REPUBLIC OF FRANCE

      Ministry of Posts, 
    Telecommunications
            and Space

NOR: MIPX9600022L

TELECOMMUNICATIONS BILL

setting out the regulatory framework for telecommunications in France
						
                          (as it has been adopted by the Cabinet meeting on 3 April 1996)

Article 1.

	Article L. 32 of the Posts and Telecommunications Code shall be amended as follows:

	I  - For 3), 7) and 9) there shall be substituted the following provisions:

	"3)  Public Network.

	“Public network means a telecommunications network established or used for the 	provision of public telecommunications services.

	“7)  Public telephone service.

	“Public telephone service means the commercial provision to the public of a service 	consisting in the conveyance of direct, real-time voice telephony between public switched  	telephone networks for mobile and fixed users.”;

	“9)  Interconnection.

	“Interconnection means reciprocal services provided by two public network operators in 	order to allow all users to communicate freely amongst themselves, regardless of the 	networks to which they are connected or the services they use.

	“Interconnection also means the network access services provided for the same reason by 	a public network operator to a public telephone service provider.” 

	
	II.  -  After the words “terminal equipment” the end of paragraph 12) shall be worded as 	follows: 

	"protection of the environment, taking into account town and country planning 		requirements".

	III.  -  There shall be inserted 15), worded as follows:

	"15)  Operator. 

	“Operator means a natural or artificial person authorised to run a public 			network or to provide a telecommunications service to the public."

Art.  2.

	Article L. 32-1 of the Posts and Telecommunications Code shall be worded as follows:

	"Art.  L.  32-1 I  -  Under the conditions laid down in this code:

	1) Telecommunications activities shall be carried out freely, in accordance with  	the licences and declarations provided for in chapter II, which shall be granted or verified 	under objective, transparent, proportional and non-discriminatory conditions;

	2)  The public service obligations set out in chapter III, which include guaranteeing every 	person access to the universal service, shall be safeguarded and developed;

	3)   Regulation of the telecommunications sector shall be carried out independently of the 	operation of networks and the provision of telecommunications services.  Regulation shall 	be administered, on behalf of the Government, by the telecommunications minister and 	the telecommunications regulatory authority, in accordance with the provisions of 	chapter IV.

	“II.  - Within the framework of their respective competences, the telecommunications 	minister and the telecommunications regulatory authority shall be responsible for ensuring 	the following:

	1)  -  the provision and financing of all components of the public service in the field of 	telecommunications;

	2)  -  effective and fair competition among network operators and telecommunications 	service providers, in the interests of users;	

	3)  - enhanced performance and innovation in the telecommunications sector;
	
	4) - public network access and interconnection conditions which guarantee equal  	conditions on the market and the possibility of unrestricted communication among users; 

	5) -  respect by network operators of the confidentiality of communications and neutrality  	with regard to the information transmitted;

	6) - compliance of network operators and telecommunications service providers with 	obligations in the interests of national defence and public security".

Art.  3.

	Article L.  32-2 of the Posts and Telecommunications Code shall be amended as follows:

	I  -  At the end of the first paragraph there shall be inserted the following words:

	"shall also support compliance with public service principles and in particular with the 	principles of universal service in the telecommunications sector.  Besides the opinions, 	recommendations and suggestions submitted to the minister, the Commission may also 	be consulted by the telecommunications regulatory authority on other issues relating to 	its field of competence."

	II  -  In paragraph 2, for the words “to articles L. 33-1, L. 33-2, L. 34-2, L. 34-4 and L. 	34-5 of the present code” there shall be substituted the words “to articles L. 33-1, 
	L. 33-2, L. 34-1, L. 34-2, L. 34-3 and L. 34-4. 

Art.  4.

	Article L. 32-4 of the Posts and Telecommunications Code shall be amended as follows:

	I  -  For the beginning of the first paragraph there shall be substituted the following 	provisions:
	 
	“In carrying out their functions the telecommunications minister and the chairman of 	the telecommunications regulatory authority may”;
	
	II  -  In the first paragraph of  2) for the words “he shall designate “ there shall be 	substituted the words “ they shall designate”;

	III  -  The beginning of the second paragraph of 2) shall be amended as follows:

	“The telecommunications minister and the chairman of the telecommunications regulatory authority shall...” (the rest remains unchanged).

Art.  5.

	For chapter II of title I of book II of the Posts and Telecommunications Code there shall 	be substituted the following provisions:

“Chapter II
Legal Regime 

Section I
Networks

	Art.  L.  33  Telecommunications networks shall be established under the conditions laid  	down in this section.

	This section shall not apply to the following:

	1) - network infrastructure established by the Government in the interests of national 	defence and public security, or using frequency bands or frequency spectrum allocated by 	the Prime Minister to an administration for its own requirements, in accordance with 	article 21 of law n° 86-1067 of 30 September 1986 on the freedom of communication;

	2) - network infrastructure referred to in articles 10 and 34 of the same law.  Network  	infrastructure of this type used for the provision of  public telecommunications services 	shall be subject to the provisions of this code governing the operation of public networks,  	only for the provision of telecommunications services.

	Art. L. 33-1 I - The establishment and operation of public networks shall be authorised 	by the telecommunications minister.

	Licences may only be refused on the grounds of public order or in the interests of national 	defence and public security, or as a result of technical constraints due to the limited 	availability of frequencies, or when the applicant does not have the technical and financial 	capacity to sustainably meet the obligations resulting from the conditions under which its 	activity is carried out, or when it has been the subject of one of the penalties referred to 	in article L. 36-11.

	Licences shall be granted subject to compliance with the provisions contained in the 	schedule of conditions governing the following:

	a)  -  the nature, characteristics, service coverage area and network extension schedule;

	b)  -  the operating hours, quality and availability of the network, as well as the access 	conditions, particularly for public pay phones;

	c)  -  the conditions of confidentiality and neutrality of the service with regard to the 	information transmitted;

	d)  -  the appropriate standards and specifications for networks and services, particularly 	European standards when justified;

	e)  -  the provisions required for the protection of the environment and for town and 	country  planning objectives, including, where appropriate, conditions governing the 	occupation of the public domain and the sharing of facilities;

	f)  -  provisions required in the interests of national defence and public security;

	g)  -  the contribution of the operator to research and training in the field of 		telecommunications;

	h)  - the use of the radio spectrum, the fees related to this use and the costs of spectrum 	management and monitoring;

	i)  -  the allocation of a number or a range of numbers, fees due for the management and 	control of the numbering plan, under the conditions laid down in article L. 34-10;

	j)  -  universal service obligations incumbent on the licence holder in accordance with  	articles L. 35-2 and L. 35-3;

	k)  -  the provision of the information required to establish the universal directory referred 	to in article L. 35-4;

	l)  -  the rights and obligations of the operator with regard to interconnection;

	m)  -  the conditions necessary to ensure fair competition;

	n)  -  the conditions necessary to ensure the equivalent treatment of international operators;

	o)  -  the conditions necessary to ensure the interoperability of services and the equal 	treatment and provision of information to users, particularly concerning the contractual 	conditions under which the service is provided;

	p)  -  the obligations incumbent upon the operator to allow the telecommunications 	regulatory authority to enforce the operator’s schedule of conditions;

	q)  -  fees payable for issuing, managing and controlling licences under the 		conditions stipulated in the Finance Act;

	r)  -  the minimum notice to be given to the licensee concerning the licence renewal 	conditions, and the grounds for refusing renewal.

