FCC AND ARCEP COMMISSIONERS DISCUSS NEXT GENERATION

UNCLAS SECTION 01 OF 02 PARIS 007568

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TAGS: ECPS ECON FR
SUBJECT: FCC AND ARCEP COMMISSIONERS DISCUSS NEXT GENERATION
NETWORKS AND UPCOMING TELECOM ISSUES


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1. (SBU) Summary: Federal Communications Commissioner Deborah Tate
discussed telecommunications regulatory issues with her French
counterpart telecommunications regulator Autorite de Regulation des
Communication Electronique et des Postes (ARCEP) Commissioner
Gabrielle Gauthey on November 10. Gauthey said that France
compensated for its relatively low cable penetration rates by
offering pay television and other high-value added telecommunication
services through its phone lines. "Triple play" offers with long
distance telephone service, broadband, and television were among the
cheapest in the world at USD 36.50 a month. Investment in fiber
networks was increasing, however, with France Telecom's competitors
investing as much as the incumbent. ARCEP coordinates regularly
with France's broadcast regulator and other EU member states. End
summary.


2. (U) On November 10, Federal Communications Commissioner Deborah
Tate met with her French counterpart telecommunications regulator
Autorite de Regulation des Communication Electronique et des Postes
(ARCEP) Commissioner Gabrielle Gauthey on competition in the
telecommunication industry, next generation networks, European
coordination, and universal service. ARCEP International Relations
Chief Joel Voisin-Ratelle, FCC Western Europe Advisor Tracey
Weisler, and econoff also attended.


3. (SBU) According to Gauthey, cable was relatively undeveloped in
France, with only a five percent penetration rate. However, French
telecom firms provided "triple play" long distance telecom,
broadband ADSL internet services, and television services over the
telecom network. Competition was robust, with many companies
charging 30 euros (USD 36.50) per month, among the lowest rates in
the world. Seventeen percent of French residents obtain their
telephone services over the internet (VOIP). All of France
Telecom's competitors comprise about 50 percent of all
telecommunications networks. Many of these competitors have changed
their business model from renting capacity from France Telecom to
building their own capacity. That said, local loop unbundling does
not take place in all regions of France. In rural areas, consumers
can only gain access to two to eight megabits, which is not enough
for video.


4. (SBU) Cable was weak in France for several reasons, Gauthey
explained. France Telecom owned France's first cable operation and
intentionally did not upgrade it so that it would not cannibalize
its telecommunications operations. France's efforts therefore went
into developing its broadband DSL services. Unbundling the local
loop has resulted in booming competition. Nonincumbent operators
such as Free and Neuf Telecom have driven innovation. ARCEP has
also spurred competition through bit stream access, i.e., wholesale
broadband access. Finally, France's copper network is newer than
that in the U.S. and does not have to be replaced.


5. (SBU) However, France's fiber network is beginning to expand more
rapidly. Telecom provider Free announced that it would invest 300
million euros (USD 375 million) by the end of 2007 to build a fiber
optic network that would reach four million households. ARCEP had
just issued spectrum for wimax through a "beauty contest," Gauthey
said. ARCEP used three criteria to evaluate the packages assembled
by telecommunication companies: price, territorial coverage, and
bit stream or broadband coverage. In total, 14 regional governments
applied for a license to ensure their region had adequate coverage,
and six obtained one, in addition to private companies.


6. (SBU) Gauthey said that in recent years, universal service has
become a less "talked-about" subject, even though the GOF has not
yet decided whether next generation networks should contribute to
the universal service fund. Telecom service providers pay directly
into this fund, and it does not appear as a separate item on phone
bills as in the U.S. Since France Telecom is the recipient of the
universal service fund, it is supportive of the expansion of its
coverage to broadband.


7. (U) European Union (EU) member state telecommunication regulators
met regularly to coordinate policy, Gauthey said. The group is
discussing appropriate ways to harmonize regulation and whether to
harmonize termination rates. It is also reviewing the entire EU
telecommunications framework in preparation for new directives that
the Commission will issue next year. In addition, the European
Commission is active in deciding whether incumbent telecommunication
providers are dominant players that are abusing their market power.
If so, each regulatory has a toolbox of remedies.

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8. (SBU) Commissioner Tate noted that, in the U.S., the FCC was
discussing how to manage termination fees mobile phone companies
impose on consumers when they terminate service before the end of a
fixed contract. Gauthey noted that the EU was also debating such
fees, particularly the need to harmonize them. However, the Conseil
de la Concurrence (Competition Council),not ARCEP, was managing
this issue.


9. (SBU) Gauthey explained that, while ARCEP was in charge of
frequency allocation and telecommunications industry oversight,
another French agency, Conseil Superieur de l'Audiovisuel (CSA),
oversaw the broadcasting industry and its allocated spectrum.
Rumors have persisted about a merger between the two agencies, but
their functions were discrete. Two ARCEP commissioners meet with
two CSA commissioners every month to coordinate on overlapping
issues and issue joint recommendations. Two issues they discuss are
spectrum usage and the "digital dividend" or what to do with
spectrum earmarked for analog broadcasters after television and
radio switch over to digital transmissions. She said that the two
also worked together to pass laws against child pornography and hate
content on the internet, but CSA does not, in general, want to
regulate content. Commissioner Tate responded that the FCC is very
considerate of protecting children through ensuring transmission of
appropriate programs. Congress has allowed fines to increase
tenfold. However, FCC looks into indecent programming only upon the
receipt of a complaint.


10. (U) FCC cleared this message.

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