Identifier
Created
Classification
Origin
05PARIS116
2005-01-07 11:28:00
UNCLASSIFIED
Embassy Paris
Cable title:  

France: Telecom and Information Technology Update

Tags:  ECPS ETRD FR 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 PARIS 000116 

SIPDIS

STATE FOR EB/CIP
USDOC FOR NTIA AND ITA
FCC FOR INTERNATIONAL
STATE PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: ECPS ETRD FR
SUBJECT: France: Telecom and Information Technology Update

NOT FOR INTERNET DISTRIBUTION

UNCLAS SECTION 01 OF 02 PARIS 000116

SIPDIS

STATE FOR EB/CIP
USDOC FOR NTIA AND ITA
FCC FOR INTERNATIONAL
STATE PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: ECPS ETRD FR
SUBJECT: France: Telecom and Information Technology Update

NOT FOR INTERNET DISTRIBUTION


1. This is another in a series of periodic updates on the
French telecommunications and information technology
sectors, including internet and e-commerce.

Contents:
-- Phone rates in France may soon be going up (para 2)
-- French Telecom Regulator Board Gets New Member (para 3)
-- Videophone service soon to be deployed in France (para 4)
-- Care to purchase a (loss-making) Franco-Italian ISP?
(paras 5 and 6)
-- France Telecom signs agreement for its North American
optical network (para 7)
-- A Bit of Old News - France Telecom and SFR Cegetel fined
for anti-competitive pricing (para 8)


2. Phone rates in France may soon be going up: France
Telecom is reportedly negotiating with the French government
and with telecom regulator ART to increase subscription
rates by 20 percent over the next three years according to
reports in French newspapers La Tribune and Le Figaro, AFX
News reported from Paris. The company is offering a five
percent reduction in local calls rates to offset the
increase, La Tribune said.


3. French Telecom Regulator Board Gets New Member: French
equivalents of FCC Commissioners are called ART college
members and France got a new one when Dominique Roux's term
expired recently. On January 4, Edouard Bridoux was named
by President Chirac to become the newest ART college member.
Born in 1945, Bridoux has been a university full professor
since 1975. He began his career in 1972 as conference
coordinator ("maitre des conferences") at the University of
Valenciennes in northeastern France, where he became
University President in 1978. The following year, Bridoux
rejoined the office of the Minister for higher education,
where he became Chief of Staff for the Minister in 1980.
From 1986 to 1990, Bridoux was rector of the Academy of
Amiens, then Director of the National Superior School of
Engineering and Mechanical Energy of Valenciennes from 1992
to 1993, before becoming rector of the Academy of Reims from
1993 to 1995. Bridoux was technical advisor for higher
education and research in the Prime Minister's office from
1995 to 1997 and then Director General of the National
Institute for Transportation Research and Security (INRETS)
from 1997 to 2000. Since 2000, Bridoux has served as
technical advisor for higher education and research in the

Prime Minister's office. ART college members serve
nonrenewable six-year terms. Three of the five members are
named by the President; the other two are named by the
President of the National Assembly and the President of the
Senate respectively.


4. Videophone service soon to be deployed in France: IP
and video technology firm Leadtek Research and telecom
services provider France Telecom have unveiled what the two
firms describe as the world's first large scale deployment
of video telephony, "MaLigne visio." Jointly developed by
the two companies, MaLigne visio is an IP-based videophone
service that lets users see each other during phone
conversations. The service utilizes QoS monitoring to
achieve real-time video chat, video messaging, video
streaming, and information on demand. The service uses
Leadtek 8882 videophones with integrated cameras and
screens, which subscribers connect to a custom broadband
modem and a standard telephone jack. Calls begin without
the video, which users activate or deactivate with the press
of a button. The videophones receive calls from any type of
fixed or wireless phones for regular voice calls, just like
a standard phone. MaLigne visio provides customers with a
free voice and video messaging service that allows users to
retrieve voice and video messages from any other location.
Users can also share and discuss photos and video by
connecting a digital camera or camcorder to the videophone.
According to recent press releases, at launch MaLigne visio
will be available to about 75% of the French population.