	Licences shall be granted for a period of fifteen years. This provision does not exclude the 	possibility of licences of shorter duration being issued in justified cases.

	A decree shall specify which of the clauses enumerated above must conform with standard 	clauses of which it shall determine the content. The provisions of this decree relating to 	the clause referred to in m) above shall be submitted for opinion to the Conseil de 	la Concurrence (hereinafter referred to as the “competition authority”).

	II  -  An operator with an annual turnover exceeding a threshold set by the 		telecommunications minister and the minister for the economy shall be required to keep 	separate accounts for the authorised activity.

	Moreover, if an operator enjoys a monopoly or dominant position, in the opinion of the 	competition authority, in a sector other than the telecommunications sector, and the 	infrastructure used may be separated, the operator shall be required to separate this activity 	from his telecommunications activities on a legal basis for the purposes of fair 		competition. 

	III  -  Subject to international agreements signed by France comprising a clause of 	reciprocity applicable to the telecommunications sector, the licence referred to in this 	article, when relating to a network using radio frequencies, may not be issued to a 	company in which more than 20% of the share capital or the voting rights are held, either 	directly or indirectly, by foreign nationals.

	Furthermore, a foreign national may not make any transaction whose result is to increase, 	either directly or indirectly, the share held by foreign nationals in a licensed company to 	more than 20% of the share capital or the voting rights at the annual general meeting.

	For the purposes of this article, a foreign national means a natural person of foreign 	nationality or an artificial person whose majority of shares is not held, either directly or 	indirectly, by natural or artificial persons of French nationality.

	The provisions of the present point III shall not apply to natural or artificial persons who 	are nationals of a member state of the European Union or a member state of the European 	Economic Area.

	IV  -  Subject to international agreements concluded by France, the telecommunications 	minister and the telecommunications regulatory authority shall ensure that operators 	licensed to route international traffic to and from French public networks enjoy equivalent 	treatment, in particular with regard to interconnection conditions to the French and foreign 	networks to which they request access.

	Subject to the same reserve, they shall also ensure that the rights conferred by operators 	in countries outside the European Union upon the operators licensed in accordance with 	articles L.  33-1 and 	L. 34-1, are comparable with the rights they enjoy on the national 	territory, particularly with regard to interconnection conditions, in application of this code. .

	V  -  The number of licences may be limited owing to technical restrictions due to the 	scarcity of frequencies.
	
	In this case, the telecommunications regulatory authority shall propose the terms and 	conditions governing the licensing procedure, which shall be published by the 	telecommunications minister.

	Art.  L.  33-2  The establishment of independent networks, other than those referred to 	in article L.  33-3, shall be authorised by the telecommunications regulatory authority.

	A decree shall set out the general conditions governing the establishment and operation 	of these networks, in relation to the essential requirements, provisions in the interests of 	public security and defence and the terms governing the installation of the network 	to be respected by independent network operators. It shall also set out the conditions 	under which the latter, together with those referred to in article L.  33-3, may be connected 	to a public network, without allowing the conveyance of calls between persons other than 	those for whom use of the network is reserved.

	A licence may only be refused in the event of non-conformity with one of the conditions 	governing the establishment of networks.  Failing an express decision within two months 	following the licence application, the latter shall be deemed to be acquired.

	When the licence concerns an independent network using radio frequency spectrum 	allocated to its operator, the licence shall be explicit and shall be accompanied by 	a schedule of conditions concerning the provisions referred to in item h) of point I of 	article L. 33-1, which shall specify the obligations incumbent on the licence holder, 	in application of the decree provided for in the second paragraph of this article.

	Art.  L.  33-3  The following may be set up without restriction, on condition that they 	conform with the provisions of this code:

	1)  private networks;

	2)  pay phones not installed on the public highway;

	3)  independent local networks, other than radio networks, whose termination points are 	less than a certain distance apart, as defined by the telecommunications minister;

	4)  low power, short range radio network infrastructures whose categories are determined 	jointly by the ministers for telecommunications, for defence and for the interior;

	5)  radio network facilities which do not use an individual frequency assignment.

	The operating conditions for the above-mentioned radio facilities shall be set out	in the provisions of article L.  36-6.
	
	Art.  L.  33-4  The publication of lists of subscribers or users of telecommunications 	networks and services shall be unrestricted, subject to the regulatory provisions governing 	the protection of personal data.

Section 2
Telecommunications services

	Art.  L.  34  This section shall apply to public telecommunications services.

	Art.  L.  34-1 The provision of a public telephone service shall be licensed by the 	telecommunications minister.  

	Licences may only be refused on the grounds of public order, in the interests of national 	defence and public security, when the applicant does not have the technical and financial 	capacity to sustainably meet the obligations arising out of its operating conditions, or 	when it has been the subject of one of the penalties referred to in article L.  36-11.

	The licence shall be subject to compliance with the schedule of conditions concerning the 	points referred to in I of article L.  33-1, with the exception of e) and h).

	When the provision of a service presupposes the establishment of a public network, the 	licence granted in application of article L.  33-1 shall authorise the provision of the 	service.

	Art.  L.  34-2  The provision of public telecommunications services other than the 	telephone service shall be unrestricted, on condition that there is conformity with the 	essential requirements and with national defence and public security requirements.

	The services referred to in article L.  34-3 shall be subject to a licence and the services 	referred to in the first paragraph of article L.  34-4 shall require a declaration.

	A State Council decree shall set out the content of the declaration and the licence 	application and shall specify in the licence conditions the technical specifications to be 	met in order to ensure conformity with the essential requirements.

	Art.  L.  34-3  The provision of a public telecommunications service using radio 	frequency spectrum shall be subject to a licence under the following conditions:

	1)  -  when the provision of the service presupposes the establishment of a new network 	or changes to a network which has already been licensed, the provisions of article 
	L.  33-1 shall apply;

	2)  -  when the service is provided by a network using radio frequency spectrum allocated 	by an authority other than a telecommunications authority, a licence shall be required,  	which shall be subordinated to the provisions referred to in article L.  33-1. The licence 	shall be issued by the telecommunications minister after approval from the authority 	responsible for allocating radio frequency spectrum.

	Art.  L.  34-4 The provision of public telecommunications services other than the 	telephone service, over networks established in accordance with the broadcasting law 
	n° 82.625 of 29 July 1982 and article 34 of the aforementioned law of 30 September 	1986, shall be subject to declaration to the telecommunications regulatory authority.

	The sole purpose of this declaration shall be to enable the telecommunications regulatory 	authority to control the nature of the service provided and the installations used.

	When the service proposed is the public telephone service, the provision of the service 	shall be licensed in accordance with the provisions of article L.  34-1.

	When the purpose of the service proposed is directly concerned with the provision of radio 	and television services broadcast over the network, the provisions of 1) of article 34-2 of 	the aforementioned law of 30 September 1986 shall apply.

	Arrangments in force which prohibit  the provision of telecommunications services over 	networks  licensed in application of the law of 29 July 1982 or article 34 of the law of 30 	September 1986 or impose restrictions of a legal or technical nature, shall be brought into 	conformity with this code by 1 January 1998 at the latest.  These same arrangements shall 	guarantee the owner the proper remuneration of these networks to cover the cost of 	providing the service and the cost of investments undertaken.  The telecommunications 	regulatory authority may be called upon to settle disputes according to the provisions of 	article L.  36-8.

