I OVERVIEW

The French regulatory framework is based on the historical distinction between telecoms and postal activities, on the one hand, and radio and television activities, on the other hand (sectors are still governed by separate legislation and by separate regulators). Amendments in the past 15 years reflect the progress and the convergence of electronic communications, media and technologies; and the liberalisation of the TMT sectors caused by the de facto competition between fixed telephony (a monopoly until 1998) and new technologies of terrestrial, satellite and internet networks. French law also mirrors the EU regulatory framework through the enactment of the three EU Telecoms Packages in 1996, 2002 and 2009, which have been transposed into French law.

The TMT sectors in France have been fully open to competition since 1 January 1998, and are characterised by the interactions of mandatory provisions originating from many sources and involving many actors (regulators, telecoms operators, and local, regional and national authorities). The TMT sectors are key to the French economy, and 2015 was once again an important year in many respects for these sectors’ business.

The major trends in the TMT sectors in 2015 were the acceleration in the transition to superfast broadband on both fixed and mobile networks, both in terms of coverage and subscription numbers; the growing reconfiguration of the sector, brought in particular by the consequences of Altice’s acquisition of SFR, France’s second-largest mobile operator, as well as Nokia’s acquisition of Alcatel-Lucent; and the upcoming Digital Republic Bill.2 Wholesale and retail electronic communications markets in France generated almost €36 billion in revenue, marking the fifth consecutive annual decrease. 2015 was, however, marked by a much less significant downward trend in revenues (-2 per cent in 2015 against -3.4 per cent in 2014 and -7.3 per cent in 2013). The mobile services sector is experiencing notable progress, due to a less marked drop in prices coupled with an increase in volume of subscriptions and communications. It should be noted that the price reform for value added telephone services, which entered into force on 1 October 2015, led to a significant decrease in mobile communication revenue over the last quarter of 2015. Excluding frequency spectrum allocation, operators invested €7.8 billion in 2015, increasing their investments by more than 10 per cent, particularly in the deployment of 3G and 4G networks (€1.2 billion spent in 2015), in addition to continuing to invest in the deployment of fibre networks.3

II REGULATION

i The regulators

There are four specialist authorities involved in the regulation of technology, media and telecommunications in France:

  • a ARCEP is an independent government agency that oversees the electronic communications and postal services sector. It ensures the implementation of a universal service, imposes requirements upon operators that exert a significant influence in the context of market analyses, participates in defining the regulatory framework, allocates finite resources (radio frequencies and numbers), imposes sanctions,4 resolves disputes and delivers authorisations for postal activities.
  • b The Superior Audiovisual Council (CSA) is the regulatory authority responsible for the audiovisual sector. The CSA sets rules on broadcasting content and allocates frequencies by granting licences to radio and television operators. It also settles disputes that may arise between TV channels and their distributors, and is empowered to impose sanctions on operators in cases of breaches of specific regulations. Law No. 2013-1028 of 15 November 2013 relating to the independence of the French public service broadcasting has amended the legal nature of the CSA, its composition, the status and appointment procedure of its members and their powers (see Section IV.i, infra).
  • c The Data Protection Authority (CNIL) ensures the protection of personal data. Automatic personal data processing systems must be declared to the CNIL. The CNIL also supervises compliance with the law by inspecting IT systems and applications, and is empowered to issue sanctions that range from warnings to fines.
  • d The High Authority for the Distribution of Works and the Protection of copyright on the Internet (HADOPI), which was established in 2009, is in charge of protecting intellectual property rights over works of art and literature on the internet.

These four authorities may deliver opinions upon request by the government, Parliament or other independent administrative authorities such as the French Competition Authority (FCA), and also renders decisions and opinions that may have a structural impact on these sectors (except for HADOPI). The National Frequencies Agency is also an important agency responsible for managing frequency spectrum and planning its use (see Section IV, infra).

The CSA and ARCEP are the two main regulators of the TMT sectors. Discussions about merging these entities at the time of the convergence or to limit the powers of ARCEP occurred regularly during the past few years, but such merger was finally given up. Instead, it was argued that the two regulators should work in closer cooperation on certain common subjects.

The prevailing regulatory regime in France regarding electronic communications is contained primarily in the CPCE, and regarding audiovisual communications in Law No. 86-1067 of 30 September 1986 on Freedom to Communicate, as subsequently amended. The main piece of legislation governing the law applicable to data protection is Law No. 78-17 of 6 January 1978 on Information Technology, Data Files and Civil Liberties, as subsequently amended. Intellectual property rights are governed by the Intellectual Property Code.

ii Regulated activities
Telecoms

Telecoms activities and related authorisations and licences are regulated under the CPCE.

To become a telecoms operator, no specific licences or authorisations are required; the implementation and the operation of public networks and the supply of electronic communication services to the public is free, subject to prior notification to ARCEP (Articles L32-1 and L33-1 of the CPCE).

Conversely, the use of radio frequencies requires a licence granted by ARCEP (Article L42-1 of the CPCE).

Media

Authorisations and licensing in the media sector are regulated under Law No. 86-1067 of 30 September 1986.

Authorisations for private television and radio broadcasting on the hertz-based terrestrial frequencies are granted by the CSA following bid tenders and subject to the conclusion of an agreement with the CSA. The term of authorisations cannot exceed 10 years.5 Broadcasting services that are not subject to CSA’s authorisation – namely, those which are broadcast or distributed through a network that does not use frequencies allocated by the CSA (cable, satellite, ADSL, internet, telephony, etc.) – are nevertheless subject to a standard agreement or a declaration regime.6

iii Ownership and market access restrictions
General regulation of foreign investment

Since the entry into force of Law No. 2004-669 of 9 July 2004, discrimination of non-EU operators is prohibited, and they are subject to the same rights and obligations as EU and national operators.7 According to Article L151-1 et seq. of the French Monetary and Financial Code, when a foreign (EU or non-EU) investment is made in a strategic sector (such as security, public defence, cryptographics or interception of correspondence),8 the investor must submit a formal application dossier to the French Ministry of Economy for prior authorisation. Any transaction concluded without prior authorisation is null and void, and criminal sanctions (imprisonment of up to five years9 and a fine amounting to up to twice the amount of the transaction) are also applicable. A decree of 14 May 201410 has expanded the list of sectors in which foreign investors must seek prior authorisation from the French Ministry of Economy. In particular, the decree has added to the regulated activities referred to in Article R153-2 of the French Monetary and Financial Code activities relating to the integrity, security and continuity of the operation of networks and electronic communications services.

