October - 2012


French competition authority decision regarding the Internet interconnection market

Cogent/France Télécom – French Competition authority decision regarding the Internet interconnection market

On 20 September 2012, the French competition authority (hereafter Autorité de la concurrence) issued a commitments decision (decision n°12-D-18) in dispute between Cogent and France Télécom related to the principle of Internet neutrality.

Indeed, on 9 May 2011, transit operator Cogent filed a complaint against France Télécom before the Autorité de la concurrence regarding competition concerns on the Internet interconnection market and especially on the IP transit market and on related markets notably the IP peering market.

The Autorité de la concurrence identified there are three types of players operating on the Internet interconnection market:

•    Internet service providers (ISP), which offer consumers Internet access packages,
•    Information society service providers (ISSP), which include hosting service providers,
•    Content and online service providers and transit operators, which connect ISP and ISSP thanks to their international networks.

Cogent is a multinational Tier 1 ISP which provides Internet access and data transport by interconnecting to other networks. France Télécom is a telecommunication company offering Internet access through its subsidiary Orange (ISP) and data transport through OpenTransit (transit operator).

The dispute arose when the clients of Cogent (ISSP) complained about network traffic congestion between Cogent and OpenTransit due to the traffic generated by his former client MegaUpload.

The relevant market was defined according to both product and geographic factors to be the direct or indirect access to subscribers of Orange (ISP). France Télécom could be dominant in the market because a significant proportion of traffic passes through Orange and OpenTransit.

In its complaint, Cogent denounced six France Télécom’s practices that could constitute an abuse of dominant position:

•    A denial of access to an essential facility and tying sale. Cogent wants to interconnect its network to Orange’s network, but France Télécom imposes a connection to OpenTransit;
•    Billing for additional capacity allocation within the peering agreement. Cogent refused to pay  France Télécom for additional capacity because of its Tier 1 rank;
•    Cogent claimed to be discriminated against by France Télécom’s peering policy, which set a ratio between incoming and outgoing traffic;
•    Refusal of propagation of prefixes to peers;
•    Favoring Open Transit over Cogent to establish a transit agreement;
•    Low capacity allocation of free peering in Paris.

The Autorité de la concurrence shows in its decision that the opacity of relations between Orange and Open Transit may result in a margin squeeze or discriminatory practices detrimental to competing operators. Indeed, the agreed price between France Télécom and a key player is apparently considerably lower than the market prices. None of the other practices criticized by Cogent were found to be relevant. Furthermore, the Autorité de la concurrence pointed out that a fee charged by France Télécom for opening additional interconnection capacity does not appear unfair as much as it is consistent with a peering policy which limits the outgoing traffic by a factor of 2.5.

France Télécom proposed two commitments to address the competition concerns identified by the Autorité de la concurrence. France Télécom has offered to draw up a formal internal protocol between Orange and Open Transit describing the technical, operational and financial conditions governing their relations in the interconnection market. A monitoring system of this internal protocol will be also implemented to verify that France Télécom has not engaged in discriminatory practices or margin squeezing. France Télécom has three months to communicate the protocol to the Autorité de la concurrence. The accurate provisions of the protocol will remain confidential during the two-years monitoring period.

It is the first time that a competition authority decides to issue a decision in the Internet interconnection market. An unsuccessful attempt to regulate the IP transit/peering markets in Poland was made in 2010 by the Polish telecom regulator. Indeed, the European Commission ruled that the draft measures do not comply with the policy objectives of Electronic Communications Framework Directive (2002/21/CE).

Cogent, France Télécom, Orange, peering, transit, interconnection, market, internet, Autorité de la concurrence, competition authority, 12-D-18, 13D18, net neutrality, Internet neutrality, competition, Anne-Laure-Hélène des Ylouses, Anne-Solène Gay, YGMA

Files: decision_12d18_01.pdf