Section 3

General provisions

	Article L. 34-5 Two specialised consultative commissions shall be set up by the 	telecommunications minister and by the telecommunications regulatory authority, one 	in the field of radio networks and services, and the other for the services referred 	to in articles L.  34-1, L.  34-2 and L.  34-4.  These commissions shall consist of equal 	numbers of service providers’ representatives, users’ representatives, and qualified 	persons appointed by the telecommunications minister.

	The relevant consultative commission shall be consulted by the telecommunications 	minister and by the telecommunications regulatory authority on all proposals concerning 	licensing procedures, setting out or modifying technical and operating conditions and	technical specifications and requirements concerning the services which lie within its field 	of competence.

	The commissions’ conclusions shall be sent to the public service commission for 	posts and telecommunications. 
	
	A decree shall set forth the composition, the functions and the operating conditions 	of these two consultative commissions.

	Art.  L.  34-6  A licence granted to a person under sections 1 and 2 of this chapter shall 	not be transferable to any other person.

	A licence granted under articles L. 33-1, L. 34-1 and L. 34-3, shall be published in the  	French Official Journal, together with the schedule of conditions appended thereto, where 	applicable.

	Licence refusals shall be fully reasoned and notified to the parties concerned.

	The suspension and total or partial revocation of a licence shall be determined by the 	telecommunications regulatory authority under the conditions set out in article L. 36-11.

	Article L.  34-7 Telecommunications infrastructure installed on the public domain or 	for public service requirements may be operated as a public telecommunications 	network and used to provide a telecommunications service, subject to compliance with 	the provisions of this code.

Section 4
Network Access and Interconnection

 	Art.  L.   34-8  I  -  Public network operators shall satisfy requests for interconnection 	from operators licensed in accordance with articles L.  33-1 and L. 34-1, under objective, 	transparent and non-discriminatory conditions.

	Interconnection may not be refused if the request is reasonable with regard to the 	applicant's requirements and the operator's capacity to satisfy them. All interconnection 	refusals shall be fully reasoned.

	Interconnection shall be subject to an agreement between the two parties concerned.  This 	agreement shall set out the technical and financial conditions governing interconnection,  	in accordance with this code and with the decisions concerning its implementation.  A 	copy of this agreement shall be sent to the telecommunications regulatory authority.

	When essential for the purposes of fair competition and the interoperability of services,
	the telecommunications regulatory authority may ask for the agreement to be modified, 	after consultation with the competition authority.	

	A decree shall set out the general conditions, particularly those relating to the essential 	requirements and pricing principles which interconnection agreements must satisfy.

	II  -  A public network operator mentioned in the list established under section 7) of article 	L. 36.7 shall be required to publish the technical and pricing terms of the interconnection 	offering, with the prior approval of the telecommunications regulatory authority and 	according to the conditions set out in the schedule of conditions.  Interconnection tariffs 	shall be cost-oriented and shall cover the effective cost of using the network.

	The offer mentioned in the paragraph above is designed 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 and obligations of each of these categories of operators.

	The above-mentioned operators shall provide users and suppliers of telecommunications 	services other than the public telephone service, with access to their network and to the 	audiovisual communication services declared in application of article 43 of the 		aforementioned law of 30 September 1986 under objective, transparent, non-		discriminatory conditions.

	III  - The telecommunications regulatory authority may be called on to settle disputes 	relating to the refusal of interconnection, interconnection arrangements or access 	conditions, in accordance with article L.  36-8.

Section 5
Terminal equipment

 	Article L.  34-9 There shall be no restriction on the sale of terminal equipment.

	Equipment intended for connection to a public network and radio network facilities 	shall be tested for conformity with the essential requirements.  The bodies involved in the 	conformity testing procedure shall be independent of the companies providing goods 	and services in the field of telecommunications.

	A State Council decree shall determine
	
	1)  the conditions under which the bodies responsible for issuing certificates of 		conformity are designated;

	2)   the technical specifications for equipment subject to conformity testing which shall 	be drawn up and published, as well as the conditions governing the connection of 	equipment to public networks. 

	3)  the cases in which a technical qualification is required for the connection and 	bringing into service of equipment and infrastructure and the conditions enabling this	qualification to be guaranteed.

	4)  the procedure for assessing conformity and issuing the corresponding certificates, the 	cases in which conformity is acquired tacitly and the special conditions under which the 	certificate is issued for infrastructures intended for connection to the networks referred 	to in 1) of article L.  33.

	Terminal equipment and apparatus subject to the conformity assessment procedure 	referred to above may only be manufactured for the European Economic Area, imported 	for inward clearance from countries outside the latter, kept in view of sale, marketed, 	distributed free of charge or in return for payment, connected to a public network or 	advertised, if they have been issued with a certificate of conformity and comply thereto 	at all times.

Section 6

Numbering

	Article L.   34-10  A national numbering plan shall be established and controlled by  	the telecommunications regulatory authority.  It shall ensure equal access for users to the 	various telecommunications networks and services.

	The telecommunications regulatory authority shall allocate a number or range of 	numbers to an operator, under objective, transparent, non-discriminatory conditions, in 	return for a fee to cover the management costs of the numbering plan and the control of 	its use.

	The conditions under which a number or range of numbers may be used shall be 	specified in the schedule of conditions of the operator’s licence, or in the allocation 	decision.

	The telecommunications regulatory authority shall ensure that the numbers allocated are 	used efficiently.  A number or range of numbers may not be protected by industrial or 	intellectual property rights.  Numbers shall only be transferrable with the prior consent 	of the telecommunications regulatory authority.

	As of 1 January 1998 subscribers who change operator without changing their 		geographical location may retain their number, on condition that there is sufficient transfer 	capability at this date. Until 1 January 2001 the cost incurred on the initial operator  by  	the transfer shall be paid by the new operator which may then bill the subscriber. 	Operators shall include the necessary provisions in the interconnection agreements 	concluded amongst themselves. The provisions of this paragraph shall not apply to 	numbers allocated to mobile networks and used to provide mobile services.

	As of January 2001 users may request: 

	- to retain their telephone number in the event of a change of operator without a change 	of geographical location. 
	
	- to obtain a number from their operator, which they may retain in the event of a change 	of operator or geographical location.

	As of the same date, operators shall include the necessary provisions in their 		interconnection agreements and shall make this facility available to their users, under 	conditions to be approved beforehand by the telecommunications regulatory authority."

Article 6

After chapter II of title I of book II of the Posts and Telecommunications Code there shall be inserted chapter III and IV, worded as follows:

“Chapter III
Public service obligations 

Art.  L.  35  The public telecommunications service shall be provided in accordance with the principles of equality, continuity and adaptability.  It shall comprise:

	a)  -  the universal telecommunications service defined, provided and financed under the conditions set out in articles L.  35-1 to L.  35-4;

	b)  -  the mandatory telecommunications services defined and provided for under the conditions set out in article L.  35-5;

	c)  -  telecommunications activities undertaken in the public interest, particularly in the interests of national defenc and public security, public research and higher education, under the conditions set out in article L.  35-6.

