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OPTICAL FIBRE AND CO-INVESTMENT

In a dispute settlement, Arcep clarifies the terms governing Free's access to the Orange FttH networks that it is co-financing 

Paris 21 June 2018

In settling a dispute between Free and Orange, the Arcep body responsible for settling disputes specified the terms and conditions governing access to shared fibre to the home networks outside very high density areas in France.

Reminder of the guiding principles of FttH regulation introduced 10 years ago

The main national operators have chosen to build a new Fibre to the Home (FttH) local loop infrastructure to keep pace with the need for ever-faster Internet connections. Back in 2008, French lawmakers adopted the principle of sharing the last drop of FttH networks, to free up investment and enable efficient rollouts, and gave Arcep the task of specifying how it would be implemented.

Commercial operators are thus able to have physical access to the last drop of the networks deployed by infrastructure operators, to provide their superfast access services. The regulation introduced by Arcep includes the provision that commercial operators can co-finance any FttH network deployed by infrastructure operators who, in exchange, will grant them long-term rights of use.

Regarding the request from Free

For several years, Free has been co-financing FttH networks deployed by Orange.

It was in this context that Free filed a complaint with Arcep, asking that it settle a dispute with Orange over the conditions under which it is able to access the latter's FttH networks in lower-density areas covered by private initiative networks. Specifically, Free asked Arcep to rule on:

- The duration of the rights of use that Orange grants Free in exchange for its co-financing and solidarity in supporting network maintenance costs;

- Providing Free with the elements it needs to understand how the different tariffs relating to the co-financed network are established, along with clarity on the main underlying cost components, as well as the terms and conditions governing price-change decisions;

- The ability to use supernumerary fibres available on the Orange FttH network, to enable Free to connect Free Mobile cellular base stations.

1/ Regarding the duration of access rights

Arcep believes that sufficient clarity on the actual duration of the rights of use is key to long-term predictability, and so an essential element in guaranteeing lasting access to co-financiers for the FttH network. Arcep thus considers that 20-year access rights, combined with the renewal terms and conditions currently stipulated in the Orange access agreement for lower-density areas covered by private initiative, do not make it possible to satisfy the need for clarity and transparency for the entire duration of Free's rights of use.

Arcep therefore required that Orange grant Free, in its capacity of co-financier, definite access rights for a period of at least 40 years, under transparent and predictable conditions, and so giving it sufficient visibility with respect to its investments and solidarity on network maintenance. This duration is consistent with the ones practiced in the marketplace and, in accordance with Free's request, is contingent on Orange's decision to continue to operate its FttH network, technically and commercially, in more sparsely populated areas.

2/ Regarding the pricing scheme for accessing FttH networks

Arcep concluded that, given its status as co-financier of networks in a substantial portion of those parts of France where the Government has issued a call for investment letters of intent (called "zones AMII" in French), it is justified and reasonable that Free obtain the information it needs to understand how the tariffs charged to access Orange FttH networks in more sparsely populated areas covered by private initiative are established.

Orange must therefore amend Free's contract to include the following stipulations:

- The explicit and transparent definition of the ties between the contract's main tariffs and the co-financed network's costs;

- Transmission of the main investment and operating cost components for the network deployed by Orange in "AMII " areas, in an aggregate form and within a reasonable timeframe.

When making its decision, and to ensure that it would have no ramifications for cases that are different in the details, Arcep took the parties' particular situation into account, and notably:

- The degree to which Free helped to co-finance Orange FttH networks, a long-term commitment that requires Free to obtain the cost elements that will enable it to anticipate the tariffs' evolution to a reasonable degree.

- The aggregated nature of the cost elements requested by Free, which it demands be provided within an appropriate timeframe.

3/ Regarding the connection of Free Mobile base stations using the supernumerary fibres from the Orange FttH network it co-finances

Arcep concluded that Free's request to connect Free Mobile base stations using supernumerary fibres from the Orange FttH network it co-finances is fair. This connection capability will improve French users' access to 4G and, in future, to 5G services.

Orange must thus allow Free to connect Free Mobile base stations using the supernumerary fibres from the FttH network deployed by Orange and co-financed by Free, in lower-density areas covered by private initiative, within the limits of their availability and, if applicable, in an amount to be defined.

This Decision is published subject to the legal protection owed to confidential information.



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