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Rural Access (continued)

Atlantiques, Loiret, and Alsace, which have established public network projects by leasing unbundled local loops and installing Digital Subscriber Line Access Muliplexers (DSLAM) to provide DSL broadband services to residents and businesses. In addition, in 2005 the European Commission co-funded with France an open broadband infrastructure network in Limousin that provided services to residential users, businesses, and public authorities. The Commission agreed to fund the project because it mainly – but not entirely – included rural and remote areas.15

Competition

When France Télécom launched asymmetric digital subscriber line (ADSL) broadband Internet access in 1999, the French regulator, the Authorité de Régulation des Communications Électroniques et des Posts (ARCEP) required the company to allow Internet service providers (ISPs) to lease its copper loops so that they could market their own broadband services (albeit with their own central office equipment).16 One of the first companies to take advantage of this rule was an ISP created by Iliad (the company that provided the content for France’s Minitel proprietary network system), called Free, which began offering Internet service in 1999 by leasing France Télécom’s infrastructure, which allowed it to compete directly with France Télécom’s ISP, Wanadoo (later renamed Orange). Unbunding followed in 2002 after protracted negotiations between the French government and France Télécom. By the end of 2004 France Télécom had unbundled 1.6 million lines (more than 25 percent of the 6.1 million ADSL lines in service).17 Yet by 2006 the company still dominated the market with Orange at 49 percent of the broadband market, followed by Free at 19 percent, Neuf Cegetel at 18 percent, Alice and Club Internet with 7 and 5 respectively, and other small providers with 2 percent.18 Moreover, France Télécom is working to gain more subscribers by adapting its local loop network for higher-speed broadband access by installing nodes closer to subscribers who otherwise would have been too far from the central office to get broadband.19

Unbundling appears to have fostered lower prices for consumers. While broadband pricing in France is within the EU average of $35-$40 per month, higher speed services using ADSL2+ offering around 20 mbps have gotten cheaper and can be found for as little as $20 (by neuf Cegetel – as opposed to a more common rate of $40-$55 per month.20 Because of these price reductions, subscribers’ average broadband Internet bills decreased by $2 from 2005 to 2006, going from $36 to $34.21

In addition to ordering France Télécom to unbundle the local loop, in 2005 ARCEP also required the company to give competitors bitstream access (allowing them to use France Telecom’s ADSL equipment rather than investing in their own).22 While France Télécom has extended DSL broadband access to 98 percent of French residents, only about 26 percent have access to broadband via cable.23 Cable broadband services have lagged behind ADSL perhaps because until recently France Télécom dominated the French cable market via its cable subsidiary France Télécom Cable (of which it sold the infrastructure only in 2005), as well as through its investments in other large cable companies, including 28 percent of Noos (which it sold in 2004).24

Fiber

The French government encouraged fiber rollout by proposing measures in December 2007 to require new buildings to be pre-equipped for fiber and to require operators to share the networks they install inside buildings.25 Yet, providers—particularly France Télécom and Illiad—are driving fiber deployment in France. There France Télécom, via Orange, its service provider, offers fiber-to-the-home (FTTH) in Paris and will expand its services to 1 million homes in 12 other cities by the end of 2008.26 Moreover, since August 2007, France Télécom’s primary

THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION

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MAY 2008

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