The European Commission Wednesday accused the French government of giving France Télécom SA (FT) an unfair advantage over cable companies wanting to compete for Internet subscribers.
The European Union regulator alleges that cable companies are forced to deal with lengthy and complicated procedures in order to open a new account for a subscriber, whereas the process is relatively straightforward for the former state monopoly.
Cable firms wanting to offer phone or Internet services must get prior permission from local municipalities, while FT does not need such permission, the Commission said.
In addition, the Commission said that cable firms do not enjoy the same rights to use public facilities, such as network infrastructure, as phone operators. Municipalities can also charge cable firms more for using public facilities than they may charge phone operators, the regulator said.
"These various handicaps have prevented the cable networks from developing," the Commission said in a statement.
It has threatened legal action that would ultimately end up in the European Court of Justice, if France doesn’t mend its ways.
The latest legal attack against France comes a day after the Commission ordered FT to repay between €11 million (US$11.8 million) and €50 million to rival phone companies which were overcharged for their contributions to providing phone lines to remote locations in France.
The Commission is also challenging the French government over a €9 billion credit line it offered to the struggling company last year.
It suspects that the guarantee is illegal state aid.
It is also conducting an antitrust investigation into FT's Internet service provider Wanadoo SA. The Commission believes Wanadoo has being selling its ‘Pack X-tense’ and ‘Wanadoo ADSL’ services at below cost. The Commission said one competitor, Mangoosta SA, folded in August 2001 because of the alleged predatory pricing.
Cable companies have had very limited success in breaking into the market for high-speed Internet access in France. A Commission study published last December showed that cable operators had 186,000 lines to provide Internet services compared with FT's 691,000.
By comparison, in the U.K., cable groups had 598,000 lines, more than twice as many as British Telecommunicatons PLC, the former monopoly operator.