TELECOMMUNICATIONS: COMMISSION CHALLENGES WANADOO OVER INTERNET CHARGES.

ADSL (Asymmetric Digital Subscriber Line) technology offers high-speed access to the Internet. But this technology will, before very long, be carrying an increasingly wide range of content. The Commission emphasises that it is therefore essential, during this growth phase, that no single operator should be allowed to capture the market.In September this year, in connection with its ongoing sectoral investigation into the local loop and DSL services, the Commission opened proceedings ex officio into Pack X-Tense and Wanadoo ADSL products marketed by Wanadoo, on the basis of information supplied by France Telecom and its competitors. Wanadoo Interactive is a 99%-owned subsidiary of Wanadoo SA, which is itself a 72%-owned subsidiary of France Telecom, the incumbent telecommunications operator. At the present stage of its investigations, the Commission believes that the retail prices charged by Wanadoo for Pack X-Tense and Wanadoo ADSL services are below cost. This is largely accounted for by the charges for intermediate services supplied to Wanadoo by France Telecom for the various components necessary for high-speed Internet access, The rate of cover of the costs of the two services did, however, improve appreciably in August 2001 as a result of reductions in France Telecom's charges for intermediate services. The adjustments required are therefore relatively minor.The competitors for general-public high-speed Internet access, in particular those working with ADSL, must, if they wish to match Wanadoo's prices, accept losses or sacrifice other investments which are strategic for their development. These competitors for ADSL services, who...