	Art.  L.  35-1  The universal telecommunications service means the provision to the public of a quality telephone service at an affordable price.  It includes the conveyance of telephone calls to and from subscriber points, the provision of an information service and a telephone directory in both printed and electronic form, the provision throughout the territory of public pay phones installed on the public domain and the conveyance of emergency calls free of charge.

	The universal service shall be provided under tariff and technical conditions which enable social categories with special needs, such as low income users and disabled users, to access the service.

	Any person who so requests may obtain a subscription to the telephone service from an operator responsible for the universal service under the conditions provided for by this code. A landlord or his agent may not oppose a telephone installation requested by a bona fide occupant or tenant.

	Art.  L.  35-2  I  -  An operator may be given the responsibility of providing the universal service if it agrees to provide the service to the whole of the country and is capable of doing so.

France Télécom shall be the public operator responsible for the universal service.

	The schedule of conditions incumbent on the operator responsible for providing the universal service shall be established after consultation with the public service commission for posts and telecommunications.  These conditions shall govern the provision of the universal service, and in particular the tariff obligations required to ensure the access of all social categories to the universal service and to avoid discrimination based on the geographical location of subscribers. It shall also determine the conditions under which the universal service tariffs and quality of service are controlled.

		II  - The conveyance of emergency calls free of charge shall be compulsory for all public telephone service providers.

	Art.  L.  35-3  I  - The cost of universal service obligations shall be calculated on the basis of an appropriate cost accounting system put in place by operators and audited, at their expense, by an independent body designated by the telecommunications regulatory authority.

	II  -  The costs attributable to universal service obligations shall be financed by public network operators and public telephone service providers under the following conditions.

	1)  The net costs of tariff averaging obligations, corresponding on the one hand to geographical price averaging obligations and on the other hand to the current unbalanced telephone tariff structure, shall be financed by a charge levied in addition to and in the same way as the interconnection charge referred to in article L. 34-8, by the operator responsible for the universal service. 

	This additional charge shall constitute the remuneration for the universal provision of the network and telephone service.  It shall be calculated in proportion to the telecommunications traffic volume of the operator requesting interconnection.  The telecommunications regulatory authority shall propose the sum payable for interconnection to be set by the telecommunications minister.

	2)  -  A universal telecommunications service fund shall be created.  The accounts and finances of the fund shall be administered by the Caisse des dépôts et consignations (hereinafter referred to as the “deposit and consignment office”) in a specifically designated  account. The expenses incurred by the deposit and consignment office for such management shall be paid out of the fund.

	The fund shall be used to finance the net costs of the following universal service obligations: the offer referred to in paragraph 2 of article L.  35-1 of special tariffs for certain subscriber categories in order to guarantee the accessibility of the service;  the provision of public pay phones throughout the territory; the universal directory and the corresponding information service.

	If an operator agrees to offer special tariffs to certain subscriber categories in order to guarantee them access to the telephone service under the conditions set out in its schedule of conditions, the net cost of this offering shall be deducted from its contribution. 

	In the event of the default of an operator, the telecommunications regulatory authority may impose a penalty in accordance with the provisions of article L.  36-11.

	3)  -  The public operator shall gradually rebalance telephone tariffs to correct the disequilibrium resulting from the current telephone tariff structure.   When rebalancing has been completed the additional charge referred to in 1) above shall no longer be levied and the net cost of the geographic price averaging obligation shall be financed by the fund mentioned in 2) above.

	The transition to this new regime for financing shall be decided by the telecommunications minister, on the advice of the telecommunications regulatory authority following the opinion of the public service commission for posts and telecommunications.

	III  -  The methods used to calculate, offset and share the net costs of universal service obligations shall be published at least one year before the use thereof.

	IV  -  A State Council decree shall stipulate the terms of application of this article. It shall also establish the methods for evaluating, offsetting and sharing the net costs of the universal telecommunications service, as well as the terms of management of the universal telecommunications service fund.

	Art.  L.  35-4  A universal directory shall be made available to the public in both printed and electronic form, as well as a universal information service.  Subject to protection of personal data, these shall provide access to the telephone numbers and addresses of all public network subscribers.

	An entity legally distinct from the companies providing telecommunications goods and services shall establish and update the list required for publication of the universal directory. Public network operators and public telephone service providers shall be required to provide the said entity with their lists of subscribers.

	A State Council decree shall determine the terms of application of this article. In particular, it shall determine the name of the entity, the guarantees required to ensure the confidentiality of data, particularly with regard to the commercial interests of operators, and protection of personal privacy.

	Art.  L.  35-5 Mandatory services shall include access, throughout the country, to the integrated services digital network, leased lines, packet switched data services, enhanced voice telephony services and telex.

	The schedule of conditions incumbent on the operator responsible for the universal service shall determine which of  the mandatory services it shall be required to provide and the conditions governing the provision thereof.

	France Télécom shall provide all the mandatory services refrred to in the first paragraph.

	Art.  L.  35-6 The services required in the interests of national defence and public security and the fair payment due for these services shall be determined, at the request of the State, by the schedule of conditions incumbent on the licensed operators, in application of articles L. 33-1 and L.  34-1.

	The State shall be responsible for higher education in the field of telecommunications and shall also assume financial responsibility thereof as of the beginning of 1997, under the conditions provided for in the Finance Acts.
	
	Public telecommunications research shall be carried out under the control of the State, by the State or on behalf of the State.

	Art.  L.  35-7  Every five years, after public consultation and the opinion of the telecommunications regulatory authority and the public service commission for posts and telecommunications, a report on this chapter shall be submitted by the Government to Parliament.  This report shall propose, where appropriate, the inclusion of new services in the scope of the universal service and the review of the list of mandatory services, in order to take into account developments in telecommunications technology and services.

Chapter IV

Regulatory framework for telecommunications

	Art.  L.  36  There shall be established a telecommunications regulatory authority
as of 1 January 1997. 

	Art.  L.  36-1  The telecommunications regulatory authority shall consist of a chairman and of two other members, appointed by decree, according to their  legal, economic and technical expertise, for an irrevocable term of six years.

	One third of the members of the telecommunications regulatory authority shall be renewed every two years. If a member is not able to complete his term of office, the member appointed to replace him shall hold office for the remainder of the term of the person he is replacing.

	The chairman of the first telecommunications regulatory authority shall be appointed for a term of six years. The term of office of the two other members shall be determined by the drawing of lots. One of the members shall be appointed for a term of 4 years and the other for a term of 2 years.

	Members of the authority shall not be eligible for reappointment. However, this rule shall not apply to members who have held office for a term not exceeding two years, as a result of the measure provided for in the above two paragraphs.
	
	Art.  L.  36-2  This office shall be incompatible with any other professional activity and any direct or indirect interest in a company in the telecommunications, broadcasting and information technology sectors.

	The members of the authority shall not disclose any information pertaining to their activities.
 
	The chairman and the other members of the telecommunications regulatory authority shall receive respectively a salary equal to that pertaining to the two highest senior administration grades for civil servants.

	Art.  L.  36-3  The telecommunications regulatory authority shall be provided with staff placed under the authority of its chairman.

	 The telecommunications regulatory authority may employ civil servants currently in post, under the same conditions as the telecommunications ministry.  The telecommunications regulatory authority may recruit contractual staff. 

	The staff employed by the telecommunications regulatory authority shall not disclose  any facts, acts and information brought to their knowledge during the performance of their functions. 

