The regulator noted indeed that a competitive dynamic now drives this market

By Hervé Castelnau, Laure Givry and Grégory Sroussi, respectively lawyers associated and collaborator, law firm Norton Rose lawyer.

December 7, the regulatory authority for electronic communications and of posts (Arcep) notified to the European Commission its draft decision proposing the lifting of the regulation of the market of wholesale access offers broadband delivered at the national level. For the regulator of telecommunications for the competition authority, regulation ex ante that market - identified as number 12 bis - is therefore more justified in the current economic configuration. Waiting for a verdict of the European Executive, the draft decision of the commented Arcep is under a process of public consultation from December 6, 2006 and January 20, 2007. Such a project has the particularity of being the first to propose not to renew a control system adopted in the process of analysis of the markets for electronic communications. This news is the opportunity to trace the history of the regulation of this market, and then comment on the analysis conducted by Arcep, and approved by the Council of competition, that there is more place to regulate the upstream market.

In a recommendation of 11 February 2003, the European Commission had identified - the sector of the Internet broadband - two wholesale markets may be subject to ex ante regulation: the 11 market relative to the "supply wholesale unbundled access, (including shared access) to the loops and the local sub-loop on metallic lines for the provision of broadband services and voice services"; market 12 "supply wholesale broadband services". On the basis of article 15 of the directive "framework" allowing regulatory authorities national identify other relevant markets subject to regulated ex ante that those identified by the Commission, Arcep has proposed, on the one hand, to add to markets 11 and 12 above market 12 bis referred to as "providing access to broadband delivered at the national level" andon the other hand, to designate France Telecom as powerful operator on the market. For the telecoms regulator, "offers access broadband" or "offers access broadband" are offers of access which the nominal rate is higher than or equal to 128 Kbps. Such offers differentiated access offers low flow rate, what their bandwidth is greater and that they allow the concurrent use of the Internet and telephone service. Wholesale access offers broadband are offers to operators allowing them to offer market access offers retail broadband. These access offers broadband include offers to take delivery of the stream broadband at a national level: are access offers broadband delivered at a national level (1).

To justify the regulation of this market 12 bis, Arcep had found that the criteria of the recommendation of the European Commission on the relevant markets were well filled, namely: the existence of non-tentative and high barriers to entry; the absence of prospects for the evolution towards a situation of effective competition; the inability of the competition law to remedy alone thus identified market failures. The regulator then could impose France Telecom - declared operator dominant on the market 12 bis - a certain number of obligations: the prohibition to practise rates of eviction, non-discrimination, accounting separation, and a duty to formalize and to transmit to the Arcep technical and tariff benefits of service conditions internal between the entity operating on telecommunication networks and the entity providing the retail Internet access. The competition Council, which was seized for opinion on this analysis, approved the reasoning of the regulator (2). The draft decision of the Arcep then submitted to the European Commission which also approved it all stating including "" "" When the obligations on unbundling and access products broadband delivered at the regional level will be strictly implemented and in particular the accounting separation, the regulation proposed by this notification will be more necessary. "The effects of this decision on the market 12 bis having been limited to a period of one year, this decision is therefore lapsed since September 23, 2006." It is in this context that the Arcep proposed December 7 a new draft decision to the market 12 bis.

The ex-ante regulation is exceptional, even extreme: it is indeed "" "" to reserve such regulation to situations in which barriers to competition would be like the competition law itself, without recourse to ex ante regulation, would not sufficiently efficient "(3)." The purpose of this type of regulation is to create the conditions of competition in a market which is not competitive at the time of his analysis to enable consumers to fully benefit from reasonable prices and any innovation that germ door market. However, according to Arcep, conditions of need for ex ante market regulation 12A appear no longer be met today. The regulator noted indeed that a competitive dynamic now drives this market. He finds so eighteen months a considerable development of the systems deployed by alternative operators, this point regional collection and the dispatchers of France Telecom through local loop unbundling. The result of this movement that alternative operators now have the opportunity to propose access offers broadband to their own affiliates or third-party Internet access providers without resorting to the offer of national collection "IP/ADSL" of France Telecom. Arcep adds that the Internet market since 2005 also the subject of a major consolidation of the fact of many buy-outs of companies and mergers-acquisition operations, giving rise to groups of companies integrating operator networks and broadband service provider functions. The conditions therefore now seem to collected that such vertically integrated sets come into competition with France Telecom.

For the competition Council, the only common competition law today, can without the support of ex ante regulation, process any competitive shortcomings of the market 12 bis (4). The Council of competition exposes effect that because of the recent outbreak of competition in this market, the incumbent operator is in a situation where he can no longer afford to practice its network access tariffs that may be considered as excessive. Conversely, if to undermine the profitability of the networks of the newcomers on the market 12 bis, the operator decided to charge ridiculous prices to the eviction of other actors in the market, it would be an abuse of dominant position (5). And even if the competitive market 12 environment bis had to be diluted in the future, said that the Arcep competition Council has regulatory tools that can be activated in an emergency. "In exceptional circumstances, when the Minister responsible for electronic communications or the electronic communications regulatory authority and positions consider it urgent to act, by way of derogation from the procedures provided for in the two preceding paragraphs, in order to preserve competition and protect the interests of users, they may immediately adopt proportionate measures which are applicable only for a limited period"section indeed L 37-3 post and electronic communications code.