ARCEP takes the "lose-lose" out of competitive fibre-laying

• ARCEP lays down ground rules for multiple, competitive network builds
• The objective is avoid network overlap and “lose-lose” competitive plays
• This way France is more likely to achieve build-out in rural or low take-up areas

Eventually the task of getting network builders to dig FttH out to homes will change as they all (hopefully) pile in, convinced at last that fibre in the ground is a financially viable proposition and not wanting to be left out. Then carrots are joined by (implied) sticks as regulatory supervision becomes about keeping order and making sure builds don’t overlap while at the same time leaving less attractive areas fibreless.

There are signs that such an inflection point may be looming for the UK as the regulator and the government pull out the stops to encourage infrastructure competition. Now, anecdotally at least, there are already complaints that ‘too many’ fibre-layers are joining the fray.

If so, the lessons that seem to have been learned by the French regulator might soon be valuable in the UK and other parts of Europe where fibre build is ongoing.

French regulator ARCEP has just released a ‘recommendation’  (keeping its stick in whatever you keep a stick in) about maintaining what it calls the ‘consistency’ of Fibre to the Home (FttH) rollouts. The aim, it says, is to prevent unnecessary overlaps and to maximise the cost-effectiveness of investments. It wants to ensure coordination of FttH rollouts between all of the public and private sector operators involved and, most important, it wants players to declare their "target rollout area," and then follow through in a timely way with actual deployments.

ARCEP is not talking regulation...  yet. But nobody is in doubt that regulation will follow if the recommendations are ignored.

According to Luca Schiavoni, an analyst at Assembly Research, the move by ARCEP can be part explained by a long-running dispute between Orange and SFR over their 2011 deal to split the ‘medium density’ territories in France to deploy FTTH. When SFR merged with Numericable the new entity decided it wanted a bigger share of the areas. Unpleasantness broke out between the two telcos with the end-result that Numericable threatened that it would gather investors in a joint venture and cover disputed non-density areas anyway, overbuildiing some of Orange’s infrastructure.

“That didn’t happen, but clearly it would have been undesirable for everyone,” said Luca. “If you duplicate networks you’re likely to remove the case for investment for both yourself and for the other operator.”

So ARCEP wanted to avoid any possibility of this sort of  “lose-lose” competitive play ocurring again since it tends to be unnerve potential investors and affect their investment plans.

So is this sort of problem a live issue in other European countries?

“Yes, I think it is a live issue,” says Luca, but we are still at question time, not at answers time. In the UK, for instance, we’re still at the stage where operators are finding out about the viability of their investments.

“In France the regulator has sent a recommendation which means it has no real binding power but it also means that the regulator has sent a message which says, ‘We are watching this and in the future, if needed, we will take action’.

Why is this text necessary? Arcep had identified threats to rollout consistency resulting from a lack of coordination between operators

As the Authority stated in its Opinion No. 2017-1293 of 23 October 2017, issued at the request of the Senate and regarding regional digital coverage, there is a danger that some of operators' rollout practices could undermine the goal of achieving consistent deployments across the country.

In particular, Arcep had noted:

Risks resulting from certain infrastructure operators' regional pre-empting strategies, in other words officially announced rollout plans with no rapid follow-through, which acts as a deterrent to another operator that might perform rollouts more quickly;

Inefficient plans for overlapping networks, in other words announced rollouts for areas that are already covered by existing networks or for which rollouts had already been planned;

Risks of cherry picking , in other words rollout schemes that do not plan to cover the most costly lines, while making it impossible for another operator to do so.

Arcep considers these practices to be, a priori, both inefficient and in opposition with several of the objectives set out in the law, particularly the goal of stimulating investment and regional digital development; as well as the goals of performing consistent rollouts and achieving homogenous coverage of the service areas.

• Such practices should be avoided To this end, Arcep issued a reminder that appropriate tools exist and, in a public consultation, offered clarifications on the process for implementing them

The tools put into place by the regulatory framework should have enabled operators to prevent these situations from arising.

This is why Arcep held a public consultation from 30 March to 15 May of this year on a draft recommendation whose purpose is to ensure that operators make full use of these tools, notably by clarifying the terms and methods for meeting consistent rollout obligations.

This draft recommendation:

1/ specified the starting point and sequencing of rollouts; 2/ clarified the scope of the zoning defined at the time of the consultation process prior to deployments; 3/ set out the consequences of the obligation of completeness with a regulatory threshold of 1,000 lines.

The Authority received 17 responses to this public consultation from operators and local authorities which requested some clarifications for implementing the rules.

• Arcep is adopting a recommendation that takes requests for more detail into account

The recommendation being adopted takes into account the requests for greater clarity that were formulated in response to the public consultation.

In particular, the text specifies that, during the consultation process prior to deployments, it is the process of declaring a location a "target rollout area" that marks the start date for the timeframe for achieving completeness.

Finally, Arcep is calling on operators to amend their information exchange flows by 31 December 2018, to fully implement the particulars and clarifications set forth in this recommendation.

• The text serves to complement the legally binding commitments made by operators, pursuant to CPCE Article L. 33-13

By providing clarification on the application of the regulatory framework, this recommendation serves to complement the legally binding commitments made for deploying fibre in more sparsely populated areas covered by private initiative (those parts of the country where the Government has issued a call for investment letters of intent, called "zones AMII" in French). These commitments were made in accordance with Article L.33-13 of the French Postal and Electronic Communications Code (CPCE), which stipulates that operators can propose commitments to the Government that will further regional development and coverage, after having obtained Arcep's opinion (2) on the matter. This draft recommendation thus seeks to clarify the rules governing rollouts, whereas Article L.33-13 pertains to the scale and timetable for these rollouts.