	Art.  L.  36-4  The resources of the telecommunications regulatory authority shall include  payment for services provided, and the taxes and fees payable under the conditions set out by the Finance Act or by State Council decree.

	During the drafting of the annual Finance Act, the regulatory authority shall submit to the telecommunications minister its proposals for the funds needed to carry out its functions, over and above the resources referred to in the first paragraph.

	These funds shall be included in the general State budget. The provisions of the law of 10 August 1922 on the control of expenditure shall not be applicable to the management thereof.

	The chairman of the telecommunications regulatory authority shall have the power to authorise expenditure. He shall submit the accounts of the telecommunications regulatory authority to the Revenue Court for auditing.

	Art.  L.  36-5  The telecommunications regulatory authority shall take part in drafting the enactments and regulations governing the telecommunications sector and shall enforce the  application thereof. It shall be consulted on decrees relating to the telecommunications sector and shall participate in the implementation thereof.

	At the request of the telecommunications minister, the telecommunications regulatory authority shall participate in the preparation of the French position in international negotiations on telecommunications issues. At the request of the minister, it shall participate in representing France in the relevant international and European Union organisations.

	Art.  L.  36-6  In accordance with the principles of this code and its enforcement orders, the telecommunications regulatory authority shall set out the regulations governing the following:

	1)  -  the rights conferred and obligations arising out the operation of the various categories of networks and services, in accordance with articles L.  33-1 and L.  34-1;

	2)  -  the provisions applicable to the technical and financial conditions governing interconnection, in compliance with article L.  34-8;

	3)  -  the technical rules applicable, where appropriate, to networks and terminal equipment to ensure interoperability, the portability of terminals and the efficient use of scarce resources;

	4)  -  the conditions for establishing the networks referred to in articles L.  33-2 and
	 L.  33-3.

	Decisions taken in accordance with this article shall be published in the French Official 	Journal, after approval by an order of the telecommunications minister.

	Art.  L.  36-7  The telecommunications regulatory authority shall:

	1)  -  examine, on behalf of the telecommunications minister, the licence applications made pursuant to articles L.  33-1 and L.  34-1;  issue other licences and receive declarations required by chapter II; when licences are granted following a call for applications, the telecommunications regulatory authority shall publish the outcome of the selection procedure; 

	2)  -   issue or have issued the certificates of conformity provided for in article L.  34-9;

	3)  -  enforce the fulfillment of obligations incumbent on operators resulting from the legislative and regulatory provisions applicable thereto and the licences which have been issued, and penalise any breach thereof under the conditions provided for in articles L.  36-10 to 
 L.  36-11;

	4)   - propose to the telecommunications minister, according to the principles and methods set out in article L.  35-3, the sum payable as the contribution to the funding of universal service obligations and supervise the corresponding financing mechanisms.

	5)  -  deliver a public opinion on universal service tariffs, multi-annual tariff objectives and tariffs for services for which there are no competitors on the market, prior to their approval, where appropriate, by the telecommunications minister and the minister for the economy.

	6)   -   allocate to operators and users, under objective, transparent and non-discriminatory conditions, the frequency and numbering resources needed for their activity, and ensure that they  are used efficiently.

	7)  -  after consultation with the competition authority, draw up an annual list of the operators and markets concerned by the provisions of article L. 34-8 II, which are considered to have a significant market power.  An operator with a share of more than 25% of a particular telecommunications market shall be presumed to enjoy significant market power.  This shall also be determined by taking into account the operator’s turnover relative to the size of the market, its control of the means of access to end-users, its access to financial resources and its experience in providing products and services in the market.

	Art.  L.  36-8  I  -  In the event of an interconnection refusal, a failure of commercial negotiation or a dispute over the conclusion or execution of an interconnection or telecommunications network access agreement, an aggrieved party may call on the telecommunications regulatory authority to resolve the dispute.

	After having invited the parties to make their observations, the telecommunications regulatory authority shall issue a determination, within a period set by State Council decree.  The decision shall be fully reasoned and shall specify the fair technical and financial conditions governing interconnection or special access.
  
	In the event of a breach of the rules governing the telecommunications sector the telecommunications regulatory authority may take conservatory measures in particular to guarantee the continuity of network operations.

	The telecommunications regulatory authority shall publish its decisions, subject to regulatory provisions on confidentiality.  It shall notify the parties concerned and the minister for the economy.

	II  -  The telecommunications regulatory authority may be called on to settle disputes 
concerning:

	1)  the conditions laid down in the last paragraph of article L.  34-4, governing the conformity with arrangements which prohibit or restrict the provision of the telecommunications services over the networks referred to in the first paragraph of the said article;

	2)  the conditions and possibilities of operators sharing facilities installed on the public domain, as provided for in article L.  47.

	The telecommunications regulatory authority shall resolve disputes according to the conditions and procedures provided for in I.

	III  -  An appeal may be made for the cancellation or reversal of the decision taken by the telecommunications regulatory authority in application of I and II, within one month of notification thereof. 

	The minister for the economy may only appeal on the grounds of the provisions of articles 7 and 8 of order n° 86-1243 of 1 December 1986 on the freedom of pricing and competition.

	Appeal shall not be suspensive. However, execution of the decision may be deferred, if it is likely to lead to obviously excessive consequences or if new circumstances of exceptional gravity have arisen since notification thereof.

	Conservatory measures taken by the telecommunications regulatory authority may be subject to an appeal or judicial review within 10 days of notification thereof.  This appeal shall be judged within one month.

	IV  -  An appeal lodged against the decisions or conservatory measures taken by the telecommunications regulatory authority, in application of this article, shall fall within the jurisdiction of the appeal court of Paris.

	An appeal lodged against an order of the appeal court shall be made within one month following the notification thereof.

	Art. L. 36-9  A natural or artificial person, professional organisation or the telecommunications minister may call on the telecommunications regulatory authority to undertake conciliatory measures in order to settle a dispute between operators not concerned by article L. 36-8.  Conciliation shall be favoured to all other solution.  

	The telecommunications regulatory authority shall inform the competition authority that the conciliation procedure has been initiated. If the same matter is referred to the competition authority, the latter may decide to suspend judgment.

	If conciliation fails, the chairman of the telecommunications regulatory authority shall refer the matter to the competition authority, if the matter falls within its jurisdiction.

	Art.  L.  36-10  The chairman of the telecommunications regulatory authority shall refer any abuse of a dominant  position or any anti-competitive practice in the telecommunications sector, which may be brought to his notice, to the competition authority.  He may also seek advice  from the competition authority on all other matters within its jurisdiction.  The competition authority shall bring to the notice of the telecommunications regulatory authority of any matters referred to it which lie within its jurisdiction and shall seek the telecommunications regulatory authority’s advice on practices which have been referred to it in the telecommunications sector.

	The chairman of the telecommunications regulatory authority shall inform the public prosecutor of any matters which may constitute a criminal offence.

	Art.   L.   36-11  The telecommunications regulatory authority may  impose penalties, at the request of the telecommunications minister, a professional organisation or a natural or artificial person, or as a matter of course if a default is observed on the part of network operators or telecommunications service providers in relation to legislative and regulatory provisions pertaining to their activity, or to decisions taken to guarantee the implementation thereof.  This power to impose penalties shall be administered subject to the following conditions:

	1)  -  when a network operator or a service provider violates a legislative or regulatory provision pertaining to its activity, or in respect of which it exercises its activity, the telecommunications regulatory authority shall summon it to remedy the matter within a stipulated period of time. It may make such a summons public.

