The Prime Minister,

Based on the report of the minister for posts, telecommunications and space,

Having regard to the posts and telecommunications code, and notably to articles L.33- 1, L.34-1, L.34-8, L.36-5, L.36-6, L.36-7 and L.36-8, as worded in the Telecommunications Act n· 96-659 of 26 July 1996;

Having regard to the amended Freedom of Communication Act n· 86-1067 of 30 September 1986;

Having regard to the report of the Telecommunications Regulatory Authority dated 21 February 1997,

HEREBY DECREES :

Article 1 - There shall be inserted a section III of chapter II of title I of book II of the third part of the posts and telecommunications code, worded as follows:

«Section III

«Interconnection

Paragraph I

Principles to apply to all operators

Art D 99-6 - Interconnection shall be subject to an agreement between parties covered by common law. This agreement shall conform to the provisions of article L. 34-8, to the provisions of the present code, and to the licences of the two operators concerned.

The agreement shall be communicated to the Telecommunications Regulatory Authority less than ten days after its conclusion. The Telecommunications Regulatory Authority may make available to interested parties, on request, the information contained therein, without prejudice to information covered by commercial confidentiality.

Operators having received information during the negotiation or establishment of an interconnection arrangement may only use the information for the purpose explicitly mentioned when it was supplied. In particular, this information shall not be passed on to other departments, subsidiaries or partners for whom it may provide a competitive advantage.

There shall be established an Interconnection Committee under the Telecommunications Regulatory Authority, involving notably the operators licensed in pursuance of articles L 33.1 and L 34.1. This Committee shall be chaired by the Telecommunications Regulatory Authority which shall set out the arrangements for its composition and mode of operation.

If, upon granting an operating licence, the Telecommunications Regulatory Authority includes an operator in the list drawn up in accordance with 7· of article L.36-7, the schedule of terms and conditions of this operator's licence shall be modified in order to include the new obligations relative to interconnection and shall set the date by which the standard interconnection offer should be published.

Art. D 99-7 - Operators shall take all measures necessary, to be specified in their interconnection agreements, to ensure conformity with the essential requirements, and in particular:

• the security of network operations;
• the maintenance of network integrity;
• the interoperability of services, including the contribution to end-to-end quality of service;
• the protection of data, to the extent necessary to ensure compliance with provisions on data protection, including the protection of personal data, the protection of privacy and the confidentiality of information processed, transmitted or stored.

They shall identify the measures to be taken to guarantee the maintenance of access to telecommunications networks and services in cases of network breakdown or in cases of force majeure.

The operators shall comply, where appropriate, with the technical specifications adopted under the conditions provided for in 3· of article L.36-6 of the posts and telecommunications code by the Telecommunications Regulatory Authority, with a view to ensuring conformity with the essential requirements.

If interconnection with a third party seriously disrupts the proper operation of an operator's network, or does not comply with the essential requirements, the operator, after technical verification of the network, shall inform the Telecommunications Regulatory Authority. The latter may then, where appropriate, authorise the suspension of the interconnection. It shall inform the parties, and establish the conditions to be met for interconnection to be restored.

Having established an interconnection agreement, the two operators shall inform one other, with at least one year's notice, except under mutual agreement or if the Telecommunications Regulatory Authority decides otherwise, of alterations to their network which require the interconnected operators to alter or adapt their own facilities.

Art. D 99-8 - Interconnect interfaces shall be defined by the operators within the framework of interconnection agreements.

If there are European specifications relative to interconnect interfaces, operators shall favour their introduction and use.

At the initiative of the Telecommunications Regulatory Authority or an operator, the technical specifications relative to interconnection may be adopted and published by the Telecommunications Regulatory Authority. The definition of the interconnect interfaces concerned, their functions, the arrangements for their adaptation or their evolution shall be drafted by the committee mentioned in article D 99-6.

In accordance with article D 99-7, the Telecommunications Regulatory Authority shall adopt and publish the technical specifications to which interconnect interfaces shall conform with a view to guaranteeing compliance with the essential requirements and end-to-end quality of service.