Specific ownership restrictions applicable to the media sector

French regulations provide for media ownership restrictions to preserve media pluralism and competition. In particular, any single individual or legal entity cannot hold, directly or indirectly, more than 49 per cent of the capital or the voting rights of a company that has an authorisation to provide a national terrestrial television service where the average audience for television services (either digital or analogue) exceeds 8 per cent. In addition, any single individual or legal entity that already holds a national terrestrial television service where the average audience for this service exceeds 8 per cent may not, directly or indirectly, hold more than 33 per cent of the capital or voting rights of a company that has an authorisation to provide a local terrestrial television service.11

Regulation of the media sector is currently evolving in reaction to a number of changes in French media ownership in 2015. The year was particularly affected by a number of acquisitions in the press sector, by French businessman Mr Patrick Drahi (see Section VI.iv, infra) as well as by the LVMH group.

As a consequence, French lawmakers are currently examining new draft bills whose purpose is to amend the Law of 30 September 1986 with the view to ensure the freedom, independence, and pluralism in media ownership, as well as the independence of editorial boards,12 for example, by requiring media outlets to provide yearly information on their capital ownership and governing bodies and reinforce the powers of the CSA over French media governance with the creation of deontology committees.

Regarding the radio sector, a single person cannot retain networks whose coverage exceeds 150 million inhabitants or 20 per cent of the aggregated potential audience.13 This regulation will, however, be subject to modification in the future, as it is does not take into account local pluralism challenges. In this respect, a report was submitted to Parliament by the CSA in April 2014.14

Further, unless otherwise agreed in international agreements to which France is a party, a foreign national may not acquire shares in a company holding a licence for a radio or television service in France and that uses radio frequencies if this acquisition has the effect of raising (directly or indirectly) the share of capital or voting rights owned by foreign nationals to more than 20 per cent. This provision does not apply to service providers of which at least 80 per cent of the capital or voting rights are held by public radio broadcasters belonging to Council of Europe Member States, and of which at least 20 per cent is owned by one of the public companies mentioned in Article 44 of the Law of 30 September 1986.15 Specific rules restricting cross-media ownership also apply.16

iv Transfers of control and assignments

The general French merger control framework applies to the TMT sectors, without prejudice to the above-mentioned ownership restrictions and to specific provisions for the media sector. The merger control rules are enforced by the FCA.17

Regarding the telecoms and post sectors, the FCA must provide ARCEP with any referrals regarding merger control, and ARCEP can issue a non-binding opinion.18

Regarding companies active in the radio or TV sector involved in a Phase II merger control procedure before the FCA, a non-binding opinion from the CSA is necessary.19

Any modification of the capital of companies authorised by the CSA to broadcast TV or radio services on a frequency is subject to the approval of the CSA.20

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and internet protocol regulation

Under the CPCE, electronic communications services other than voice telephony to the public may be provided freely.21

As regards the ADSL network, and following local loop unbundling, alternative operators must be provided with direct access to the copper pair infrastructure of France Télécom, the historical operator. Therefore, as with traditional fixed telephony, DSL networks are subject to asymmetrical regulation.

As regards services, ISPs can operate freely and provide services, but they must file a declaration with ARCEP before commencing operations.22 A failure to comply with this obligation constitutes a criminal offence.23

More generally, ISPs must comply with the provisions of Law No. 2004-575 of 21 June 2004 on Confidence in the Digital Economy governing e-commerce, encryption and liability of technical service providers, as subsequently amended. Law No. 2004-575 of 21 June 2004 also sets out a liability exemption regime for hosting service providers. They are not subject to a general obligation to monitor the information they transmit or store, nor are they obliged to look for facts or circumstances indicating illicit activity. Nevertheless, when the provider becomes aware that the data stored is obviously illicit, it has the obligation to remove the data or render its access impossible. In that respect, the question of the qualification as ‘host provider’ has been widely debated before French courts.24

ii Universal service

The EU framework for universal services obligations, which defines universal services as the ‘minimum set of services of specified quality to which all end users have access, at an affordable price in the light of specific national conditions, without distorting competition’,25 has been implemented by Law No. 96-659 of 26 July 1996 and further strengthened by Law No. 2008-3 of 3 January 2008. Universal service is one of the three components of public service in the telecoms sector in France (the other two being the supply of mandatory services for electronic communications and general interest missions).

Significant changes occurred in 2015 as the Law of 6 August 2015 (the Macron Law)26 modified the universal service missions of telecoms operators. In particular, telecoms operators no longer have to provide access to public payphone services.

Obligations of the operator in charge of universal service are listed in Article L35-1 of the CPCE and fall into two main categories of services:

  • a telephone services: connection to an affordable public telephone network enabling end-users to take charge of voice communications, facsimile communications and data communications at data rates that are sufficient to allow functional internet access and free emergency calls; and
  • b enquiry and directory services (either in printed or electronic versions).

These services must be rendered under tariff and technical conditions that take into consideration the difficulties faced by some users, such as users with low incomes, and that do not discriminate between users on the ground of their geographical location. The Minister in charge of electronic communications following calls for applications (one per category) designates the operator or operators in charge of universal service. So far, only France Télécom-Orange has been designated as such.

