EUROPEAN COMMISSION. Commission Decision concerning Case FR/2015/1736: Symmetric remedies for FTTH deployments in France

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1 EUROPEAN COMMISSION Brussels, C(2015) 4261 final Autorité de régulation des communications électroniques et des postes (ARCEP ) 7, square Max Hymans F Paris-Cedex 15 France For the attention of Mr. Sébastien Soriano Président Fax: Dear Mr Soriano, Subject: Commission Decision concerning Case FR/2015/1736: Symmetric remedies for FTTH deployments in France Article 7(3) of Directive 2002/21/EC: No comments 1. PROCEDURE On 22 May 2015, the Commission registered a notification from the French national regulatory authority, Autorité de régulation des communications électroniques et des postes (ARCEP) 1, concerning symmetric remedies for FTTH deployments in France. There were two national consultations 2 that ran from 15 July 2014 to 26 September 2014 and from 10 December 2014 to 20 January 2015, respectively. On 1 June 2015, a request for information 3 was sent to ARCEP and a response was received on 4 June Under Article 7 of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), OJ L 108, , p. 33, as amended by Directive 2009/140/EC, OJ L 337, , p. 37, and Regulation (EC) No 544/2009, OJ L 167, , p. 12. In accordance with Article 6 of the Framework Directive. In accordance with Article 5(2) of the Framework Directive. Commission européenne/europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel

2 2. DESCRIPTION OF THE DRAFT MEASURE 2.1. Background In October 2009, ARCEP notified to the Commission the general terms and conditions for access to fibre optic electronic communication lines and the identification of cases where the local connection point for access to inbuilding fibre wiring could be located in private property in "very dense areas" of the French territory. 4 ARCEP's decision established that in-building operators should meet reasonable requests for passive access to their fibre lines at a local connection point and to the required associated facilities at reasonable and non-discriminatory conditions. In addition, ARCEP stipulated that the charges for access should be consistent with the principles of nondiscrimination, objectivity, pertinence and efficiency of investment. The Commission commented on ARCEP's use of Article 5 of the Access Directive as a legal basis for imposing the regulatory obligations. While the Commission agreed with ARCEP's approach in that decision, it noted that Article 5 should be used with caution and only in exceptional circumstances. The Commission invited ARCEP to monitor developments in the market and to consider imposing other remedies (such as asymmetric access to fibre infrastructures) if the proposed measures did not lead to the envisaged infrastructure competition. In addition, the Commission considered that the lack of an official endorsement of building operators' access offers prior to their publication could give raise to an undesirable lack of regulatory certainty and invited ARCEP to consider providing further details on pricing terms and conditions in its adopted measure, or to require operators to submit their offers to ARCEP for their prior approval. In October 2010, ARCEP notified to the Commission the terms and conditions for the symmetric access to fibre optic electronic communications lines rolled out in France outside "very dense areas" 5. The purpose of ARCEP's notified measure was to promote efficient investments and innovation and to ensure a coherent deployment and a homogeneous coverage of FTTH networks throughout the national territory. In its notification ARCEP established the rules for (i) access to the concentration point; (ii) the size of the point of concentration and shared backhaul offer; (iii) completeness and coherence of FTTH deployments; as well as (iv) coinvestments and terms and conditions of access. The Commission commented on the lack of legal certainty as regards the terms and conditions of access to FTTH lines, as some key aspects of the proposed measure had not been defined in sufficient detail (e.g. the approach to determine the risk premium for fibre deployments and the volume discounts). The Commission thus invited ARCEP to further specify details on 4 5 C(2009)8692. ARCEP identified "very dense areas" as being municipalities where, on a large part of the relevant territory, infrastructure competition was susceptible to emerge (i.e. where it was economically viable for several operators to rollout their own fibre access network in the proximity of dwellings). C(2010)8623 2