An interconnect interface may only be used in the context of an interconnection agreement if the corresponding intellectual property rights are available and accessible under transparent, reasonable and non-discriminatory conditions, except if an exemption has been granted by the Telecommunications Regulatory Authority in the light of the existence of equivalent alternative solutions.

In the event of a dispute on the definition of an interconnect interface, on the arrangements for its adaptation or its evolution, either of the parties may refer the matter to the Telecommunications Regulatory Authority under the conditions provided for in article L.36-8.

Before the effective establishment of interconnection, interfaces shall be submitted to tests to be defined and carried out jointly by both operators concerned. These tests shall be performed on site, if one of the parties so requests. In the event of interconnection tests not being carried out within normal technical conditions and time frame, either of the parties may refer the matter to the Telecommunications Regulatory Authority.

Art D 99-9 - Interconnection agreements shall specify as a minimum, except with the specific accord of the Telecommunications Regulatory Authority:

- general principles :

• commercial and financial relations, and notably the terms of payment and the billing and collection procedures;
• requirements concerning the exchange of information between the two operators and the corresponding periodicity or notice;
• procedures to be followed in the event of alterations being proposed to the interconnection offer of one of the parties;
• definition and limitation of liability and indemnity between operators;
• intellectual property rights, where appropriate;
• duration and conditions of renegotiation of agreements.

- the description of the interconnection services provided and the corresponding remuneration:

• conditions governing access to basic services: switching and, for public network operators, leased lines;
• conditions governing access to supplementary services;
• billing services for third parties;
• conditions governing co-location.

- the technical characteristics of interconnection services:

• measures implemented to allow users equal access to the various networks and services, equivalent formats, and number portability;
• measures to ensure compliance with the essential requirements;
• comprehensive description of the interconnect interface;
• billing information supplied at the interconnect interface;
• the quality of the services provided: availability, security, efficiency, synchronisation;
• traffic routing arrangements.

- arrangements for the establishment of interconnection:

• conditions governing service provision: traffic forecasting arrangements and the implementation of interconnect interfaces, procedures concerning the identification of the termination points of leased lines, the time frame for provision;
• the designation of the points of interconnection, and the description of the physical arrangements for interconnection;
• arrangements for the reciprocal sizing of interface equipment and the systems common to each network so as to maintain the quality of service provided for in the interconnection agreement as well as compliance with the essential requirements;
• arrangements for testing the operation of interfaces and the interoperability of services;
• arrangements for clearing and recording faults.

Art D 99-10 -Pricing conditions in interconnection agreements shall respect the principles of objectivity, transparency, and non-discrimination.

They shall not lead to the undue levying of excessive charges on the operators using interconnection.

They should be justifiable, if so requested by the Telecommunications Regulatory Authority.

Operators shall provide interconnection under non-discriminatory conditions, including with regard to their own departments, subsidiaries and partners.

Paragraph 2

principles applicable to operators on the list established

in accordance with 7· of article L. 36 – 7

Art D 99-11 - Operators on the list established in pursuance of 7· of article L.36-7 shall be required to publish, under the terms set out in their schedule of conditions, a standard interconnection offer describing the technical conditions and tariffs applicable for interconnection, with the prior approval of the Telecommunications Regulatory Authority. They shall be subject to the provisions of the present paragraph.

These operators may not use the existence of a service in the standard interconnection offer as a reason for refusing to enter into commercial negotiations with another operator with a view to determining interconnection conditions not provided for in their standard interconnection offer, notably conditions governing direct access to international gateway switches and other international facilities. Any interconnection condition not provided for in the operator's standard interconnection offer shall be indicated as such in the interconnection agreement.

The services listed in the standard interconnection offer published by these operators shall contain the various conditions to meet, on the one hand, the interconnection requirements of public network operators and, on the other hand, the network access requirements of public telephone service providers, taking into account the rights enjoyed by and the obligations incumbent upon each of these user categories. These conditions shall be broken down to a sufficient level of detail so that the various individual components required by applicants may be identified.

