US embassy cable - 05PARIS4444

UNCLAS SECTION 01 OF 02 PARIS 004444 
 
SIPDIS 
 
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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