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Press Release. The development of broadband internet in France 16 th April 2002. The development of broadband. The value chain Conditions for developing competition France Télécom’s proposals Action by the Authority. Description of the value chain. Flowcharts The offers involved - PowerPoint PPT Presentation

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  • Press ReleaseThe development of broadband internet in France16th April 2002

  • The development of broadbandThe value chain Conditions for developing competition France Tlcoms proposals Action by the Authority

  • Description of the value chainFlowcharts The offers involvedTechnical diagrams

  • The broadband internet value chainConsumerAccessRouting and transportISPFrance TlcomRival operatorsFrance TlcomRival operatorsWanadooRival ISPsfully unbundled accessshared accessOption 5Option 3bitstream accessOption 1Effective competition must affect every part of the value chain

  • Internet userThird party operatorISPADSL PackIP/ADSL: access + transport (option 5)

    France TlcomUnbundling (option 1) Competing IP/ADSL offerDescription of the value chain (1/5) Flowchart: the pack ADSL Connect ATM (bitsream access ( option 3) The customer purchases the ADSL access plus the ADSL subscription from the ISP

  • Internet userThird partyoperatorISPIP/ADSL: transport

    France TlcomUnbundling (option 1) Competing IP/ADSL offerLigneADSLADSL SubscriptionDescription of the value chain (2/5) flowchart Bitstream Access : ADSL Connect ATM (option 3) The customer purchases the Ligne ADSL from France Tlcom and the ADSL subscription from the ISP

  • Description of the value chain (3/5) Offers involvedAimed at operators:Option 1: local loop unbundlingtwo kinds of LLU access offers to the copper pair (full unbundling, shared access);allows the operator to have full control over the offers made to the final customer;regulatory status: a reference offer from France Tlcom, which ART may modifyOption 3 : bitstream accessoffer wholesale France Tlcoms Ligne ADSL and deliver traffic at intermediary levels of France Tlcoms network, aimed at operators as a complement to unbundling;enables competition on IP/ADSL offers aimed at ISPs;regulatory status: special access; ART may especially settle disputes between operators in terms of technical and tariff conditions.Aimed at internet service providers:Option 5:two elements: IP/ADSL access (resale of France Telecoms Ligne ADSL) and IP/ADSL transport (data flow);regulatory status: offer subject to approval by the Ministry.

  • Description of the value chain (4/5) technical diagramCopper pairDSLAMBASSubscriberISP ADSL AccessATM and IP transportSubscribersISP

  • Description of the value chain (5/5) technical diagram

  • Conditions for developing competitionObjectives The role of bitstream access (option 3)The residential market: a crucial market

  • Conditions for developing competition (1/3)Objectives Consumers require efficient competition throughout all segments in the chain:downstream: a variety of offers from access providers;upstream: conditions for operator involvement, allowing competition in offers aimed at access providers.

    The Authoritys aim is to meet the conditions for long-lasting, effective involvement of operators, by means of unbundling and option three, provided both at the same time

  • Conditions for developing competition (2/3) The role of bitstream access (option 3)Nation-wide unbundling coverage, which is a highly capital-intensive task, will take several years;ISPs expect increased competition from operators that will be diversified and likely to cover the whole country in order to make competitive broadband internet offers;Operators need bitstream access (option 3) in order to enter the ADSL market, even in areas that will be unbundled later.The development of competition in the residential market requires rapid, simultaneous and complementary implementation of unbundling on the one hand and bitstream access (option 3) on the other.

  • Conditions for developing competition (3/3) The residential market, a crucial marketIt generates volume and therefore reduces entry costsA requirement for deploying unbundling outside of large cities These features make the residential market a market in itself, in which balanced competitive conditions must prevail.

  • France Tlcoms announcementsUnbundling (option 1) Bitstream access : ADSL Connect ATM (option 3)Offers to ISPs (option 5)

  • France Tlcom's announcements (1/3)UnbundlingFrance Tlcom has notified the Authority of a new reference offer, the main points of which were made public on Thursday, 11th April. This new offer does not fulfil the markets expectations in terms of the following essential points:The tariffs, especially for partial unbundling, appear to be too high for operators to be able to compete with FTs offers to internet service providers; The new proposals regarding co-location of technical equipment in the main distribution frame sites are not efficient. On the one hand, the terms and conditions proposed involve high surcharges, and on the other hand, this solution is presented an interim measure and non-permanent;The offer does not include any specific progress aimed at allowing alternative operators to compete with France Tlcoms xDSL retail offer in term of delivery times.

