1. Broadband Workshop Facilitating Broadband Investment French regulatory framework Bertrand Vandeputte ARCEP European Commission – DG INFSO March 23rd, 2011

2. General approach on Broadband regulation  Objectives of regulation  promotion of investments  maintain effective and durable competition  planning  ARCEP has so far promoted facility-based competition  in accord with the ladder of investments  on Broadband, with the regulation of Local Loop Unbundling…  … and now on NGA  Regulation framework through obligations applying to operators  either in a asymmetrical way (regulation of the existing copper network)…  … or a symmetrical way (regulation of the rolls out of the new FttH networks)  Regulation aims to reduce investment costs :  especially when roll out of a new network  access to existing infrastructures so as not to replicate  promote sharing of investments / risks

3. Investment of public sector : intervention of local authorities  France has a five-year long experience of public intervention in the electronic communications market.  Since mid-2004, local authorities have been given a new and optional competence to intervene in the electronic communications market as a local public service.  In respect of equality and of free competition on EC market, local authorities can on their territories :  roll out passive infrastructures / networks  roll out and operate EC networks  become wholesale market players  operate on the retail market when there is a local lack of « adequate private initiatives to meet the need of final users »  So far, on the 85 biggest projects of local authorities notified to ARCEP :  more than 2,7 billions Euros, of which 60% of public fund  essentially on broadband : backhaul networks and areas without DSL access

4. Implementation of regulation : 3 case studies  Local loop unbundling  Roll out of FttH network  Access to subloop

5. 1 st example : regulation of Local loop unbundling (1/2)  Unbundled access to the copper local loop of France Télécom  passive offer  enables innovation & differentiation by alternative operators (TV on DSL / triple play)  grants sustainable competition on broadband  Regulatory framework put in place by ARCEP : promotion of LLU  obligations imposed to France Télécom  bitstream (activated wholesale offer) as a transitory complement  Investment needed for LLU : optical fiber backhaul  so as alternative operators can connect their equipments installed in unbundled MDF to their own backbone networks  importance of alternative backhaul networks : for broadband today… and for NGA in the future

6. 1 st example : regulation of Local loop unbundling (2/2)  Action of local authorities has been determinant for LLU :  public investment, through optical backhaul networks rolled out by local authorities  40% of MDF / Local Exchanges made available to LLU (more than 2M households + acceleration of private investment)  Measures are taken to facilitate the action of local authorities :  Possibility for local authorities to gather data on existing networks…  … so that they can invest where it is needed, without replicating existing infrastructures via public initiative networks via FT’s FO offer Extension of LLU coverage

7. 2nd example : regulation of NGA (1/2)  FttH = fiber to the home  Roll out of a new local loop  New round of important investments (25 to 30 billions Euros)  Initiated by alternative operators in very dense areas  Two complementary tools  Access to France Telecom’s civil engineering (asymmetric regulation)  limit the costs of FttH rolls out  level-playing fields for the access to ducts and poles  Access and co-investment on the terminal part (symmetric regulation)  facilitate the deployment in private domains ;  reduce the risk of a local monopoly through sharing the terminal part ;  lower deployment costs through mutualisation and co-investment schemes ;  improve competition in very dense areas through multi-fibre deployments ;  ensure consistent coverage in less dense areas.

8. 8 2nd example : regulation of NGA (2/2)  Objective of NGA regulatory framework implemented by ARCEP:  to provide an incentive to investment and fibre deployments…  …. and at the same time to protect and improve competition.  alternative operators are using France Telecom’s ducts offer, with noticeable rollouts in over fifty cities  Local authorities will take part in this new round of investments :  measures taken by the government to promote fiber rolls out and enable public investments (Plan National THD)  tools at the disposal of local authorities : to collect data

9. 3 rd : Access to subloop (1/2)  Genera demand for more bandwidth  by end users, local authorities  current DSL technologies : limited by the length of the copper pair  FttH is the sustainable solution for more bandwidth (100M symmetrical)  …but fiber rolls won’t occur everywhere at short- or mid-term  Access to the copper subloop = interesting solution  shorten the length of the copper pair => bandwidth till 20M or even 40M (VDSL2)  Implementation of access to the subloop suppose to modify the topology of the local loop…  when it is implemented, all DSL access have to be activated at the level of the street cabinet  … which could jeopardize investments made by alternative operators for LLU at the level of the MDF

10. 3 rd : Access to subloop (2/2)  Planning must not been done to the detriment of competition :  only LLU can locally grant effective competition  ARCEP’s approach :  enable local authorities to ask for the implementation of access to the subloop  grant that this implementation has no effect on LLU  Framework under public consultation :  through market analysis decision : obligations imposed to France Télécom  should be adopted at the end of Spring

11. Conclusion  ARCEP has implemented a framework on Broadband :  that promotes competition…  … letting local authorities planning rolls out on their territories  Articulation between backhaul and access :  Backhaul is necessary to enable competition in remote areas  Access through either LLU, FttH or access to the subloop  Local authorities are given the tools to have a coherent approach on their territories :  data gathering  public investments where needed