Universal service currently only covers telephone provision and not information technologies. However, in Opinion No. 11-A-10 of 29 June 2011, the FCA considered that the reduced price policy (also called the ‘social tariff’) set up for telephone networks, pursuant to universal service rules, might be extended to internet services even though the EU Telecoms Package does not expressly allow for the inclusion of such in the universal service. In the absence of regulation, France Télécom-Orange launched a ‘social tariff’ for multi-service offers (telephone and internet) on 9 February 2012.

ARCEP determines the cost of universal service and, when it is necessary to finance it in the event that it represents an excessive burden for the operator in charge, ARCEP also determines the amount of the other operators’ contributions to the financing of universal service obligations through a sectoral fund. In principle, every operator contributes to the financing, with each contribution being calculated on the basis of the turnover achieved by the operators in their electronic communications activities.27

iii Restrictions on the provision of service

Net neutrality is a growing policy concern in France.28 2015 was marked by a number of regulatory innovations, namely Regulation No. 2015/2120 of 25 November 2015 establishing measures concerning open internet access, which was followed by draft guidelines presented by ARCEP in June 2016. From the electronic communications regulator’s standpoint, which focuses on the technical and economic conditions of traffic conveyance on the internet, the key question in the debate over net neutrality is how much control internet stakeholders can rightfully exert over the traffic. This implies examining operators’ practices on their networks, as well as their relationships with some content and application providers.

In that respect, ARCEP started discussions on net neutrality in 2010 that led to the issuance of 10 proposals to ensure the internet’s smooth operation and balanced development, and to define the tools needed to maintain this balance.

ARCEP also issued an important decision on 29 March 2012 giving it the ability to gather information on the market for interconnection between ISPs and the main content and application providers.29 A new decision dated 18 March 201430 introduces two main changes to the system established in 2012: it distinguishes the installed and configured capacity on each interconnection link covered by the decision; and allows ARCEP to request additional information periodically to enable it to assess the scale of a presumed traffic overload on interconnection links. For the sake of simplicity, ARCEP has also reduced the amount of information that operators are required to provide, and the number of relationships covered by the decision.

Moreover, the FCA issued a decision on 20 September 201231 regarding the dispute between the US operator Cogent and France Télécom in relation to the controversial issue of whether network operators are entitled to charge for opening additional capacity. The MegaUpload website – which has since been shut down by the US authorities – was a Cogent customer that used to send, via Cogent, to subscribers of France Télécom’s subsidiary, Orange, very significant traffic volumes (up to 13 times greater than in the other direction) of essentially video content downloaded by web users. In view of the severely asymmetric traffic running to its detriment and exceeding the maximum ratio stated in its peering policy, France Télécom wished to charge for opening additional interconnection capacity. The FCA considered that such practice did not contravene competition law inasmuch as France Télécom did not refuse access to its subscribers by Cogent – and indeed opened additional capacity free of charge on several occasions between 2005 and 2011, in response to demand from Cogent – but simply requested payment for opening new capacity, in accordance with its peering policy, without seeking to charge for existing capacity hitherto provided free of charge. The FCA’s decision was confirmed by the Paris Court of Appeals in a decision of 19 December 201332 and by the French Supreme Court in a decision dated 12 May 2015.33

The French regulatory framework is therefore undergoing changes to enhance net neutrality among top internet platforms. On 18 June 2014, the Prime Minister added several measures to France’s digital strategy framework, including introducing the principle of net neutrality into the legislation as well as the ability for all internet users to shift their personal data from one service to another. In addition, in a report submitted on 13 June 2014 to the government, the French Digital Council called for the creation of neutrality rating agencies in France.

As to the content, pursuant to the Law of 21 June 2004, ISPs have a purely technical role, and they do not have the general obligation to review the content they transmit or store. Nevertheless, when informed of unlawful information or activity, they must take prompt action to withdraw the relevant content, failing which their civil liability may be sought. Since 2009, HADOPI has been competent to address theft and piracy matters. It intervenes when requested by regularly constituted bodies for professional defence that are entitled to institute legal proceedings in order to defend the interests entrusted to them under their statutes (e.g., SACEM), or by the public prosecutor. After several formal notices to an offender, the procedure may result in a €1,500 fine.34

Finally, French e-consumers benefit from consumer law provisions and from specific regulations. In particular, they are protected against certain unsolicited communications via e-mail if their consent has not been obtained prior to the use of their personal data.35 Moreover, consumers must be provided with valid means by which they may effectively request that such unsolicited communications cease.36 In addition, a Decree of 19 May 2015 provides for the implementation of an opposition list on which any consumer can add his or her name so that advertising material may not generally be sent to him or her.37 The Decree joins a list of programmes in place to ensure consumer protection. With regard to phone-based advertising, new restrictions have been implemented since 1 June 2016 thanks to the designation of the company Opposetel, which is in charge of preventing unsolicited communications for consumers registered on an opposition list.38 The Bloctel service had over 2 million registered users two months after its launch. All telephone operators also have the obligation to offer their users the possibility to register on an opposition list.39

iv Security

The past few years have seen increasing terrorist security threats, resulting in substantial changes in the legal framework regarding security in telecommunications.

Law No. 91-646 of 10 July 1991 concerning the secrecy of electronic communications, now codified in the Internal Security Code, provides that the Prime Minister may exceptionally authorise, for a maximum period of four months (renewable only upon a new decision), the interception of electronic communications in order to collect information relating to the defence of the nation or the safeguarding of elements that are key to France’s scientific or economic capacity. In addition, pursuant to Law No. 2015-912 of 24 July 2015 (new Article L851-3 of the Internal Security Code) and only for the purpose of preventing terrorism, the Prime Minister may impose on providers of electronic communication services the obligation to implement an automated data-processing system for a maximum period of two months (renewable only upon a new decision) with the aim of detecting connections likely to reveal a terrorist threat.