The information necessary to the establishment of interconnection shall be provided to other operators under the same conditions and to the same degree of quality as that furnished by these operators to their own departments and to their subsidiaries and partners. They shall inform the other operators of changes in their interconnection offer with at least six months' notice, unless the Telecommunications Regulatory Authority decides otherwise.

Art D 99-12 - These operators shall provide interconnection under non- discriminatory conditions.

The technical and financial terms of the interconnection services offered, under equivalent conditions, to other operators, notably the technical quality of the services, the delivery timescale and the supply conditions of these services, shall be the same as those established, where appropriate, for their own departments and for those of their subsidiaries and partners.

The conditions applicable to these operators for their own access to their network components shall be set out in paragraphs l) and m) of the schedule of terms and conditions of the licences they are issued.

The technical and financial terms of the interconnection services they offer to their own departments and to their subsidiaries and partners shall be described, according to the case, in the interconnection arrangements or agreements. They should be able to be justified at the request of the Telecommunications Regulatory Authority.

These operators shall keep a separate accounting system for their interconnection activities, the specifications of which are set out under the conditions mentioned in article D99- 13. The purpose of this system is to identify the external transfer price of the activities, services and network components used by these operators or, in the absence of such data, to identify the cost by reference to the tariffs that these operators charge users or operators to interconnect to their network.

This separate accounting system shall allow in particular for the identification of the following costs :

– general network costs, that is, the costs of the network components used both by the operator to provide services to its own users and interconnection services; network components include notably the switching facilities and conveyance systems necessary for the provision of all services;

– costs specific to interconnection services, that is, costs directly caused only by interconnection services;

– costs specific to the operator's services other than interconnection, that is, costs caused only by these services;

– common costs, that is, costs which do not come under one of the above categories.

The relevant elements of the information system and the accounting data shall be furnished to the Telecommunications Regulatory Authority at the request of the latter.

Art D 99-13 - The Telecommunications Regulatory Authority shall establish and publish the specifications and the description of the cost accounting systems of these operators, adapted so that compliance may be ascertained with regard to the principle of non-discrimination, as described in article D 99-12 and with regard to the principles concerning pricing and relevance as stated in articles D 99-17 and D 99-18.

The cost accounting systems of these operators shall be audited periodically by an independent entity. The entity shall be designated by the Telecommunications Regulatory Authority for a period of three years. The audit shall be carried out at the expense of each public neÉwork operator on the list established in pursuance of 7· of article L. 36-7. The cost incurred shall be added to the costs specific to interconnection services.

The designated entity shall publish a statement of compliance annually.

Art D 99-14 - If one of these operators wishes to use an interconnect interface which is not in its standard interconnection offer or to add supplementary specifications to an interface in the standard interconnection offer, it shall communicate the technical specifications and the corresponding services to the Telecommunications Regulatory Authority. The Telecommunications Regulatory Authority may publish these specifications to safeguard the principle of non-discrimination or if it considers that their publication is in the interest of the community of operators.

Art D 99-15 - The technical and tariff terms and conditions for the interconnection services of these operators shall be broken down to a sufficient level of detail so that the various individual components required by applicants may be identified. In particular, the tariffs which relate to interconnection services shall be sufficiently unbundled, so that the applicant operator is not required to pay for facilities which are not strictly related to the service requested.

In accordance with this principle, these operators shall offer access in their standard interconnection offer, particularly to:

– their local exchanges;

– their higher level exchanges or an equivalent technical solution.

Interconnection at a local exchange allows access to all the operator's subscribers accessible from this same exchange without routing via a higher level exchange.

