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Cablegate: France: Telecom and Information Technology Update

This record is a partial extract of the original cable. The full text of the original cable is not available.

241115Z Jun 05

UNCLAS SECTION 01 OF 02 PARIS 004444

SIPDIS

STATE FOR EB/CIP AND INR/B
USDOC FOR NTIA AND ITA
FCC FOR INTERNATIONAL
STATE PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: ECPS ETRD FR
SUBJECT: France: Telecom and Information Technology Update


NOT FOR INTERNET DISTRIBUTION

Ref: Paris 4116

1. This is another in a series of periodic updates on the
French telecommunications and information technology
sectors, including internet and e-commerce.

Contents:
-- New Industry Minister Francois Loos (para 2)
-- New Agency for Industrial Innovation partially financed
by FT stock sale (para 3)
-- FT joins Warner Music in an International Partnership
(para 4)
-- FT reported to be eyeing Cable and Wireless (para 5)
-- ART changes name to ARCEP as its authority expands to
postal services (para 6)
-- ARCEP withdraws mobile phone regulation plan (para 7)

2. New Industry Minister Francois Loos: Following the GOF
reshuffle on June 2, Francois Loos, 51, stays on as Junior
Minister ("Ministre Delegue") in the French Ministry Economy
and Finance, but he switches portfolios from Foreign Trade
to Industry. He was previously Junior Minister for Higher
Learning and Research. Loos' background is not that of a
typical politician. A graduate of France's prestigious
Polytechnic School, and an engineer, he also holds a degree
in Mathematics. Unlike many of his colleagues, he has a
strong private sector background, which includes Secretary
General of Research for French pharmaceutical giant Rhone-
Poulenc, and CEO of Lohr SA Group, a manufacturer of
industrial trucks and specialized vehicles. This combined
foreign trade and industry experience should prove helpful
as Loos deals with outsourcing from France to destinations
in Eastern Europe and Asia, a growing phenomenon in France,
which has cost an unprecedented 11,000 jobs in 2004,
according to French economic magazine "L'Expansion."

3. New Agency for Industrial Innovation partially financed
by France Telecom (FT) stock sale: To double the budget of
France's newly established Industrial Innovation Agency,
French Prime Minister Dominique de Villepin reiterated
during the Paris Air Show, on June 18, his intention to use
500 million Euros (USD 602 million) from the receipts of the
recent France Telecom (FT) share sale, which raised some 3.4
billion Euros (USD 4.2 billion). The sale (see Reftel)
reduced the GOF's stake in its former telecom monopoly by
6.2 percent to 34.9 percent. This came nine months after
the government reduced its stake to a minority position.
The Industrial Innovation Agency will now have a budget of
some one billion Euros (USD 1.2 billion) to fund "national
champions" in innovative areas, such as renewable energy,
nanotechnology, and biotechnology.

4. FT joins Warner Music in an International Partnership:
Under the agreement announced on May 31, France Telecom will
offer Warner Music's catalogue to all of its subscribers in
France (Orange, Wanadoo and the fixed line network) as well
as in Belgium, the Netherlands, Poland, Portugal, Romania,
Slovakia, Spain, Switzerland and the UK. This will allow FT
customers to download ring tones, full length music tracks
and music videos either through their Wanadoo-provided
Internet access or on their Orange mobile phones. The two
partners will also work on content protection solutions,
with support from France Telecom Research and Development
and from Viaccess, an FT subsidiary specializing in secure
content distribution.

5. FT reported to be eyeing Cable and Wireless:
Speculation is growing that France Telecom is preparing a
takeover bid for British telecom operator Cable and
Wireless. The story first appeared in the June 19 edition
of the British Sunday Telegraph. Since then, FT has been
busy denying the rumors. However, observers point out that
there has been a 22 percent rise in Cable and Wireless
shares since the beginning of May, suggesting that investors
are expecting a takeover. Furthermore, the move would allow
France Telecom to consolidate the French operator's diverse
interests in the UK, which include mobile phone operator
Orange.

6. ART changes name to ARCEP as its authority expands to
postal services: Following the deregulation of French
postal services in mid-May, the original domain of the
French Telecom Authority (ART) has expanded to postal
services, and thus ART transformed into the Electronic
Communications and Postal Services Authority or ARCEP. As a
result of the law implementing the 2002 EU directive on
postal services, the French state-owned company La Poste
will loose its monopoly of mail services below 50 grams.
Under these new criteria, competitors to La Poste will be
afforded authorization in ten-year cycles by ARCEP.

7. ARCEP withdraws mobile phone regulation plan: France's
telecom and postal services regulator ARCEP said in mid-June
that it was withdrawing its plan to bring greater
competition to the country's mobile-phone market after the
EU said the move was not justified. ARCEP wanted permission
to force France's three mobile operators (Orange, SFR and
Bouygues Telecom) to open their networks to lower-cost
Mobile Virtual Network Operators (MVNOs). EU Commissioner
for Information Society and Media, Viviane Reding, said that
ARCEP had withdrawn its notification relating to Market 15
(mobile access and call origination), but that it would
provide quarterly reports to the European Commission about
the status of MVNO access.
WOLFF

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