On June 13 2002 the European Court of Justice (ECJ) condemned France for failing to implement provisions of the Directive on the Application of Open Network Provisions to Voice Telephony and on Universal Service for Telecommunications (98/10/EC) within the prescribed timeframe. Despite indications by the French authorities that efforts were being made to enact the appropriate legislation, the ECJ criticized the government for its continuing failure to transpose numerous provisions of the directive by the long-expired June 30 1998 deadline, including Article 6 (directory services), Article 10 (consumer contracts), Article 21 (non-payment of bills) and Article 26 (consumer dispute resolution).

On June 9 2002 the French Telecommunications Regulatory Authority decided to order the French incumbent operator, France Télécom, to apply a series of measures that would facilitate access to the French local loop by an independent operator, LDCom (a subsidiary of the Louis-Dreyfus Group), within four weeks.

This change is made in conjunction with a series of recent attempts by the authority to ensure effective competition in the French local telephone and high-speed internet access markets. These steps include a decision forcing France Télécom to reduce its reference prices for access to the last few kilometres of local network lines, over which it has historically maintained full and unhindered control much to the chagrin of competitors and new market entrants.

On June 14 2002 France Télécom presented a revamped set of access tariffs for its local loop access, to comply with the injunctions issued by authority in April 2002. Following the announcement the authority expressed its satisfaction with the move, calling it an important step towards opening the high-speed internet access market to effective competition, which would allow competing operators to provide high-speed internet services to French customers.

However, France Télécom has brought an action before the French High Administrative Court regarding the method of determining the prices to be charged for access to its local loop, particularly with regard to remote or sparsely populated regions. In its complaint France Télécom contends that the methods prescribed by the authority violate the principle of geographical equality, which is set forth in the government decree on the unbundling of the local loop.

For further information on this topic please contact Eric Morgan de Rivery or Carole Arribes at Lovells by telephone (+33 1 53 67 47 47) or by fax (+33 1 53 67 47 48) or by email ([email protected] or [email protected]).