3 pricing and access conditions in its final measure. In addition, the Commission asked ARCEP to reconsider if the proposed size of concentration points was adequate to ensure co-investments in less densely populated areas. Finally, the Commission invited ARCEP to closely monitor NGA developments and to evaluate whether the symmetric regulation scheme remained sufficient to ensure competition or if, instead, additional asymmetric forms of access could be more appropriate The notified draft measure As indicated by ARCEP in its notification, there has been an increasing number of operators deploying fibre optic local loops to the subscriber in France, in particular due to public initiative networks (PINs), as well as increasing numbers of commercial operators requesting access to high-speed fibre optic networks. 6 ARCEP considers that the continued increase in market participants expected in the near future means that there is a risk that the costs of interoperability may increase significantly and that groups created at the initiative of operators for the standardisation of processes and information exchanges (such as Interop'Fibre 7 ) are unlikely to be appropriate to ensure adequate interoperability. 8 The main objective of ARCEP's draft measure is therefore to clarify the existing regulation regarding fibre optic access in order to ensure better implementation and standardization of information sharing between players. It consists of several regulatory measures and recommendations for consideration by operators Regulatory remedies The legal basis for the regulatory remedies imposed by ARCEP are Article 12 of the Framework Directive, relating to the imposition of sharing of infrastructure used for the provision of electronic communications, and ARCEP notes that the number of building operators that it has identified increased from 5 at the end of 2007 (including 2 PINs) to 34 at the end of 2014 (including 28 PIN). Similarly, ARCEP notes that the number of commercial operators registered in its list has increased from 5 to 20 between 2009 and Furthermore, the number of operators who reported having activated at least one access line on a fibre optic network increased from 11 to 27 between 2012 and Interop'Fibre was created in 2008 at the initiative of France Telecom and SFR to define the practical means for management of processes and information exchanges to be implemented under the pooling of the very high speed fibre optic electronic communications networks. Currently the group has expanded to include twelve operators: Orange, SFR, Numericable, Free, Bouygues Telecom, Colt, Axion, Tutor, the energy and e-communication intercommunal Ain union (SIEA), Céliéno (R.E.G.I.E.S. high and very high speed), Altitude Infrastructure and Covage. ARCEP notes that recommendations from the Interop'Fibre group are not legally binding. In fact, ARCEP explains that, in spite of Interop'Fibre recommendations, the actual implementation of recommendations may differ between building operators and structural differences in the way operators describe objects and processes undermine the entire system of interoperability. ARCEP notes that these difficulties have been widely documented in the various exchanges it has had with operators. In contrast, some stakeholders dispute ARCEP's view as they consider in their response to the second consultation that the current system is fit for purpose and question the need for additional regulation from ARCEP to ensure interoperability. 3

4 Article 5 of the Access Directive, relating to the imposition of obligations regarding access, interconnection and service interoperability. The regulatory obligations and recommendations proposed by ARCEP relate to the following: (i) principles for information exchange; (ii) nondiscrimination obligations; (iii) conditions of access offers; (iv) exchange of information on collectivised networks; and (v) procedure for access orders and role of the infrastructure operator. In relation to the first item, ARCEP establishes a period of one calendar day for infrastructure operators to notify the information necessary for commercial operators to be able to make a request for access to the fibre line. 9 ARCEP also imposes an obligation for infrastructure operators to allow access to commercial operators of previously available information within one calendar day, in an automated manner and free of charge. Finally, the infrastructure operator shall keep record of the information supplied to commercial operators in the previous six months to ensure traceability of information. Regarding the non-discrimination obligations, ARCEP imposes an obligation on infrastructure operators to ensure that information is made available at the same time, same level of detail and allowing the same operational opportunities to all commercial operators. In addition, the infrastructure operator shall make sure that the operational and technical procedures regarding the line access order are comparable to those that it uses for the needs of its own departments. In this sense, ARCEP imposes an equivalence of outputs (EOO) rather than equivalence of inputs (EOI) obligation on infrastructure operators. 10 In response to the RFI, ARCEP explained it's preference for EOO and noted that it considered the obligations sufficiently detailed to result in an approach similar to EOI in practice. 11 In addition, in order to ensure non-discrimination and, in particular, to counter any potential first mover advantage of vertically integrated infrastructure operators, ARCEP proposes to impose a three-month freeze period for the commercialisation of an access line following the availability of the collectivisation point. In order to allow monitoring of non-discrimination, infrastructure operators must also provide to ARCEP, on a quarterly basis, a list of key performance indicators (KPIs) defined in the notified measure In particular, information regarding prior consultation procedures, the infrastructure mesh and the elements of the collectivised network. This approach has been criticised by some stakeholders in their responses to the second consultation, noting that ARCEP should have adopted an EOI approach, particularly in light of the fact that the systems are in the process of being specified and set up. ARCEP considered that the market for access to fibre lines was characterised by a diversity of commercial operators, meaning that the use of EOO was the most effective means to ensure interoperability of processes between operators. They also explained that they were accompanying the EOO obligation with additional measures (such as KPIs) which would help to ensure nondiscrimination. Finally, they noted that in practice public initiative networks (expected to represent a significant share of the total fibre roll-outs) would effectively be under EOI, as they are not present in retail markets. 4

