Key Benefits:
Telecommunications Regulatory Authority,
As amended Directive 97 /33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in the sector Telecommunications with a view to ensuring a universal service and interoperability through the application of the principles of the provision of an open network (ONP), and in particular Article 7;
In view of the postal code and telecommunications, and in particular its Articles L. 35, L. 35-3, R. 20-31 to R. 20-39 and D. 377;
In view of the specifications of France Télécom, annexed to Decree No. 96-1225 of 27 December 1996 approving the specifications of France Télécom, and in particular Article 18;
Vu The Ministerial Order of 12 March 1998 authorising Société France Télécom to establish and operate a telecommunications network open to the public and to provide telephone service to the public, and in particular Chapter XIII of the Annex;
Decision No 98-901 of the Telecommunications Regulatory Authority dated 28 October 1998 establishing the cost nomenclature and specifying the rules of relevance relating to the interconnection of operators subject to Articles D. 99-11 to D. 99-22 of the Postal Code and Telecommunications;
In view of Decision No. 99-780 of the Telecommunications Regulatory Authority dated 30 September 1999 specifying and publishing the rules for the accounting of costs and revenue requirements The calculations in paragraphs II and III of Article R. 20-33 of the Postal Code and telecommunications relating to the net cost of geographical equalization obligations;
In view of Decisions No. 97-272 of the Telecommunications Regulatory Authority Of 22 September 1997, No. 98-907 of 13 November 1998 and No. 99-779 dated 30 September 2000 proposing the estimates of the cost of the universal service and the contributions of operators for the years 1998, 1999 and 2000;
After deliberation on November 12, 2002;
I. -Background
The order of 12 March 1998 authorising the France Télécom company to establish and Operate a telephone network open to the public and provide telephone service to the public that:
" The audit shall, inter alia, verify the consistency of the individual accounts with the general accounts and the analytical accounts of The operator. Auditors must be independent of the auditors of the operator. They shall publish a certificate of conformity. This audit may be the same as that provided for in Article 18 of the specifications annexed to Decree No. 96-1225 of 27 December 1996. '
With regard to Article 18 of the specifications annexed to Decree No 96-1225 of 27 December 1996, it lays down that: France Télécom maintains an information system as well as an accounting of services and activities, which must allow, In particular, to verify compliance with the principle of guidance towards costs where it applies. "
The audit that was entrusted to the firm KPMG Audit examined the 1997 cost accounting system, which has undergone substantial changes since the previous three audits conducted in 1996 (1994 system), in 1998. (1996 system), in 1999 (system of the year 1998) and in 2000 (system of the year 1999); it concentrated on the methods of feeding the system from the analytical accounting system, the application of the specifications established by France Telecom and the new computer system. It also covered the 2000 cost elements necessary for the calculation of the final cost of the universal service as well as the corresponding revenues and traffic volumes, on the accounts for the year 2000 (methods and values). It has more generally dealt with the regulatory accounting of France Télécom, which provides for Article 18 of its specification for the production of " Accounts of products and charges, known as individual accounts, as follows: general network, network Dial-up access, interconnection, public telephone service, leased links and other activities covered [by this authorization] ".
II. -Method
The intervention was divided into 6 lots:
Lot I: audit of the cost accounting system (audit of completeness and compatibility and relevance analysis);
Lot II: Audit 2000, necessary for the Determination of the net cost of the definitive universal service for the year 2000 (audits of the system for the allocation of revenue to the products, the costs involved in the evaluation of the cost of the universal service and the operating accounts by product 2000) In the calculation of the net cost of the universal service);
Lot III: other specific audits for the universal service 2000 (verification of the completeness of the collection of technical units of work of the network, audit of outbound revenue per line according to Their location);
Lot IV: Audit of the regulated accounts 2000: audits of the 6 individual accounts of the licence of France Télécom for the year 2000 and of the operating accounts for 2000 by product or service ("CEP fact sheets") ;
Lot V: Audit of the method of switching the costs recorded for the year 1999 to the incremental average costs of long-term forecasts entering the rates of the 2002 interconnection offer of France Télécom.
Lot VI: audit of the method of passage of the Costs recorded for the year 1999 with the estimated costs included in the price of the unbundled access to the copper pair of the reference offer in preparation at the time of the audit and, in particular, the long-term incremental costs of the Network.
III. -Conclusion
In accordance with the combined provisions of Decree No. 96-1225 of 27 December 1996 and the ministerial order of 12 March 1998 approving the specifications of France Télécom, the Authority publishes the certificate of Compliance of the 2000 costs included in the individualised accounts and in the operating accounts by product or service, established by France Télécom in the framework of its regulatory obligations, which was drafted by the auditors as of 23 May 2002,
Decides:
The Authority shall publish in the Annex to this Decision the attestation of conformity of the 2000 incoming costs In the individualised accounts and in the operating accounts by product or service, established by France Télécom as part of its regulatory obligations. This certificate was drawn up by the auditors as of 23 May 2002, in the light of the specifications and the description established by the Authority and in accordance with the rules it produces under Article R. 20-33 (IV) and Sections R. 20-35 and R. 20-36 of the Postal Code and Telecommunications.
The Director General The Authority shall be responsible for the implementation of this Decision, which shall be forwarded to the Minister responsible for industry and published in the Official Journal of the French Republic.