Further, Law No. 2013-1168 on Military Programming (LPM) introduced a new chapter in the Internal Security Code relating to administrative access to data connection, including real-time geolocation.40 The new regime, which entered into force on 1 January 2015,41 authorises the collection of ‘information or documents’ from operators as opposed to the collection of simply ‘technical data’ that is authorised under the current law. In addition, access to data organised by the new regime is exclusively administrative, namely, without judicial control. Requests for implementing such measures are submitted by designated administrative agents to a ‘chosen personality’ appointed by the National Commission for the Control of Security Interceptions (CNCIS) upon proposal of the Prime Minister. CNCIS will be in charge of controlling (a posteriori) administrative agents’ requests for using geolocation measures in the course of their investigation. The Minister for Internal Security, the Defence Minister and the Finance Minister can also issue direct requests for the implementation of real time geolocation measures to the Prime Minister who, in this case, will directly grant authorisations.

Law No. 2014-1353 of 13 November 2014, implemented by Decree No. 2015-174 of 13 February 2015, also entitles the administrative authorities to request ISPs to prevent access to websites supporting terrorist ideologies or projects.42 Additionally, laws linked to the state of emergency created extraordinary means of data search and seizure and expanded the provisions of Law No. 2014-1353.

The collection and future processing of personal data is subject to several cumulative conditions, which include information, consent and legitimate purpose, and – as a matter of principle, subject to certain exceptions – no transfer outside the EU.43 Any operator that determines the purposes and the manner in which personal data are processed is considered a ‘data controller’ and therefore needs to file a prior declaration of such processing to the CNIL.44

In addition to these general rules applicable to the protection of personal data, the CPCE provides specific rules pursuant to which operators must delete or preserve the anonymity of any traffic data relating to a communication as soon as it is complete.45 Exceptions are provided, however, in particular for the prevention of terrorism and in the pursuit of criminal offences.

Data used for the purpose of location identification are also considered as personal data within the meaning of Law No. 78-17 of 6 January 1978 on Information Technology, Data Files and Civil Liberties. In the past few years, the CNIL has taken decisions on statistical measures of advertising effects based on locational identification of smartphones, pay-as-you-drive systems, anti-theft devices, Google Latitude and Google Street View. Two conditions are usually required: the individual’s knowledge and consent.

Any person under 18 is considered a child under French law. Unlike in the US, there is no specific statute governing the protection of children online. In general terms, the Law of 21 June 2004 provides that an ISP should inform subscribers where there is a technical means of restricting access to selected services.

As for privacy, children’s online rights are protected in the same way as those of adults. According to CNIL practice, collecting children’s personal data is allowed only with prior authorisation from their parents and if clear information is provided to the child.

In addition, provisions aimed at protecting children against activities or products such as pornography, gaming or alcohol are enshrined in criminal law and in a range of sectoral legislation. To increase the efficiency of the existing provisions meant to prevent children against pornography, Law No. 2011-267 on Performance Guidance for the Police and Security Services (LOPPSI 2) allows the administrative authorities to order an ISP to cut access to websites displaying images of child abuse.46 Law No. 2010-788, dated 12 July 2010 also forbids any type of communication with the purpose of promoting the sale, the provision or the use of a mobile for children under 14 years old.47

Unauthorised access to automated data-processing systems is prohibited by Articles 323-1 to 323-7 of the French Penal Code. In addition, with regard to cyberattacks, LOPPSI 2 introduced a new offence of online identity theft in Article 226-4-1 of the French Penal Code and empowers police officers, upon judicial authorisation and only for a limited period, to install software in order to observe, collect, record, save and transmit all the content displayed on a computer’s screen. This helps with the detection of infringements, the collection of evidence and the search for criminals by facilitating the creation of police files and by organising their coordination. Cybersecurity threats are dealt by the National Agency for the Security of Information Systems (ANSSI), a branch of the Secretariat-General for Defence and National Security created in 2009.48

In terms of personal data protection, LOPPSI 2 increases the instances where authorities may set up, transfer and record images on public roads, premises or facilities open to the public in order to protect the rights and freedom of individuals, and recognises that the CNIL has jurisdiction over the control of video protection systems.

IV SPECTRUM POLICY

i Development

The management of the entire French radio frequency spectrum is entrusted to a state agency, the National Frequencies Agency. It apportions the available radio spectrum, the allocation of which is administered by governmental administrations (e.g., those of civil aviation, defence, space, the interior) and independent authorities (ARCEP and the CSA) (see Section II.ii, supra).

In recent years, French spectrum policy has primarily concerned the development of DTTV and the digital dividend. The total transition to DTTV was completed on 30 November 2011.

ii Flexible spectrum use

The trend towards greater flexibility in spectrum use is facilitated in France by the ability of operators to trade frequency licences, as introduced by the Law of 9 June 2004.49

The general terms of spectrum licence trading were defined by Decree No. 2006-1016 of 11 August 2006, and the list of frequency bands the licences of which could be traded was laid down by a Ministerial Order of 11 August 2006. A frequency database that provides information regarding the terms for spectrum trading in the different frequency brands open in the secondary market is publicly accessible. The spectrum licence holder may transfer all of its rights and obligations to a third party for the entire remainder of the licence (full transfer) or only a portion of its rights and obligations contained in the licence (e.g., geographical region or frequencies). The transfer of frequency licences is subject either to prior approval of ARCEP50 or to notification to ARCEP, which may refuse the assignment under certain circumstances.51 Another option available for operators is spectrum leasing, whereby the licence holder makes frequencies fully or partially available for a third party to operate. Unlike in a sale, the original licence holder remains entirely responsible for complying with the obligations attached to the frequency licence. All frequency-leasing operations require the prior approval of ARCEP.

iii Broadband and next-generation mobile spectrum use

Until 2009, there were three 3G licence holders in France: Orange France, SFR and Bouygues Telecom. The fourth 3G mobile licence was awarded to Free Mobile on 17 December 2009.