5 3. NO COMMENTS In relation to the conditions of access offers, infrastructure operators shall publish their access offer on a dedicated page on their website and inform ARCEP and commercial operators. In addition, the infrastructure operator shall define the performance levels to which it commits and the penalties due to contracting commercial operators for failing to meet these performance levels. ARCEP identifies a set of minimum performance indicators and notes that penalties must be sufficiently incentivising to the infrastructure operator. ARCEP also sets out a series of obligations regarding the exchange of information on collectivised networks. For all co-financed meshes, infrastructure operators shall make available on the first and ulterior prior consultations a provisional schedule of deployments and the expected number of users supplied through these. Before any deployment, infrastructure operators shall conduct a one month prior consultation to explain their deployment project and to supply all relevant information (specified by ARCEP in its draft measure) to commercial operators. New consultations should follow if there are significant modifications to the information initially sent. In addition, ARCEP sets out the (i) recipients that shall receive the information supplied by infrastructure operators, (ii) procedure for making information available regarding the infrastructure mesh, (iii) conditions that need to be met to start the commercialisation of a collectivised network, and (iv) information required for multi-fibre deployments with dedicated fibre in very dense areas. In relation to the procedure for access orders and the role of the infrastructure operator, the infrastructure operator shall include in its access offer a service consisting of the construction of the end connection at the request of the commercial operator at a reasonable rate and supplying commercial operators with a network tool allowing the visualisation of the workload schedule. Similarly, the access offer shall include a maintenance service of active lines. When requesting access to a line, the infrastructure operator shall provide a line availability report specifying the line identifier (which shall be stable over time) and it shall describe the objective and non-discriminatory conditions that may cause it to reject an order. In addition, infrastructure operators shall supply operators that desire access to lines an order input tool providing information on connectable and existing lines. In relation to the implementation of the decision, ARCEP has separated the obligations into three categories based on the estimated time needed for their implementation. The implementation dates are thus six, twelve and eighteen months, respectively, from the date of publication of the final decision. The Commission has examined the notifications and the additional information provided by the NRA and has no comments. 12 Pursuant to Article 7(7) of the Framework Directive, ARCEP may adopt the draft measure and, where it does so, shall communicate it to the Commission. 12 In accordance with Article 7(3) of the Framework Directive. 5

6 The Commission s position on this particular notification is without prejudice to any position it may take vis-à-vis other notified draft measures. Pursuant to Point 15 of Recommendation 2008/850/EC 13 the Commission will publish this document on its website. The Commission does not consider the information contained herein to be confidential. You are invited to inform the Commission 14 within three working days following receipt whether you consider that, in accordance with EU and national rules on business confidentiality, this document contains confidential information which you wish to have deleted prior to such publication. 15 You should give reasons for any such request. Yours sincerely, For the Commission, Robert Madelin Director-General Commission Recommendation 2008/850/EC of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services, OJ L 301, , p. 23. Your request should be sent either by CNECT-ARTICLE7@ec.europa.eu or by fax: The Commission may inform the public of the result of its assessment before the end of this three-day period. 6