1 Press Update The Development of high-speed Internet in France ART’s opinion on France Télécom IP/ADSL offers 18 July 2002

2 The development of the high-speed market in Europe Rapid development: from 5.6 million high- speed subscribers in Europe in late 2001 to 9.5 million at end 2002* The price of network access is a critical factor for market development *source: CMA consulting

3 The high-speed Internet value chain Consumer Access Collection and transport ISP France Télécom Competing operators France Télécom Competing operators Wanadoo Competing ISPs Full unbundled access Shared access Option 5 Option 3 Option 1 Effective competition must be present along the entire value chain

4 ART’s goals for the development of ADSL in France Effective competition along the entire value chain –Access: the decision dated 16 April 2002 on the pricing and operational conditions of unbundling (full unbundled access and shared access: option 1) –Collection and transport: the need for an option 3 offer, to allow operators to complete deployment for unbundling and to compete with France Télécom’s option 5 offers (IP/ADSL) –Internet service: making ISPs’ ADSL offers viable, while ensuring that operators benefit from viable market entry conditions, via unbundling and option 3

5 What ART is doing (1) Access: the decision of 16 April 2002 and France Télécom’s reference offer of June 2002 for unbundling (option 1): –Fees that are among the lowest in Europe: –Collocation conditions that have been simplified considerably

6 What ART is doing (2) Option 5: the pricing opinion of 18 July 2002 Major improvements in the conditions of option 5 for ISPs, to benefit market development

7 What ART is doing (3) Option 3: changes made by France Télécom in early July, compatible with IP/ADSL prices –Two offers now available: –Functional improvements, in particular the elimination of pre-reservation of access, which allows operators to order access by unit –Improvements still to be made: access to the lower level (1 st cross connect)

8 Conclusion A measure that is highly beneficial to the dynamic development of the market for all players: –ISPs: significantly improved economic conditions, extension of the range of offered services –operators: viable entry conditions on the market, to complement unbundling For consumers: competition that will encourage a decline in prices (cf. current market price: €45 VAT included, for a 512 kbits/s offer); prices will drop as a result of market competition Implementation as of 15 October 2002 to ensure that France Télécom and competing operators are able to launch their offers to ISPs at the same time