  • France Tlcom's announcements (2/3)Bitstream Access (Option 3)On Thursday, France Tlcom publicly announced the adjustments it intends to make to the bitstream access ADSL Connect ATM (option 3) offer. These developments are still not enough to enable balanced development of competition:

    the tariffs are still incompatible with the creation of offers to compete with those provided by France Tlcom;the operating terms and conditions, which involve significant surcharges for operators, have not been considerably improved;the deployment calendar, in relation to IP/ADSL, will exacerbate the time squeeze between FT and its competitors.

  • France Tlcom's announcements (3/3)Offers to internet service providers

    France Tlcom has announced a significant drop in tariffs which is beneficial for ISPs in the short term, but discourages alternative operators from entering the market, and thus may harm all players in the medium term.Internet userThird partyoperatorsISPADSL Pack : 38 ex. VAT (45 inc. VAT)IP/ADSL: today: 35.9 ex. VATFT Option 3: today: 40.5 ex. VAT IP/ADSLcompetingoffer/ FT announcement: 26.1 ex. VATFT announcement: 30.6 ex. VATAt the moment, an operator purchases an bitstream acces (option 3) offer from FT for 40.5 and has to compete with an IP/ADSL offer for 35.9. FTs announcements aggravate the existing squeeze

  • Action by the AuthorityUnbundling (option 1) Offers to ISPs (option 5)Bitstream Access (option 3)

  • Action by the Authority regarding unbundling (1/3)Operating terms and conditionsAccess is the first link in the value chain that starts with the subscriber. Applying the Council Regulation of 18th December 2000, the Authority has thus decided to make immediatly modifications of the technical terms and conditions:co-location terms and conditions, which are simplified and thus much less costly, making deployment likely in the provinces and medium-sized cities;reduction of entry costs (cable, electricity, air-conditioning), in line with the decision taken regarding splitters within the scope of the ruling on LD Coms dispute in mid-March;application of the non-discrimination principle will enable alternative operators to deliver xDSL access with similar terms to FT.

  • Action by the Authority regarding unbundling (2/3) Simpler and less expensive co-locationOperators equipment France Tlcoms equipmentCommon access to main distribution frameDedicated roomDedicated access

  • Action by the Authority regarding unbundling (3/3)TariffsMonthly tariffs aimed at efficient cost levels, enabling the residential market to be targeted These tariffs are valid in all of France and they take into account the foreseeable pace of deployment in all areas of the country; they will apply as of 2nd May, 2002 and, according to the data available, up until the end of 2003

    Feuil1

    2001 TariffDecision by ART on 16th April 2002Change

    Fully unbundled access (/month)14.510.5-28%

    Shared access (/month)6.1 + filter on request2.9 including filtering

    Installation costs ()107.978.7-27%

    Tie cable, L120 type ()on requestMonthly payment, all inclusive: 162 or 97 depending on the co-location solution

    &C&F &A

    &C&D

  • Action by the Authority regarding IP/ADSL (1/3)

    France Tlcom has made announcements regarding the following tariff changes:

    IP/ADSL transport, which is currently being examined,IP/ADSL access, which the Authority has not yet been notified.

    Taking into account the global nature of the offer, the Authority wishes to gain a better knowledge of all its parts before taking an overall position.

  • Action by the Authority regarding IP/ADSL (2/3)Elements of the analysisNotwithstanding the final decision, the main elements of the analysis may now be stated:

    - France Tlcoms proposals lead to a time lag between IP/ADSL and bitstream access (option 3) offer availability (time squeeze);

    - France Tlcoms proposals regarding option 3 do not allow the operators to compete with the IP/ADSL offers (tariff squeeze);

    - A balance should be found between the access and transport segments, as operators may compete on the second segment via bitstream access (option 3) offer.

  • Action by the Authority regarding IP/ADSL (3/3)

    TheAuthority is beginning to bring the players together and analyse France Tlcoms public announcements.

    It will announce its decision on the IP/ADSL tariff change by 30th April

  • Action by the Authority regarding Bitstream Access offer (option 3)

    In February 2002 the Authority took the initiative to enter into in-depth co-operation with the main players in the market. The operators expectations have now b

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