	2)  - when a network operator or a service provider does not comply with a decision taken in application of article L.  36-8 or the summons provided for in point 1) within the period of time stipulated, the telecommunications regulatory authority may pronounce one of the following penalties against it:

	a) depending on the gravity of the default, either total or partial suspension of the licence for one month maximum, reduction in the duration of the licence up to one year, or withdrawal of the licence; 

	For licences subject to the provisions of III of article L.  33-1 the licence may be withdrawn without prior summons, in the event of a substantial change in the composition of the share capital. 

	b) or, if the default does not constitute a criminal offence, a fine may be levied in proportion to the gravity of the default and to the advantages which it affords.  The fine shall not exceed 1% of turnover, increased to 3% in the case of a repeated default of the same obligation. In the absence of sufficient activity to determine this threshold, the penalty may not exceed one million French francs, increased to two million French francs in the case of a repeated breach of the same obligation.

	The penalties shall be imposed after the operator has received notification of the grounds for complaint, has been given the possibility of consulting the case file and has presented written and verbal comments.

	Fines shall be recovered as State debts, independently from taxes and public property.

	3) - Matters dating back more than three years may not be referred to the telecommunications regulatory authority if no action has been taken in view of an inquiry, verification or penalty. 

	4)  -  Decisions shall be fully reasoned, notified to the interested party and published in the French Official Journal. They may be the subject of an appeal to the State Council or of an application for stay of execution. Where fines are concerned, applications for stay of execution shall be suspensive.

	Art.  L.   36-12   The chairman of the telecommunications regulatory authority shall have the capacity to institute legal proceedings pertaining to the accomplishment of his functions.

	Art.  L.   36-13  The telecommunications regulatory authority shall gather the information and carry out the inquiries necessary for the accomplishment of its missions, within the limits and under the conditions set out in article L.  32-4.

	Art.  L.  36-14  The telecommunications regulatory authority shall draw up and make public an annual report on the performance of its functions and on the application of the legislative and regulatory provisions for telecommunications. This report shall be submitted to the Government and to the chairpersons of the two parliamentary chambers - the Sénat and the Assemblée Nationale. In the report, the telecommunications regulatory authority may suggest legislative or regulatory amendments which appear to be called for due to evolutions in the telecommunications sector and the development of competition.

	The telecommunications regulatory authority may be heard by the standing committees on telecommunications of the Sénat and the Assemblée Nationale.

	The telecommunications regulatory authority may commission expert evaluations, conduct studies, collect data and carry out any action required to obtain information on the telecommunications sector.

Article 7

	For chapter III of title I of book II of the Posts and Telecommunications Code there shall be substituted chapter V which shall be amended as follows:

	I  -  For Articles L. 39, L. 39-1 and L. 39-3 there shall be substituted the following articles:

	"Article L.  39  The following shall be liable to imprisonment for a term of six months and to a fine of 500 000 French francs:

	1)  -  to establish or have established a public network, without the licence provided for in article L. 33-1, or to continue the operation of such a network in breach of a decision to withdraw the said licence;

	2)  -  to provide or have provided a public telephone service without the licence referred to in article L.  34-1 or in breach of a decision to withdraw the said licence.

	Art.   L.  39-1  The following shall be liable to imprisonment for a term of six months and to a fine of 200 000 French francs:

	1)   to establish or have established an independent network, without the licence provided  for in article L.  33-2, or to continue the operation of such a network in breach of a decision to withdraw the said licence;

	2)  to cause interference to the radio transmissions of a licensed service, without prejudice to the application of article 78 of law n° 86-1067 of 30 September 1986, by using a radio frequency or infrastructure without the certificate of conformity or the licence provided for in article L.  89, or without conforming to the general regulatory conditions set out in article L. 33-3. 

	Art.  L.  39-3  Artificial persons may be declared criminally responsible, under the conditions set out in article L.  121-2 of the Criminal Code, for the offences defined in articles L.  39 and L.  39-1.  The penalty imposed on artificial persons shall be a fine, according to the terms set out in article L.  131-38 of the Criminal Code."

	II  -  In article L.  39-2, for the words “paragraph II of article L.  33-1 there shall be substituted the words “III of article L.  33-1”.

	III   -   In article L.  39-6, for the words, "prevent from applying for a licence, as described in sections one and two of chapter II of this title, for a maximum of two years" there shall be substituted "from applying for a licence, in application of articles L. 33-1 and L. 34-1 of the Posts and Telecommunications Code, for a maximum of two years".

	IV - In article L. 40, for the words, "civil servants of the telecommunications administration" there shall be substituted the words, "civil servants and officials of the telecommunications administration, the telecommunications regulatory authority and the national radio frequency agency".

Article 8

Title II of book II of the first part of the Posts and Telecommunications code shall be entitled “Rights of Way and Easements”

Article 9

	Chapter I of title II of book II of the first section of the Post and Telecommunications Code shall be entitled, "Rights of way" and shall be amended as follows:

	I  -  For articles L.  45-1, L.  46, L.  47, L.  47-1 and L.  48 there shall be substituted the following articles:

	"Article L.   45-1  Operators licensed under article L.  33-1 shall enjoy rights of way on carriageways and easements on the private properties referred to in article 
 L.  48, under the conditions set out below.

	Authorities which lease or manage the public domain, with the exception of carriageways, shall provide access to their property to parties licensed in application of article L. 33-1 under transparent and non-discriminatory conditions.

	The installation of infrastructures and equipment must be carried out in respect of the environment and the aesthetic quality of the site, and with the least damage to private property and the public domain.

	Article L.  46  Operators licensed to establish public networks may occupy the public highway by erecting structures, insofar as such occupation is not incompatible with the purpose of the highway.

	The work required to establish and maintain networks shall be carried out in accordance with the highway regulations, and, in particular, with the provisions of article L. 115-1 of the Highways Code. 

	Article L.  47  The occupation of public carriageways shall require a highway permission, issued by the relevant authority, according to the type of highway used, under the conditions set out in the Highways Code. The permission may define the installation and operating specifications necessary for the requirements of public traffic and preservation of the highway.

	The authority referred to in the paragraph above shall take all measures necessary to enable universal service obligations to be fulfilled.  It may only refuse rights of way to licensed operators on the grounds of ensuring, within its competence, compliance with the essential requirements.

	If an operator may be given a right of way, under the same conditions as a licensed occupation, through the use of the facilities of another occupant of the public domain, the authority referred to in the first paragraph may invite the two parties to come to an agreement on the shared use of these facilities.  In this case, the owner of the facilities used by the licensed operator shall maintain the infrastructure and equipment needed installed in the premises under his  responsibility, in return for the payment of a contribution set after negotiation with the operator.  The telecommunications regulatory authority may be called upon to settle any dispute, in accordance with the conditions set forth in article L.  36-8.

	The highway permission may not contain provisions relating to commercial and operating condtions.  In return for occupation of the public domain fees shall be payable to the local authorities.

	A State Council decree shall determine the terms of application of this article and in particular shall specify the ceiling payable for the above mentioned fee.