In addition, spectrum in the 800MHz and 2.6GHz bands were allocated for the deployment of the ultra-high-speed 4G mobile network: in that respect, licences for the 2.6GHz frequency were awarded to Bouygues Telecom, Free Mobile, Orange France and SFR in September 2011,52 and in December 2011, licences for the 800MHz were awarded to the same operators except Free Mobile,53 which has instead been granted roaming rights in priority roll-out areas. The next step towards greater deployment of the 4G mobile network is the transfer of spectrum in the 700MHz band from TNT services to mobile services. New spectrum in the 700 and 800MHz bands was transferred in December 2015 in order to promote better network capacities in areas with low population density, but the transfer will only be made effective from October 2017 to June 2019.

With respect to mobile network, SFR and Bouygues Telecom announced in January 2014 that they have finalised and signed an agreement whereby the two operators will deploy a shared cellular network that covers a portion of France. The announcement followed the issuance of the FCA’s Opinion No. 13-A-08 of 11 March 2013 on conditions for sharing and roaming on mobile networks, in which the FCA developed in particular the conditions under which network sharing between mobile phone operators may be permitted without harming competition.54 The announcement was welcomed by ARCEP, which indicated that resource-pooling agreements can provide telecommunications operators with a way to reduce their costs and increase the benefits passed onto users, including increased coverage and a better quality of service from both operators.55 However, ARCEP also indicated that the fulfilment of certain conditions remained to be checked. In particular, the two operators must remain independent from one another in terms of both their business strategies and sales. In addition, it must be ensured that the agreement will not squeeze certain competitors out of the market. Additionally, the agreement must result in better coverage and quality of service provided to end-users. These improvements must be quantifiable and verifiable over time. On 25 September 2014, the FCA rejected Orange’s complaint about and request for provisional measures to suspend the agreement, concluding that the agreement in question did not constitute an immediate and serious threat to the economy. ARCEP announced that it will work closely with the FCA to perform a detailed examination of the agreement to verify whether these various conditions have been met. It also remains to be seen how the recent acquisition of SFR by Altice/Numericable will affect the network sharing agreement between SFR and Bouygues Telecom. ARCEP is vigilant on the matter and, on 18 February 2016, sent a formal notice to SFR and Bouygues, reminding them of their commitment to cover 40 per cent of low population density areas by January 2017.

Additionally, under ARCEP supervision, 5G deployment is being prepared, with network coverage estimated to begin in 2020. The European Union’s public-private partnership between the European commission and telecom industries (the 5G-PPP), launched on 1 July 2015, provides a framework for national 5G development.56 Among the project participants is French company Orange. On 30 September 2015, ARCEP gave Orange the authorisation to conduct initial tests for 5G in the city of Belfort until the end of 2016. The authorisation delivered to Orange tests three formerly unused spectrum ranges, namely 3,600–3,800MHz, 10,500–10,625MHz, and 17,300–17,425MHz frequencies.

iv Spectrum auctions and fees
Spectrum auctions in the case of scarce resources

Pursuant to Article L42-2 of the CPCE, when scarce resources such as RF are at stake, ARCEP may decide to limit the number of licences, either through a call for applications or by auction. The government sets the terms and conditions governing these licensing selection procedures, and until now such proceedings have always been in the form of calls for applications.

Fees

Depending on their size and their turnover, electronic communication operators are subject to different types and levels of fee.57 If an operator’s licence only covers one region in France or its overseas regions, the fee is reduced by half.

In addition to these fees and pursuant to Articles R20-31 to R20-44 of the CPCE, licensed operators contribute to the financing of the universal services.

V MEDIA

i Restrictions on the provision of service

Media are, in particular, subject to certain content requirements and restrictions.

Content requirements

At least 60 per cent of the audiovisual works and films broadcasted by licensed television broadcasters must have been produced in the EU, and 40 per cent must have been produced originally in French.58

Private radio broadcasters must – in principle – dedicate at least 40 per cent of their musical programmes to French music.59

In addition, pursuant to Law No. 2014-873 of 4 August 2014 for genuine equality between women and men, audiovisual programmes have the duty to ensure fair representation of both women and men. Furthermore, audiovisual programmes and radio broadcasters must combat sexism by broadcasting specific programmes in this respect.60

Advertising

Advertising is particularly regulated in television broadcasting.61 In particular, advertising must not disrupt the integrity of a film or programme, and there must be at least 20 minutes between two advertising slots. Films may not be interrupted by advertising that lasts more than six minutes.

Rules governing advertisements are stricter on public channels. In particular, since 2009, advertising is banned on public service broadcasting channels from 8pm to 6am. This prohibition does not, however, concern general-interest messages, generic advertising (for the consumption of fruits, dairy products, etc.) or sponsorships, which may continue to be broadcast.

In addition, some products are prohibited from being advertised, such as alcoholic beverages above a certain level of alcohol or tobacco products. A circular was issued on 25 September 2014 related to the newly marketed electronic cigarettes, prohibiting any form of advertisement of such device or associated refills.

ii Internet-delivered video content

Internet video distribution refers to IPTV services, which can be classified into the three following main categories: live television, time-shifted programming and VOD.

For customers who cannot afford triple-play offers, access to video content is limited to the content of free channels. The regulatory framework for ‘social’ offers set by the Law of 4 August 2008 is only limited to mobile telephony offers, triple play offers being thus outside its scope. Following the FCA’s Opinion No. 11-A-10 and in the absence of regulation, France Télécom-Orange launched a ‘social tariff’ for multi-service offers (telephone and internet) (see Section III.ii, supra).

iii Mobile services

Mobile personal television, initiated in 2007, has suffered from substantial delays due to disagreements among operators and content providers on the applicable economic model and on how to finance the deployment of a new network.

