France Télécom Faces New Competition in Local Loop

PARIS (07/11/2000) - The beginning of the end for France Télécom SA's stranglehold on local telephone services in France came Tuesday, when the state telecommunications regulator proposed to award nine companies licenses to offer competing wireless local loop services.

National licences should go to FirstMark Communications France and Fortel, while Altitude, Belgacom France SA, BLR Services, Broadnet France SAS, Completel Europe NV, Landtel France and Siris (a subsidiary of Deutsche Telekom AG) should receive regional licences, the Autorité de Réglementation de Télécommunications (ART) has proposed to the Minister of Economy, Finance and Industry.

France has seen competition in national and international long-distance services since Jan. 1, 1998. However, all calls, even those carried by competing operators, must still travel the last mile to the customer's premises over France Télécom's local loop -- so called because it consists of a loop of copper wire between local exchange and customer premises -- and the company is reluctant to give up control of this asset.

Burying a second set of cables in the ground is unthinkably expensive, but wireless local loop technology can be 30 percent to 40 percent cheaper, according to ART. The nine new local loop operators will replace the expensive copper connection with a radio link between their customers and the local exchange -- and by doing so, avoid having to pay interconnection charges to France Télécom each time they carry a call. Because they only need to install antennas on their customers' buildings, rather than on every building they pass, deployment can be more rapid and the investment progressive. And, according to ART, the technologies licensed can support high-speed data connections of up to 2M-bps (bits per second), comparable to fixed-line ADSL (asymmetric digital subscriber line) technology.

One applicant which did not figure among the winners is Vivendi SA's telecommunications subsidiary Cegetel. The company said Tuesday that its failure to win a license would not affect its plans to offer high-speed Internet access, because its strategy has all along been based on another means of gaining access to the local loop: unbundling.

Today, France Télécom "bundles" access to its local loop with other telecommunications services. However, the French government has announced its intention to force France Télécom to unbundle these services, letting other operators use its local loop from Jan. 1, 2001, so companies like Cegetel, which missed out on a wireless local loop licence, will get a second bite at the cherry.

ART can be reached at +33-1-40-47-70-00 or found on the Web at http://www.art-telecom.fr/.

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