Unbundling tariffs: Arcep proposes new price caps for 2018 to 2020

Via ARCEP - Press Releases

Oct 6, 2017

Paris, 5 October 2017

Aim of the public consultation: to satisfy a strong need for clarity from the sector's players, during the transition to ultrafast access which will require massive investments.

Today Arcep launches a public consultation on its draft proposal on full LLU price caps for the period running from 2018 to 2020.

In early 2016, Arcep set a multi-annual (2016-2017) price cap for the first time for these tariffs, to give the sector's players greater clarity on this baseline metric, at a time when the market is transitioning to ultrafast broadband technologies, and committing substantial capital expenditures to do so.

As part of the new round of market analysis, and as specified in its draft analysis of the market for wholesale access provided at fixed location [1], Arcep wants to provide even greater clarity, by setting price caps for the entire period of the market analysis, i.e. up to 2020.

Arcep's work on establishing these price caps has included regulatory accounting projections for Orange, and modelling a shared optical local loop network

Arcep established projections for 2018 - 2020 for Orange's regulatory accounting, taking into account the upcoming changes in copper access user numbers and the consequences they will hold for the different cost items involved, and including the regulated rate-of-return set by Arcep for 2018 to 2010.

In this current time of technological transition to ultrafast access, Arcep also designed a model for a shared optical local loop, to be able to assess the costs of the future benchmark infrastructure. This modelling exercise is meant to deliver a long-term perspective, and be part of the broader efforts that Arcep is devoting to providing economic stakeholders with greater clarity going forward.

Developed in-house over the course of a year, this model simulates the path, architecture and costs of a nationwide fibre access network deployed by an efficient operator. It was submitted to public consultation in April [2], at which time - for the sake of transparency - a functional and technical description was provided, along with the complete source code that was developed by Arcep teams. After having taken into consideration the feedback obtained from the sector's stakeholders during this consultation, Arcep details in the document being published today for consultation the costs it obtained. These costs are presented in the form of a cost bracket, due to the variable nature of certain parameters that can affect their calculation. Arcep also publishes an updated version of the model and a description of the changes made since the previous consultation.

In light of these different elements, Arcep proposes a monthly price cap for the recurring tariff of full local loop unbundling of €9.31 in 2018, €9.41 in 2019 and €9.51 € in 2020.

The draft document also provides a price cap for certain ancillary tariffs - service access fees, cancellation fees, VAS+ - as well as shared access prices and bitstream prices.

To support transition to ultrafast access plans, Arcep suggests decreasing full LLU cancellation fees from €15 to €5. The price caps set for ancillary fees and shared access remain unchanged.

Lastly, Arcep proposes a monthly price cap for the recurring tariff of mass market bitstream access of €13.19 in 2018, €13.30 in 2019 and €13.41 a month in 2020.

Today's public consultation will run until 6 November 2017.

[1] Arcep Press release of 27 July 2017 [2] www.arcep.fr/uploads/tx_gspublication/consult_modelisation_reseau_BLOM_tarification_degroupage-April2017_02.pdf ; www.arcep.fr/uploads/tx_gspublication/consult_modelisation_reseau_BLOM_tarification_degroupage-fichiers_sources_et_parametres-April2017_01.rar

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