Thus, on 8 April 2010, the CSA delivered authorisations to 16 channels (13 private channels selected by the CSA after the call for applications launched on 6 November 2007, together with three public channels selected by the government) for the broadcasting of personal mobile television services.

On 22 April 2010, TDF, a French company which provides radio and television transmission services, services for telecoms operators and other multimedia services, and Virgin Mobile signed an agreement under which TDF committed to develop the new network with up to 50 per cent coverage of the ‘outdoor’ population and 30 per cent of the ‘indoor’ population, with Virgin Mobile paying TDF a monthly per customer fee using DVB-H, an airwave broadcasting format that does not allow interaction with the user. However, after Virgin Mobile’s decision to withdraw from the project, TDF decided to end the agreement in January 2011, and in June 2011 announced that it no longer wished to be the DVB-H operator in charge of mobile personal television. Following TDF’s withdrawal, the CSA granted a two-month period to the selected channels to appoint a new operator in charge of mobile personal television. On 14 February 2012, no operator being appointed, the CSA acknowledged that the project was abandoned, and withdrew the authorisations it delivered to the 16 channels on 8 April 2010.62

VI THE YEAR IN REVIEW

i The Digital Republic Bill

The government drafted the Digital Republic Bill, which was passed by the National Assembly on 20 July 2016 but is still undergoing discussions at the Senate level as of 22 September 2016.

First, the draft bill aims at promoting the circulation of data and knowledge, which is supposed to be ensured via the open access to public data, the creation of a public service mission for the provision of data, the introduction of the notion of ‘data of public interest’ in order to enable the reuse of data and the enhancement of knowledge-based economy.

Second, the draft bill seeks to protect individuals in the digital era, which encompasses access to an open digital environment (inter alia via net neutrality – despite important pressure from the industry sector at European level63 – loyal behaviours from platforms and adequate information, as well as data portability).

Finally, the draft bill seeks to ensure digital access to all citizens by generalising mobile coverage, measures designed to facilitate mobile payments and promoting the access to disabled or with low incomes persons.

The Senate is expected to vote on the bill at the end of September 2016, after a period of public consultations.

ii The Internet of Things

It is estimated that there will be up to 2 billion connected devices within five years in France, or 40 devices per person. This evolution of the internet towards the interconnection of devices of all kinds is also known as the ‘Internet of Things’.

In view of the figures above-mentioned, ARCEP considers that it is fundamental to prepare and accompany this trend by playing the role of facilitator and placed the Internet of Things on its roadmap for 2016–2017. From November 2015 to February 2016, ARCEP conducted auditions regarding the development of the Internet of Things. Meanwhile, in April 2016, the authority held auditions aimed at improving the attribution of radio-electric spectrum in the development of the Internet of Things. ARCEP also launched a consultation in July 2016 and, according to its calendar, will release a White Paper entitled ‘Prepare the Internet of Things Revolution’ in autumn 2016 presenting the orientations and guidelines originating from this consultation.

In addition, Bouygues Telecom announced in June 2016 the launch of the first French network dedicated to communicating devices based on LoRa technology. Bouygues Telecom is the first French operator to commercially deploy this technology, globally recognised as the most successful in the field of the Internet of Things. The LoRa technology was experimented in Grenoble since November 2013, where Bouygues Telecom, its international partners (Semtech, Sagemcom, Eolane, Adeunis and Kerlink) and large industrial customers were able to test this technology and evaluate its performance in real conditions.

iii Concentrations in the telecommunication sector
SFR’s acquisition of Altice Media Group France and NextRadioTV

In April 2014, after a bidding process that lasted weeks, the cable operator Numericable – a subsidiary of the Altice group – succeeded in purchasing Vivendi’s French telecom subsidiary, SFR. Following a rather favourable opinion from ARCEP,64 the FCA authorised the merger after an in-depth Phase II review, on 30 October 2014.65 Numericable committed to (1) give competing operators access to its cable network, (2) divest Completel’s copper network, an operator for professionals, (3) divest Outremer Telecom, and (4) take measures so that no strategic information is provided to Vivendi.

Further to this acquisition, SFR increased its media presence through the acquisition of Altice’s media activities in May 2016 and thus became a leading content operator.

The first operation was the acquisition by SFR of Altice Media Group France, a division of the Altice group controlling the newspaper Libération and several magazines such as L’Express, L’Expansion, L’Etudiant, as well as Stratégies. The acquisition of these press titles by Mr Patrick Drahi – who controls the Altice group – was authorised by the FCA on 3 June 2015.66

In addition, SFR acquired Altice’s 49 per cent minority shareholding in NextRadioTV, acquired by the group in December 2015. This operation allows SFR to have a wide media coverage with TV channels such as BFMTV, RMC Découverte or i24 News, as well as participation in the radio station RMC.

Iliad and Hiridjee group’s acquisition of joint control of Telecom Réunion Mayotte

On 15 June 2015, the FCA and ARCEP approved the Hiridjee group (a group notably active in the telecommunication sector in Madagascar) as the buyer of Outremer Telecom’s mobile phone activities in the overseas departments of La Réunion and Mayotte that Numericable committed to divest in the context of SFR’s acquisition. These activities were therefore acquired by Telecom Réunion Mayotte, a subsidiary of Hiridjee group during the summer of 2015.