A N N E X E
CONFORMITY OF COST 2000 CONFORMITY IN INDIVIDUALIZED ACCOUNTS AND OPERATING ACCOUNTS BY NET COST OF UNIVERSAL SERVICE ESTABLISHED BY FRANCE TELCOM IN ITS REGULATORY OBLIGATIONS
In execution of the mission entrusted to us jointly by the Telecommunications Regulatory Authority (ART) and France Télécom in the framework of The audit of the 2000 regulatory accounts of France Télécom (Lots I, II and IV), we present hereafter our attestation of conformity on the individual accounts and on the operating accounts by product (PECs) entering the net cost of the Universal service for the year 2000. These accounts shall include all of the following documents, attached to this certificate of conformity:
-the individualised accounts for the year 2000, the list of which is given in Chapter XIII of the Annex to the Order of 12 March 1998, namely :
-general network;
-dial-up network;
-interconnect;
-public telephone service;
-leased connections;
-other activities covered by the authorization;
-operating accounts by product In calculating the final net cost of the universal service for the year 2000.
1. Responsibilities of France Télécom
and auditors
France Télécom is responsible for the establishment of individual accounts and operating accounts by product of the net cost of the universal service for The year 2000, which were prepared in accordance with the accounting principles and methods mentioned in the various legislative and regulatory texts set out in the specific technical clauses of 9 October 2001. As auditors, it is our responsibility to express a qualified judgment on these accounts independently and on the basis of the checks carried out in accordance with the procedures set out in the following paragraph.
2. Basis of our certification
The accounts produced by France Télécom in the framework of its regulatory obligations are built from the analytical accounts of France Télécom, which is fully integrated with the General accounting of the public operator. The individual financial statements of France Télécom established for the 12-month period ended 31 December 2000 on the basis of the above individual general accounts have been audited by the auditors of The public operator, this audit has resulted in unqualified certification.
In this context, we have implemented the due diligence that we deemed necessary to obtain reasonable assurance on the absence of errors Significant in " Accounts produced by France Telecom as part of its regulatory obligations " Submitted as a result of this report.
These diligences essentially consisted of reviewing the analytical charges for the charges and Relevant products by surveys, then to assess the reasonableness, economic justification and conformity with the requirements of the various legislative and regulatory texts specified in the technical clauses On 9 October 2001 of the distribution options on the products and services of the charges previously identified in accounting, as well as that of the reprocessing operations carried out on the general accounts of France Télécom. This has led us to ensure by surveys of the conformity of the cost calculation system with the specifications mentioned in these reference documents and to assess the reliability of the information used in the quantification Distribution keys used.
Our controls included:
-Completting the 2000 cost calculation TCP system, used to produce the individualized accounts and operating accounts by product for 2000;
-the relevance of the cost allocation rules used;
-the figures and rules for the development of individualized accounts and operating accounts by product for the year 2000.
3. Assessment of compliance of
individualized accounts and operating accounts by product
Based on this work, we estimate that:
Completting data from the TCP Is used to establish the individualised accounts and operating accounts by product of the net cost of the universal service for the year 2000, as well as compliance with the functional documentation, are provided;
Accounts Individualised for the year 2000 are in line with the objectives set by the Decree of 12 March 1998 and the specifications of the ART issued for the purposes of Article D. 99-13, paragraph 1, of the Postal Code and Telecommunications;
The costs involved in the Operating accounts by product related to the determination of the final net cost of the universal service for the year 2000 have been established in accordance with the specifications of the RTA; and
That the consistency of the operating accounts by product with the Individualized accounts for the same year and in relation to the ART specifications is assured.
Without challenging the opinion expressed above, we draw your attention to the following:
Review of relevance rules Used for the establishment of the 2000 costs included in the individualised accounts and the operating accounts by product established by France Télécom calls, on our part, for recommendations to develop these rules, in view Improve the relevance of the cost allocation methods.
The most significant recommendations issued under the relevance rules cover the following areas:
1. A number of studies used to support the calculation of the cost spill keys for commercial products or activities are old: for example, the 1997 study on the apportionment of the cost of buildings, the study of 1994 updated in 1997 on the distribution of selling time by product, the 1998 study on the costs of civil engineering and cables, and the 1996 study on the investment costs of telephone switches. In view of the changes in the supply of commercial products in recent years, as well as technological developments, it appears necessary to carry out new studies and to integrate the results of recent surveys into Cost calculation.
2. For the particular case of the sales time study, it should be noted that the time measures taken during the investigation do not include the selling time devoted to a failed attempt to sell. This remark was taken into account by France Télécom, which introduced a flat-rate failure rate for products distributed in the most competitive areas (terminals sold, subsidiaries and tariff options). The seniority of this study is particularly sensitive, taking into account both the selling times and the important developments in the commercial portfolio. A new vendor time allocation study is underway and the results should be used in the preparation of the 2001 cost calculation.
3. France Telecom has allocated a non-significant part (100 million francs) of the costs of its divisions towards mergers and acquisitions and international finance in its indivis costs. These costs, which can be assimilated to activities described as ' ", do not participate directly in the development of products marketed by France Telecom SA. Not being intrinsically linked to the exercise of a fixed telephone operator activity in France, the expenses relating to the activities of " Holding " Should therefore generally be excluded from the cost base.
4. The forecast contributions received in respect of the universal service are included in the individual account " Other activities ". These contributions relate both to the activities of " Dial-up network " And " Telephone service to the public ". Therefore, the forecast contributions received under the universal service 2000 should be broken down into each of the two individual access and traffic accounts concerned.
In addition, given the introduction of an offer Unbundling, called to be for the dial-up network during the interconnection offer for the general network, a reflection must be conducted between France Télécom and the ART in order to decide whether to create a new account Individualized " Unbundling " And, where appropriate, homogenize and/or specify the respective perimeters of this new account and that of the " Dial-up Network ".
Paris-La Défense, 23 May 2002.
KPMG Audit :
J.-L. Guera,
Associate Director
Done at Paris, November 12, 2002.
The President,
J.-M. Hubert
