III-3.1: Speech delivered by Mr. Jean-Ludovic Silicani, the Chairman of the Arcep, on November 19, 2009, during the “Digiworld Summit”, organised by the IDATE (European Audiovisual and Telecommunications Institute).

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During the IDATE summit, Mr. Jean-Ludovic Silicani, the President of the Autorité de regulation des communications électroniques et des postes (Arcep – French Electronic and Postal Communications Regulation Authority) defended his point of view on the new challenges and issues in electronic communications regulation, and announced the creation of a committee within the Arcep to reflect on regulation of this sector in the long-term.

The first subject addressed was the opening of the telecommunications sector to competition. The President explained that the construction of solid, lasting free-market competition can be obtained not by seeking maximum competition, but rather, optimal competition. Optimal competition entails finding a balance between a supply of quality services at a reasonable price to consumers, and the possibility for operators to earn sufficient margins to enable them to innovate and invest. To this end, he repeated that he was favourable to licensing a fourth mobile telephone operator in France. The increased competition that would result would benefit consumers, for mobile telephone service prices in France are at the high end of the European average.

Secondly, upon the subject of electronic communication, the President supported the idea of shifting from asymmetrical regulation—which has become less necessary because of the change from a monopolistic situation to a competitive market—to symmetrical regulation, which would give equal treatment to all operators. This would imply a change in the role of the regulator, who would become less of a police officer and more of a ‘catalyst for market development’. The digital economy is a major sector for the economy and represents 6% of gross national product. The President of the Arcep intends to overcome the two major hurdles confronting this sector, in order to build a lasting and innovative digital ecosystem.

The first issue, considered to be a horizontal issue, is developing very-high-speed Internet networks, both in the home and on mobile phones. This requires reconciling the various goals of competition, investment, and local and national development programmes; all of which must open up to other solutions. For mobile networks, the Arcep has followed the provisions of the Loi de modernisation de l’économie (Economic Modernisation Act) of August 4, 2008, and conducted a consultation with telephone service providers on the possibility of their sharing 3^rd generation mobile infrastructures, which should lead to a standard agreement between all operators by the end of the year. The reconciliation of competition and innovation is also problematic in licensing a 4^th mobile telephone provider in France, because this new operator requires a band of radio frequencies to emit its services, and there are a very limited number of frequencies available. The Arcep’s new method of attribution should be published at the end of the year and answer these problems.

For landline networks, the deployment of a new fibre-optic local loop should allow a progressively greater number of consumers to access the Internet at virtually unlimited speeds. However, once again, the creation of new networks should not lead to new monopolies on the local loop. Technically, the terminal part of fibre optic networks should be open and neutral, in order to allow all operators to service users on the network, especially networks within private property, as was decided by the Loi de modernisation de l’économie in August 2008. This principle of network mutualisation will have to be implemented by the Arcep. After having conducted many studies and experiments on the question, the Arcep has concluded that there has to be a clear legal framework in order to deploy fibre optics, an idea that the major operators agree upon. There has to be a distinction between densely populated areas and sparsely populated areas. For densely populated areas, the idea is to allow operators to contact building owners to obtain permission to equip the building with fibre: he will install either one fibre for each operator, or a devise to permit access to the building by different operators.  Once the legal framework has been established, operators will have to publish their service plans and tariffs. For less densely populated areas, fibre optic deployment will be horizontally mutualised, open to different operators in a fair cost-sharing system. In these two contexts, the goal will be to promote network mutualisation and to stimulate investment by coordinating public and private initiative. The Arcep will also examine the ways that public funds will be used in these programmes, in the context of the national loan to promote infrastructure development during the economic crisis.

 The second major issue for this sector is that of its underlying economic model, meaning the sharing of the value and the financing of networks between different links in the value chain. The deployment of very-high-speed internet will promote the expansion of very attractive contents which will reciprocally increase consumer’s appetite for high speed internet. There is already an evolution in the role of various actors who want to reposition themselves on the value chain by developing new activities, which creates competitive difficulties because of the exclusivity policies implemented. The Autorité de la Concurrence (French Competition Authority) published an opinion on this subject on July 7, 2009.

Beyond these questions, the relations between different links of the chain, especially between content providers and service providers, raise questions as to network neutrality and Internet neutrality, which can be divided into three distinct issues. Economic neutrality exists when value is shared between service providers and content providers, and when they share the financing of network development. It is because of the amount of content available that new generation networks have to be built, which could imply that content providers should participate in financing them. Their financial participation seems to be a reasonable consideration for the cost that they and their clients engender for service providers. However, there exists the issue of network neutrality when service providers prioritise traffic to and from different networks, in an attempt to modulate data fluxes in order to optimise their quality of service. Finally, deontological neutrality explores the degree of involvement of service providers or the government in the nature of content provided, especially when such content is illegal.

The regulation of this sector therefore has to have a definition and a regulation as to what ‘acceptable’ neutrality means. In other words, the relations between content providers and service providers have to be determined. This is why, since September 2009, the Arcep has begun a process of reflecting upon solutions to this important subject, while striving to respect the two essential principles of electronic telecommunications law: non-discrimination, which prohibits service providers from unduly favouring certain content, especially its own if it is vertically integrated; and transparency, which allows the consumer to be informed on the rules of traffic management applied by his service provider. This reflection process will give way to a process of cooperation with the actors of the sector and the organisation of a conference.