Then, Illiad acquired 50 per cent of the share capital of Telecom Réunion Mayotte. Through this transaction, authorised by the FCA on 20 October 2015, Iliad and Hiridjee group acquired joint control over Telecom Réunion Mayotte.67

Vivendi’s bid over the Société d’édition de Canal Plus

In August 2015, the French group Vivendi successfully bid to Société d’édition de Canal Plus (SECP), which includes the French pay-TV channel Canal+ and other TV channels. This transaction allowed Vivendi, which indirectly controls 48.5 per cent of SECP (through its 100 per cent stake in the Canal Plus group), to acquire shares representing 45.2 per cent of capital and voting rights of SECP, and therefore to hold 93.6 per cent of SECP at the end of the transaction.

iv Judicial proceedings

In November 2015, the FCA issued a decision whereby it fined SFR and SRR (SFR’s subsidiary in La Réunion) €10.7 million for abuse of dominant position on the mobile telephony market provided to business clients in La Réunion and Mayotte. SFR and SRR were sentenced for having implemented and maintained, for 12 years in La Réunion and six years in Mayotte, unfair pricing differences between calls within its network (‘on net calls’), and calls to its competitors’ networks (‘off net calls’), which were charged at a higher price.68 This decision put an end to a long procedure, initiated by Orange and Outremer Telecom in September 2009, further to which the FCA issued an interim measure in June 2009,69 then sentenced SFR for non-compliance with the said measure in January 201270 and imposed on SFR and SRR a €46 million fine for similar practices implemented on the mobile telephony market provided for household customers in La Réunion and Mayotte in June 2014.71

In December 2015, the FCA imposed a fine of €350 million on Orange for having abused its dominant position through the implementation of four anticompetitive practices on the markets for fixed and mobile telecommunications services provided to business clients.72 In addition, the FCA imposed injunctions on Orange in order to immediately restore a situation of fair competition within the markets concerned. This procedure, initiated by the FCA after complaints brought by Bouygues Telecom and SFR respectively in 2008 and 2010, ended with the highest fine ever imposed by the FCA on an individual company.

In April 2016, the FCA sentenced Altice/Numericable group to pay a fine of €15 million for non-compliance with commitments regarding the divestment of Outremer Telecom’s mobile phone activities in La Réunion and Mayotte undertaken in the framework of the acquisition of SFR in 2014.73 While according to the commitments made, Altice/Numericable group should have maintained the viability, market value and competitiveness of Outremer Telecom’s mobile phone activities until the divestment, the group changed Outremer Telecom’s strategy and significantly increased its subscription prices without notifying it to the FCA. The FCA considered that these price increases which had a negative impact on Outremer Telecom’s image constituted a breach of the group’s commitments.

Footnotes

1 Myria Saarinen and Jean-Luc Juhan are partners at Latham & Watkins. This chapter was written with contributions from associates Oriane Fauré, Marie Florent and Julie Brousseau.

2 See Section VI.i, infra. The draft Digital Republic Bill was passed by the National Assembly on 20 July 2016.

3 Electronic Communications and Postal Regulatory Authority (ARCEP) Annual Report, 2015.

4 ARCEP’s sanctioning power was restored by Order No. 2014-329 of 12 March 2014 on the Digital Economy after the French Constitutional Council ruled that the legal provisions contained in the Post and Electronic Communications Code (CPCE) governing ARCEP’s power to sanction were unconstitutional as they did not comply with the principle of impartiality (see Constitutional Council, Decision No. 2013-331 QPC of 5 July 2013). The new provisions in the CPCE introduce a separation of the proceedings and the adjudication functions by assigning them to different members of the ARCEP Board (see new Articles L5-3, L36-11 and L130 of the CPCE). The terms of application for this new sanctions procedure are specified in Decree No. 2014-867 of 1 August 2014 (see new Articles D594 to D599 of the CPCE).

5 See Articles 28 to 32 of the Law of 30 September 1986, which determine the CSA’s allocation procedures.

6 Articles 33 to 34-5 of the Law of 30 September 1986.

7 Article L33-1 III of the CPCE.

8 Article R153-2 of the French Monetary and Financial Code.

9 Article L165-1 of the French Monetary and Financial Code.

10 Decree No. 2014-479 of 14 May 2014.

11 Articles 39-I and 39-III of the Law of 30 September 1986.

12 See draft Bill on Freedom, Independence, and Pluralism in Media Ownership and draft Bill on the Independence of Editorial Boards.

13 Article 41 of the Law of 30 September 1986.

14 Available at www.csa.fr/Etudes-et-publications/Les-autres-rapports/Rapport-du-CSA-sur-
la-concentration-du-media-radiophonique.

15 Article 40 of the Law of 30 September 1986.

16 Article 41-1 to 41-2-1 of the Law of 30 September 1986.

17 For recent examples of mergers in the TMT sectors, see, e.g., FCA, Decision No. 15-DCC-142 of 20 October 2015, in which the FCA ruled on the joint acquisition of Telecom Réunion Mayotte by Iliad and Hiridjee groups.

18 Article L36-10 of the CPCE.

19 Article 41-4 of the Law of 30 September 1986.

20 Article 42-3 of the Law of 30 September 1986.

21 Article L32-1 of the CPCE.

22 Article L33-1 of the CPCE.

23 Article L39 of the CPCE.

24 This issue now seems resolved regarding video-sharing sites: see, for instance, the judgment of the French Supreme Court (Cass. civ. 1ère, 17 February 2011, No. 09-67896, Joyeux Noël) in which the Supreme Court recognised a simple hosting status for Dailymotion. The Supreme Court ruled that host websites did not have to control a priori the content they host but need to ensure the content is not accessible once it has been reported as illegal (Cass. Civ. 1ère, 12 July 2012, No. 11-15165 and No. 11-15188, Google and Auféminin.com). This issue is still to be debated with respect to online marketplaces such as eBay from which it follows that French courts, which are favouring a very factual analysis of the role of the services provider, will give significant importance to judges’ discretion. In that respect, see Cass. Com, 3 May 2012, No. 11-10.507, Christian Dior Couture, No. 11-10.505, Louis Vuitton Malletier and No. 11-10.508, Parfums Christian Dior, in which the Supreme Court confirmed an earlier decision of the Paris Court of Appeals that did not consider eBay as a ‘host provider’, and therefore refused to apply the liability-exemption regime. See, in contrast, the Brocanteurs v. eBay case, Paris Court of Appeals, Pôle 5, ch. 1, 4 April 2012, No. 10-00.878, in which second-hand and antique dealers accused eBay of encouraging illegal practices by providing individuals with the means to compete unfairly against professionals, and in which the Paris Court of Appeals considered eBay as a host provider able to benefit from the liability-exemption regime. The Court of Appeals based its decision on the fact that eBay had no knowledge or control of the adverts stored on its site. If the seller was asked to provide certain information, it was for the purpose of ensuring a more secure relationship between its users. The issue is also debated in the context of online forums. The Supreme Court ruled on 3 November 2015 that publishing directors are responsible for ‘personal contribution spaces’ from the moment they become aware of their content and must be held criminally liable for failing to take down defamatory comments (Cass. Crim., 3 November 2015, No. 13-82645).