The standard interconnection offer of these operators shall include the list of local exchanges not open to interconnection for justifiable technical reasons, as well as the timescale according to which the local exchanges in question will be opened to interconnection. However, if justified by the routing of other operators' forecast traffic originating from or terminating at subscribers connected to an exchange on this list, the operator with market power shall be required to establish a transitory offer for this exchange, at the request of the Telecommunications Regulatory Authority. The objective criteria according to which the Telecommunications Regulatory Authority may request the establishment of a transitory offer shall be laid down by decree of the telecommunications minister, in accordance with article L.36- 6. This transitory offer shall enable the applicant operator to enjoy a tariff structure aimed at reflecting the costs that it would have incurred, in the absence of technical access restrictions, to route calls on the one hand to or from subscribers connected to that exchange, and on the other hand to or from subscribers which would have been accessible without routing via a higher level exchange.

Art D 99-16 - The standard interconnection offers of these operators shall, as a minimum, include the following services and components, for public network operators:

– routing services for switched traffic, with technical access and tariff options enabling the principle of an unbundled offer to be implemented, in accordance with article D 99- 15;

– supplementary and advanced services and functions (including access to the intelligent network resources necessary for interconnection or for optimim routing of traffic) and the associated contractual terms, based on a pre-established list drawn up by the Telecommunications Regulatory Authority, after consultation with the Interconnection Committee;

– arrangements for implementing number portability and carrier selection so as to guarantee equal access;

– a description of all the physical points of interconnection and the access conditions at these points, if the interconnection link is provided by a third party operator;

– the technical and tariff terms and conditions governing the links provided by third party operators to the points of interconnection and, if the third party operator wishes to supply this link, the technical and tariff conditions governing the physical and logical access to these operators' points of interconnection;

– a comprehensive description of the interconnect interfaces proposed in the standard interconnection offer and notably the signalling protocol used at the interfaces, and the conditions for implementing them;

– leased line connection services.

The standard interconnection offers of these operators for public telephone service providers shall include the services and components listed above, taking into account the rights enjoyed by and the obligations incumbent upon these providers.

After consulting the Interconnection Committee, the Telecommunications Regulatory Authority may request that one of these operators revise its standard interconnection offer, in particular to add or alter the services listed in the standard interconnection offer, if such additions or alterations are justifiable in accordance with the principles of non-discrimination and cost orientation of interconnection tariffs, and the needs of the community of operators.

Art D 99-17 - The tariffs for interconnection services provided by these operators, whether included in the standard interconnection offer or provided as a supplementary offer, shall compensate the effective use of the main and junction network and shall reflect the corresponding costs. These operators should be able to demonstrate that their interconnection tariffs effectively reflect costs.

For the services contained in interconnection agreements which are not included in the standard interconnection offer mentioned in D 99-16, the Telecommunications Regulatory Authority may request that operators supply all information necessary to enable it to assess whether the tariffs for the services contained in the agreements reflect costs.

Interconnection tariffs shall be based on the following principles:

1. – the costs taken into account shall be relevant, that is, linked through a form of direct or indirect causality to the interconnection service provided;
2. – the costs taken into account shall aim to increase long term economic efficiency, that is, the costs considered shall take into account the capital invested for network renewal, based on the best industrially available technology and aimed at the optimum sizing of the network, based on the assumption that the quality of service is maintained.
3. – tariffs shall include an equitable contribution, in conformance witß the principle of proportionality, to the costs which are common both to interconnection services and to other services, in accordance with the principles of cost relevance set out in article D 99-18 and the economic equilibrium of the operator.
4. – tariffs shall include a normal rate of return on the capital invested, set in accordance with article D 99-22;
5. – tariffs may be subject to time variants to take into account congestion in the operator's network transmission capacity and switching;
6. – the unit tariff charged for the general network components used for an interconnection service shall not be volume or capacity-related;
7. – tariff units shall correspond to the needs of interconnecting operators.

Art D 99-18 - Costs specific to interconnection services shall be fully allocated to the interconnection services.

The costs specific to the operator's services other than interconnection shall be excluded from the cost base for interconnection services. In particular, access costs (local loop) and commercial costs (advertising, marketing, sales, sales administration apart from interconnection, billing and collection apart from interconnection) shall be excluded.

