French government to slash France Telecom's tariffs

French Industry Minister Christian Pierret has issued a warning to France Telecom that it must lower its tariffs to encourage competition once the local loop has been unbundled.

Speaking only days before French legislation is due to be passed to free up the 'last mile' of phone lines, he said other operators must be able to lease lines from France Telecom at a competitive rate. "I want the lowest possible tariffs for consumers. The fees for operators to hire France Telecom's local lines should be close to the European average in order for our country to be competitive." Pierret added that France Telecom would not be compensated for the loss of its monopoly. France Telecom has long been accused by its competitors such as Cegetel and 9Telecom of stifling competition. Tony Lavender, principal consultant at Ovum, welcomed the warning. He said: "Deciding policy for unbundling the local loop in France has been a complete fiasco. These are strong words from the French government to tell France Telecom that the unbundling is happening and that it will hurt them, but it has to be done so France can be in line with the rest of Europe." Robin Bothsworth, director at Schema, called the news a warning shot, claiming if France Telecom failed to pay attention to the government's request then the regulator, ART, would step in. The company is also currently under investigation by the European Commission for its failure to provide an adequate commercial offering to enable its competitors to provide ADSL to customers. Ian William, analyst at Datamonitor, said: "The company has not abused its position by charging consumers too much money for calls, but it has been unfair to other operators. It is closed in terms of competition."