	Article L.  48  The easement referred to in article L.  45-1 shall be created in order to allow the installation and operation of network infrastructures both in the communal parts of appartment buildings and estates, and above and below the ground of undeveloped sites. 

	Creation of an easement shall be subordinated to a licence issued on behalf of the Government by the mayor, after the owners, or in the case of co-ownership, the householders' association, have been informed of the reasons for creating the easement and the choice of location, and have been invited to make their observations on the project, within a minimum period of three months.  Work may only begin after the expiry of this period.  In the event of a dispute, the terms of creation of the easement shall be determined by the president of the High Court.

	Installation of the structures described in the first paragraph may not interfere with the right of the owners or co-owners to demolish, repair, alter or enclose their property. However, the owners or co-owners must inform the beneficiary of the easement before carrying out any work which could affect the buildings, at least three months beforehand.

	When the personel of licensed operators are required to enter the private property defined in the first paragraph, for the purpose of design, erection or operation of the installations, they shall be authorised to do so, in the absence of an amicable agreement, by the president of the High Court sitting in chambers, who shall ensure that the presence of such agents is necessary.

	The beneficiary of the easement shall be responsible for all damage resulting from the network equipment. It shall be required to pay for all direct, unquestionable material damages caused by the installation and maintenance work referred to in the first paragraph of article L. 45-1 and by the existence and operation of such structures. Failing an amicable agreement, compensation shall be determined by the court competent in matters of expropriation on the application of the contending party.

	A State Council decree shall determine the conditions of application of this article.

	II  -  Articles L.  49 to L.  52 shall be repealed.

	III  - In article L.  53, for the word "prefectorial" there shall be substituted the words "relevant authority".

Article 10

	Chapter II of part II of book II of the first section of the Posts and Telecommunications Code shall be entitled "Radio easements" and shall be amended as follows:

	I  -  Article L.  56-1, worded as follows, shall be added:

	I  -  In article L.  56-1 for the words, "centres of all types operated or controlled by the various ministerial departments" shall be replaced by the words, "centres of all types operated by the various ministerial departments, as well as centres appointed by the telecommunications regulatory authority, operated by licensed operators in the interests of national defence and security".

	"Article L. 56-1. Operators licensed under article L. 33-1 shall benefit from radio frequency easements for the protection of telecommunications networks, under the following conditions, with the exception of those concerning the centres designated by the telecommunications regulatory authority which operate in the interests of national defence and security.

	1)  -  Easements may apply to properties adjoining radio broadcasting stations in order to ensure the correct propagation of radio waves.

	2)  - A radio interference protection plan shall define the radio frequency easements for each station and shall determine the land to which the easements apply.

	3)  -  The creation of an easement shall entitle the owner to compensation for any direct or indirect material damage.  In the event of a dispute the sum shall be determined according to the principles of expropriation.

	The plan shall be submitted to the national radio frequency agency for its opinion, and to public consultation.  It shall be approved by the Prefect, with the consent of the municipal councils concerned and after the owners have been informed of the reasons for creating the easement and the choice of location, and have been invited to make their observations on the plan, within a minimum period of three months.

	4)  -  Creation of a radio frequency easement shall entitle the owner to compensation for any resulting unquestionable, direct damage. Failing an amicable agreement, the compensation shall be determined and paid according to the rules governing expropriation.

	A State Council decree shall stipulate the terms of the application of this article."

	II  -  At the end of the first sentence there shall be added the following words:

	"or requiring a declaration, according to a procedure determined by a State Council decree."

	III  -  Article L.  62-1 below shall be added:

	"Article L.  62-1  Operators licensed in application of article L.  33-1 shall benefit from easements for the protection of telecommunications networks from radio interference, according to the conditions of this article.

	1) - Easements may apply to the area around centres operated by licensed operators, in order to prevent electromagnetic interference, with the exception of centres designated by the telecommunications regulatory authority, which operate in the interests of national defence and security.

	2)  -  A protection plan established under the conditions defined in article L. 56-1 shall determine the easement areas and define such easements.
	
	3)  -  Easements shall include the prohibition to commission or use equipment installed subsequent to the protected centre, which might interfere with radio reception.

	4)  -  Creation of a radio easement shall entitle the owner or user to compensation for any resulting unquestionable, direct material damage. Failing an amicable agreement, the compensation shall be determined and paid according to the rules governing expropriation.

	A State Council decree shall stipulate the terms of application of this article."

	VI  - In article L.  89, for the words, ""with the exception of the cases described in 3) of article L.  33-3" there shall be substituted the words, "with the exception of the cases referred to in article L.  33-3".

Article 11

	I  -  There shall be established a national radio frequency agency, as of 1 January 1997.  This shall be government agency and of administrative character.

	The function of this agency shall be to plan and manage public radio frequency spectrum in accordance with article 21 of law n° 86-1067 of 30 September 1986 on the freedom of communication, subject to the powers conferred upon the administrations and authorities to which radio frequencies have been allocated. 

	It shall prepare the French position and co-ordinate the French representation in international negotiations on radio frequency spectrum issues.

	It shall be responsible for co-ordinating the installation on the national territory of radio stations of all kinds in order to ensure the optimum use of available sites. For this purpose, and notwithstanding the competence of the broadcasting authority, decisions on radio station installation shall only be taken with the consent of the agency and after consultation with the agency when within the field of competence of the broadcasting authority. 

	A State Council decree shall determine the period of time at the end of which the said agreement is deemed to be acquired and, where applicable, the categories of intallations for which, for technical reasons, such agreement is not required.

	II  -  The agency shall be administered by a Board of Directors consisting of representatives of various administrations, particularly those which have been allocated frequency bands, the broadcasting authority, the telecommunications regulatory authority and persons chosen for their particular expertise.

	The chairman of the Board of Directors shall be appointed by decree.

	III  -  The director-general of the agency shall be appointed by decree after consultation with the chairman of the Board of Directors. He shall be responsible for the technical, administrative and financial management of the agency. He shall represent the establishment in legal proceedings.

	IV  -  The agency's resources shall  include the payment of services provided, income from investments and authorised shares, public subsidies and income from donations and legacies. The agency may also charge fees for the use of radio frequency spectrum under the conditions laid down in the Finance Acts.

	V  -  A State Council decree shall define the terms of application of this article and shall specify the agency's functions, organisation and operating conditions.

	An interministerial order shall stipulate the specific aims to be achieved by the agency under the provisions set out in articles 2 and 6 of order n°59-147 of 7 January 1959 on the general organisation of defence and the special provisions to be taken into account in order to achieve them.

	VI  -  This article applies to the island of Mayotte and to the overseas territories, subject to the specific jurisdictions of these territories in application of the laws by which they are governed."

Article 12

	Article 28 of law n° 90-1170 of 29 December 1990 on the regulatory framework for telecommunications shall be amended as follows:

	I  -  I shall be amended as follows:

	1)  At the end of the first paragraph there shall be added the following sentence, "Encryption device means hardware or software designed or modified for this purpose."

	2)   For the second and third paragraphs there shall be substituted the following provisions:

	"In the interests of national defence and  internal and external security of the State, while protecting data and developing the security of communications and transactions:

	1)  the use of an encryption device or service shall be:

	a)  unrestricted 

	-  if the encryption service or device does not provide confidentiality, particularly when its only purpose is to authenticate a communication or to ensure the integrity of the information transmitted;

	-  or if the encryption device provides confidentiality functions based solely on secret conventions managed using procedures and by an organisation approved under the conditions defined in II;

	b)  subject to authorisation by the prime minister in any other case.