General network costs shall be apportioned between interconnection services and other services on the basis of the effective use of the general network by each of these services.

Among the common costs defined in article D 99-12, the relevant common costs for a telecommunications operator's activity shall be apportioned between interconnection services and services other than interconnection. Telecommunications research and training costs shall be excluded from relevant common costs.

The Telecommunications Regulatory Authority shall set out and publish the nomenclature of:

• general network costs;
• costs specific to interconnection services;
• costs specific to the services provided by these operators other than interconnection;
• common costs;
• relevant common costs.

Costs charged to public network operators, on the one hand, and to public telephone service providers, on the other hand, shall take into account the rights enjoyed by and the obligations incumbent upon each of these operator categories.

Art D 99-19 - From 1997, until the Telecommunications Regulatory Authority defines another method under article D 99-20, and without prejudice to the third paragraph of the present article, interconnection tariffs for a given year shall be based on the forecast relevant average historic costs for the year in question, evaluated by the Telecommunications Regulatory Authority taking into account:

• the efficiency of new investments made or forecast by the operator in view of industrially available state-of-the-art technology;
• international benchmarks for interconnection tariffs and costs;

The average historic costs shall be calculated using forecast accounting data, information from the operator's most recent audited accounts and productivity improvement records.

The Telecommunications Regulatory Authority may set a pluriannual price constraint aimed at reducing interconnection tariffs, as an incentive for economic efficiency in view of international benchmarks on tariffs and interconnection costs.

Art D 99-20 - After consulting the Interconnection Committee and having carried out a public consultation, the Telecommunications Regulatory Authority shall define a method taking more into account the long term efficiency of costs than the initial method set out in article D 99-19, while respecting the principles laid down in article D 99-17. For this purpose, it shall compare the results of technical economic models and models based on the accounting system of the operator, using available international benchmarks for reference.

The Telecommunications Regulatory Authority shall involve operators in the elaboration of this method. Operators shall communicate to the Telecommunications Regulatory Authority, at its request, all information of a technical, economic or accounting nature which shall be used in accordance with commercial confidentiality.

The Telecommunications Regulatory Authority shall publish the method it decides to adopt.

Art D 99-21 - In order to take into account the effects of increasing competition in the interconnection market, after consulting the Interconnection Committee and having carried out a public consultation, the Telecommunications Regulatory Authority may establish a new method for determining interconnection tariffs based on principles and rules which may differ from those set out in articles D 99-17 and D 99-18. It shall propose amendments to the present section before the entry into force of the new method.

Art D 99-22 - In order to evaluate interconnection tariffs, the Telecommunications Regulatory Authority shall set the rate of return on capital employed, taking into account the weighted average cost of the operator's capital assets and that which an investor would bear for telecommunications network activities in France.

Article 2 - France Télécom shall be subject to articles D 99-11 to D 99-22 of the posts and telecommunications code until the first publication of the list provided for in 7· of article L.36-7 of the said code. It shall be required to publish, before 1 July 1997, a technical and tariff interconnection offer with the prior approval of the Telecommunications Regulatory Authority. It shall guarantee access to its network under objective, transparent and non- discriminatory conditions, to users and providers of telecommunications services other than the public telephone service, and to providers of broadcasting services, registered in accordance with article 43 of Act n· 86-1067 of 30 September 1986. It shall also satisfy all justified requests for special access corresponding to unpublished technical or tariff conditions, from these service providers and users.

Article 3 - The minister for industry, posts and telecommunications and the minister for posts, telecommunications and space, shall be responsible, within their respective jurisdiction, for the enforcement of the present decree which shall be published in the Official Journal of the Republic of France.

Done at Paris, 3 March 1997

By the Prime Minister:

Alain Juppé

Minister for posts,

telecommunications and space

François Fillon

Minister for industry, posts,

and telecommunications

Franck Borotra

© Secretary of State for industry - France