 30, 1986, as follows:
• Article 34-2 states that for all types of network (cable, satellite and ADSL) the following channels must be
provided to subscribers free of charge: public service channels broadcast over microwave, the Chaîne
Parlementaire, TV5, and RFO services specifically aimed at the general public in mainland France (i.e. the
RFO-Sat program). Excluding satellite, the same rules apply to local cable channels.
• Article 34-4 introduces must-carry rights on all means of transmission (cable, satellite, and ADSL) for
free-to-air, analog or digital channels broadcast via microwave, under fair, reasonable and
non-discriminatory conditions. Only the channels themselves can demand that their programs be carried by
the distribution networks and not vice-versa.
• Article 34-5 requires electronic communications networks in digital mode to carry all of France 3’s regional
programs.
Law 2007-309 of March 5, 2007 concerning the modernization of audiovisual broadcasting and the television of
the future amends Law 86-1067, and provides in particular for the full switch of analog television broadcast over
microwave to digital broadcasting by November 30, 2011 at the latest. It sets down the conditions for launching
high-definition television and personal mobile television – innovative services corresponding to a nomad
consumer mode via dedicated means of transmission or telephone. It also introduces a parliamentary commission
to oversee the national framework for the reuse of frequencies released by the phasing out of analog
broadcasting.
The full-scale switch from analog television broadcast over microwave to digital broadcasting will free up
frequencies at the lower of the spectrum. Some of these frequencies, particularly the most effective ones, may be
allocated to telecommunications operators, and in fact the World Radiocommunication Conference has identified
a bandwidth between 790 MHz and 862 MHz that could be used for telecommunications.
Under Law 2007-309, like all television distributors, broadcasters of audiovisual services via ADSL are required
to pay contributions to the compte de soutien à l’industrie de programmes audiovisuels (“COSIP”) calculated
based on the revenue generated by broadcasting audiovisual content (both linear and non-linear) via ADSL. In
addition, this law enables ARCEP to intervene in order to ensure compliance with agreements signed with towns
or groups of towns with a view to laying and using cabled networks.
54 - Iliad – Registration Document 2007