25 Article 1(2) of Directive No. 2002/22/EC.

26 Law No. 2015-990 of 6 August 2015 for growth, activity and equality of economic opportunities.

27 Article L35-3 of the CPCE.

28 See the French Digital Council Opinion issued on 1 March 2013 (available at www.cnnumerique.fr/wp-content/uploads/2013/03/130311-avis-net-neutralite-VFINALE.pdf).

29 ARCEP Decision No. 2012-0366 of 29 March 2012.

30 ARCEP Decision No. 2014-0353 of 18 March 2013.

31 FCA Decision No. 12-D-18 of 20 September 2012 on practices concerning reciprocal interconnection services in the area of internet connectivity.

32 Court of Appeals of Paris, Pôle 5, ch. 5-7, 19 December 2013, No. 2012/19484.

33 French Supreme Court, 12 May 2015, No. 14-10792.

34 See Articles L331-25, L336-3 and R335-5 of the Intellectual Property Code.

35 The CNIL is particularly attentive to the obligation of obtaining prior consent that is free, specific and informed. On 1 June 2015, the CNIL imposed a €15,000 fine on Prisma Media for not giving enough precise information regarding the nature of a newsletter to which its customers may subscribe.

36 See Article L34-5 of the CPCE.

37 See Article L121-34 of the Consumer Code.

38 See Ministerial Order of 25 February 2016 designating SA Opposetel (JORF No. 0050 of 28 February 2016).

39 The red list service ensures that contact information will not be mentioned on user lists. The orange list service ensures that contact information will not be communicated to corporate entities with the goal of advertisement. The contact information remains available on universal directories made available to the public.

40 New Article L246-1 et seq. of the Internal Security Code introduced by Article 20 of the LPM.

41 Article 20 IV of the LPM.

42 See Article 12 of Law No. 2014-1353 of 13 November 2014 reinforcing regulations relating to the fight against terrorism.

43 See CNIL Decision No. 2011-238 of 30 August 2011, confirmed by the French Administrative Supreme Court on 23 March 2015 (Conseil d’Etat, 10th and 9th subsections, No. 353717), imposing a €10,000 fine on the database Lexeek for not respecting the right to opposition applicable to the processing of personal data.

44 In that respect, see the French Supreme Court’s recent decision, according to which the fact that an employee is informed of the existence of a monitoring system is not sufficient: the system controlling the flow of data received and sent by an employee constitutes an automated data-processing system that requires prior declaration to the CNIL (Cass Soc, 8 October 2014, No. 13 14991).

45 See Articles L34-1 and D98-5 of the CPCE.

46 Article 6 of the Law of 21 June 2004.

47 Article L5231-3 of the Public Health Code.

48 See Decree No. 2009-874 of 7 July 2009 as modified by Decree No. 2011-170 of 11 February 2011.

49 Article L42-3 of the CPCE.

50 Article R20-44-9-2 of the CPCE.

51 Ibid.

52 ARCEP, Decision No. 2011-1080 of 22 December 2011.

53 Ibid.

54 FCA, Opinion No. 13-A-08 of 11 March 2013 on conditions for sharing and roaming on mobile networks.

55 See ARCEP press release of 31 January 2014.

56 See ARCEP press release of 30 September 2015.

57 Article 45 of the Law of Finance of 1987 as amended.

58 Articles 7 and 13 of Decree No. 90-66 of 17 January 1990.

59 Article 28 2°-bis of the Law of 30 September 1986.

60 Article 56 of the Law of 4 August 2014.

61 Decree No. 92-280 of 27 March 1992.

62 CSA, Decision No. 2012-275 of 14 February 2012.

63 Representatives of the industry, in an open-letter dated 7 July 2016, highlighted the financial incompatibility between the investments required for 5G deployment and the strains of net neutrality. They argue that ‘the current net neutrality guidelines, as put forward by BEREC, create significant uncertainties around 5G return on investment.’ See 5G Manifesto for timely deployment of 5G in Europe, 7 July 2016, signed by 17 executives of the industry.

64 ARCEP, Opinion No. 2014-0815 of 22 July 2014.

65 FCA, Decision No. 14-DCC-160 of 30 October 2014.

66 FCA, Decision No. 15-DCC-66 of 3 June 2015.

67 FCA, Decision No. 15-DCC-142 of 20 October 2015.

68 FCA, Decision No. 15-D-17 of 30 November 2015 on practices implemented on the mobile telephony market for non-residential customers in La Réunion and in Mayotte.

69 FCA, Decision No. 09-MC-02 of 17 September 2009.

70 FCA, Decision No. 12-D-05 of 24 January 2012 on SRR’s partial inobservance of the injunction imposed by decision 09-MC-02 of 16 September 2009.

71 FCA, Decision No. 14-D-05 of 13 June 2014 on practices implemented in the mobile telephony sector for household customers in La Réunion and Mayotte.

72 FCA, Decision No. 15-D-20 of 17 December 2015 concerning practices implemented in the telecommunications services sector available.

73 FCA, Decision No. 16-D-07 of 19 April 2016.