5. Care to purchase a loss-making Franco-Italian ISP?:
Tiscali recently said it had received several takeover
offers for LibertySurf, its French internet service
provider, but the Italian group denied planning to sell the
company it acquired four years ago for 650 million Euros
($864 million). LibertySurf had 386,000 ADSL internet
subscribers or 5.5% share of the French market in September.
It is the fourth largest operator in the French broadband
market, and generated nearly 200 million euros in 2003
revenues. Speculation about the potential sale underlines
Tiscali's urgent need for cash. Tiscali was forced to sell
smaller subsidiaries in Europe and South Africa to raise
money for the repayment of a 250 million Euro bond due in
July 2005. Industry reports have said that Paris investment
bank Rothschild was hired by Tiscali to gauge interest among
European rivals for its loss-making French subsidiary,
valued by analysts at about 250 million Euros. A Tiscali
spokeswoman said: "For the last two months there have been
rising rumors that the refinancing Tiscali must do would
force it to sell one of its core operations. These rumors
and the dynamic growth of the French market encouraged some
operators to make expressions of interest for Tiscali
France. But Tiscali intends to maintain its presence in
France."


6. Someone close to the talks reportedly said that Neuf
Telecom, the French internet and telecommunications group
controlled by the Louis Dreyfus family, submitted a bid for
LibertySurf last month. Neuf Telecom has declined to
comment, but, tellingly, documents about Tiscali's French
subsidiary were reportedly sent to several of its biggest
competitors, including Deutsche Telecom, which owns Club
Internet in France, and Iliad, which owns Free, France's
second-biggest ADSL provider. Interestingly, the head of
LibertySurf quit in August, a month before Tiscali announced
the resignation of Renato Soru, its founder and chairman,
who left to pursue a political career in his native
Sardinia. Any sale of LibertySurf could be complicated by a
30 million euro loan it extended to Tiscali in June 2003.
The Italian parent group said it had repaid 18 million euros
of the loan with rest to be repaid in the first quarter.


7. France Telecom signs agreement for its North American
optical network: The operating subsidiary of U.S.-firm
Level 3 Communications Inc. has signed a multi-year
agreement to provide transmission and co-location services
to France Telecom. Under the terms of the agreement, Level
3 will become FT's primary provider of lit broadband
transport and co-location services in North America. Level
3 will supply identified private-line and wavelength
circuits across its 19,400-mile optical network in the U.S.,
which the FT Group will use as a platform to support its
customers. "This agreement stands as proof of the strength
of our longstanding customer relationship with France
Telecom," said Level 3's president and chief operating
officer, Kevin O'Hara. "We're pleased that France Telecom
will continue to rely on Level 3 as its principal network
partner in North America, and we look forward to providing
them with the highest quality communications services in the
coming years." The new agreement replaces and terminates an
earlier, 20-year dark fiber contract signed by the two
companies in October 2000. Under the prior agreement, FT
acquired a nationwide dark fiber network from Level 3, along
with ongoing maintenance and co-location services. The
fiber strands leased to FT in the initial transaction will
revert to Level 3. The transaction is expected to be
completed in the first quarter of 2005.


8. A Bit of Old News - France Telecom and SFR Cegetel fined
for anti-competitive pricing: In October 2004, France's
competition authority fined France Telecom 18 million euros
and its competitor SFR Cegetel 2 million euros, after
concluding that both groups practiced anti-competitive
pricing tactics toward business customers between 1999 and

2001. The regulator found that the two telecom operators
took advantage of their combined mobile and fixed telephony
businesses to offer below-cost pricing on calls within their
own networks, while charging high prices for other fixed-
line operators to call their mobile networks. Through the
practice, SFR Cegetel sustained a 65% negative margin from
fixed-mobile calls within its own network. For its part,
France Telecom sustained a negative margin of 70%, but
realized a profit of 244 million euros from billing other
fixed-line operators for calls to its mobile network, of
which it returned 114 million euros to its business
customers. A fixed-line operator would have registered
trading losses of 126 million euros over the same period if
it had offered the same prices to customers, said the
regulator. France Telecom has responded that wholesale
prices were fixed by regulator ART and that it plans to file
an appeal against the fine.

LEACH