	2)   the supply, importation from countries outside the European Union, or exportation of an encryption device or service: 

	a)  shall be subject to authorisation from the Prime Minister if it performs functions of confidentiality; to obtain an authorisation the supplier may be required to reveal the identity of the purchaser. 

	b)  shall be subject to declaration in all other cases.”

	3) A decree shall lay down the conditions under which declarations are made and authorisations granted. This decree shall provide for 

	a)  a simplified declaration or licensing regime for certain types of device or service and for certain categories of users;

	b) the substitution of the authorisation by the declaration for the use of encryption devices or services which are not subject to authorisation with regard to the above-mentioned provisions, but which justify supervision. 

	c) derogation of all previous formalities for operations concerning encryption devices and services, the technical characteristics and usage conditions  of which should not effect the interests mentioned at the beginning of the present paragraph.

	II  -  For II there shall be substituted the following provisions:

	"II - The bodies responsible for managing the secret keys pertaining to encryption devices and services which provide confidentiality, on behalf of third parties, shall be subject to prior approval from the Prime Minister.

	They shall not disclose information brought to their notice while carrying out their approved functions.
	
	The approval shall specify the resources and services that they may use or provide.

	They shall be required to store the secret keys that they manage. They shall be required to send a copy thereof to the legal authorities and to the authorised bodies, or to implement them, as requested, in application of law n° 91-646 of 10 July 1991 on the confidentiality of information transmitted by telecommunications networks, or within the framework of inquiries conducted under articles 53 et seq and 75 et seq of the Criminal Code.  

	They shall carry out their activities on the national territory.

	A State Council decree shall define the conditions governing the approval of these organisations and shall set out the procedures and technical provisions required to implement the obligations described above.

	III  -  a)  Notwithstanding the application of the Customs Code, a person who provides, imports from countries outside the European Union or exports an encryption device or service without having obtained the authorisation referred to in point I or who does not respect the conditions of the authorisation issued shall be guilty of an offence and liable to imprisonment for a term of six months and to a fine of 200 000 French francs.

	A person who provides encryption devices or services without having obtained the approval referred to in point I or does not comply with the conditions of the approval referred to in point II, shall be guilty of an offence and liable to imprisonment for a term of two years and to a fine of 300 000 French francs.

	A person who provides, imports from countries outside the European Union, or exports an encryption device in order to facilitate the preparation or commission of a crime or offence shall be liable to imprisonment for a term of three years  and to fine of 500 000 French francs.

	Any attempt to commit the offences described in the previous paragraphs shall be liable to the same punishment.

	b)  -  A natural person guilty of an offence described in this paragraph shall also be liable to the additional penalties provided for in articles 131-19, 131-21 and 131-27 of the Criminal Code.

	c)  An artificial person may be declared criminally responsible for the offences defined in the first paragraph, under the conditions described in article 121-2 of the Criminal Code. The penalties to which artificial persons shall be liable are as follows:

	1)   a fine according to the terms set out in article 131-38 of the Criminal Code;

	2)  the penalties referred to in article 131-39 of the same code. The prohibition referred to in 2) of article 131-39 above concerns the activity in the exercise of which or at the time of the exercise of which the offence was committed."

	III  -  III shall become IV.

	For the last paragraph there shall be substituted the following provisions:

	"A person who refuses to supply information or documents or to obstruct the inquiries referred to in paragraph IV, shall be liable to imprisonment for a term of six months and to a fine of 200 000 French francs."

	IV  -  IV shall become V.

	After the word, "authorisations", there shall be inserted the words "and declarations".

	V  -  VI below shall be added:

	"VI  -  The provisions of this article shall not prevent the decree of 18 April 1939 laying down the regime governing armaments, weapons and munitions from being applied to encryption devices which are especially designed or modified to permit or facilitate the use or implementation of weapons."

	VI  -  This article shall be applicable to the overseas territories and to the island of Mayotte.

					Article 13

 Article 22 of law n° 91-646 of 10 July 1991 on the confidentiality of information transmitted by telecommunications networks shall be amended as follows:

	1)  in the first paragraph, the words, ""or managing the universal directory" shall be inserted after the words, "telecommunications service providers";

	2)  a third paragraph, worded as follows, shall be added:

	"A person who refuses, in breach of the first paragraph, to furnish information or documents or who furnishes erroneous information, shall be liable to imprisonment for a term of six months and to a fine of 50 000 French francs. Artificial persons may be declared criminally responsible under the conditions set out in article 121-2 of the Criminal Code for the offence defined in this paragraph. Artificial persons shall be liable to a fine, according to the terms set out in article L.  131-38 of the Criminal Code."

Article 14

In article L. 113-3 of the Highways Code, for the words “public telecommunications services” there shall be substituted the words “operators of public telecommunications networks and public services”.

Article 15

	The second paragraph of article L.  34-2 of law n°86 1067 of 30 September 1986 on the freedom of communication shall be repealed.

Article  16

	I  -  The provisions of Article L.  33-1 of the Posts and Telecommunications Code, enabling the establishment and operation of public networks by operators other than France Télécom, in order to provide all telecommunications services other than the public telephone service between fixed points shall come into effect as of 1 July 1996.

	Notwithstanding the provisions of the schedule of conditions in force at the date of commencement of this law, the managers of the government’s public domain and the operators and public service concessionaries may as of this date, in accordance with their specific public service obligations, use their facilities for the operation of such networks;

	II  -  The provision of a public telephone service between fixed points over licensed networks, in application of article L.  33-1 of the Posts and Telecommunications Code,  shall  only be authorised as of 1 January 1998, subject to the application of article 2 of law n° 96-299 of 10 April 1996 on experimental trials in the field of information technologies and services. At the request of the operators concerned, licences to provide the public telephone service shall be granted in application of this law as of 1 January 1997 and shall take effect on 1 January 1998.

	Operators licensed, on the date of publication of this law, to offer services in competition with France Télécom, shall be entitled, as of 1 July 1996, to use the infrastructure established in application of articles L. 33-1 and L. 33-3 of the Posts and Telecommunications Code, in order to provide such services. At the request of the operators concerned, the telecommunications minister may issue or modify the corresponding licences.

	III  -  Decisions which, in application of law n° 96-299 of 10 April 1996 on experimental trials in the field of information technologies and services, authorise the provision of the public telephone service between fixed points, together with the schedule of conditions appended thereto, shall conform with the provisions of this law by 1 January 1998.

	IV  -  Licences to establish networks and provide telecommunications services issued for a fixed period of time before the date of publication of this law shall continue to take effect until their stipulated term. The provisions of articles L.  36-6 to L.  36-13 of the Posts and Telecommunications Code shall be applicable thereto, as well as article L.  34-6 in the event of breach of the obligations required by the legislative and regulatory texts and by the licence decision. The telecommunications regulatory authority shall enforce the compliance thereof.

	Holders of concessions or licences for the same purpose as above, issued for an unlimited period of time, shall have one year from the date of publication to conform with the provisions of this law and, when a licence is required, shall make a new application to the relevant authority.

	V  - Staff currently under the authority of the telecommunications minister which are required to carry out the functions conferred upon the telecommunications regulatory authority shall be transferred to the latter.