The regulator found that data transfers related to switching providers create no additional cost for cloud providers, meaning no fee for data transfers can be charged to consumers
Arcep published its proposed implementation of the SREN Act’s provisions on the cloud market
On 14 October 2024, Arcep published its proposed regulation of the cloud computing sector under the Law on securing and regulating cyberspace (SREN Act). The SREN Act, which also transposes the EU’s Digital Services Act (DSA) and Digital Markets Act (DMA) into French law, designates the regulator as the competent authority for regulating cloud services under the provisions of the EU’s Data Act. Under the Data Act, Arcep is charged with enforcing technical and contractual obligations on cloud providers to facilitate greater fairness and competition in the market, which the regulator has further specified in its proposed guidance in relation to switching fees, fees for multi-homing of data and technical requirements for portability and interoperability. Interested stakeholders have until 16 December 2024 to respond to Arcep’s consultation.
The regulator plans to recommend that in most instances no switching fee can be charged to consumers
The Data Act requires that cloud service providers not charge switching fees which exceed the costs to the cloud provider of the requested transfer. In developing its guidance on fees, Arcep therefore considered the various operational elements, and the related services charged to consumers, that are required for switching cloud services or multi-homing data with more than one cloud provider. The regulator states that data transfers conducted as a result of switching services do not result in additional costs to cloud providers and therefore cannot incur added charges for consumers. According to cloud computing market studies Arcep sites from the Autorité de la concurrence and the UK’s Competition and Markets Authority, the predictable and and manageable process of transferring data across its own network infrastructure as well as through peering relationships with third parties appears to create no added strain on network capacity and therefore no costs to providers in developing additional capacity. The regulator also outlined that under the Data Act, processes related to the extraction and transfer of data in a secure and machine readable format fall under a cloud service providers’ regulated duties and also cannot be accounted for in fees charged to consumers. The consultation does seek additional input on the potential need for additional network capacity to manage higher volumes of multi-homed data as well as other services including technical support offered to consumers to facilitate switching providers that go beyond regulated obligations and could therefore incur fees. However, Arcep does state its intention to recommend that no switching fee may be charged to consumers seeking to switch providers in most instances.
A new obligation for a reference offer for cloud services engages a familiar debate in the EU on regulating the market
In addition to looking at the contractual terms that may limit competition in cloud markets, Arcep is also charged with developing a framework to better facilitate the portability of data and interoperability of services for both switching providers and multi-homing data (the storage of the same or related data with more than one cloud provider). The regulator identifies three primary categories of services that make up offerings from cloud providers: infrastructure, platforms and software. Given the variability of the compatibility and replicability of these services among providers, particularly at the platforms and software level, Arcep finds that greater transparency is needed for consumers to understand the limitations that different services may have in relation to switching providers or multi-homing data. To achieve this, the regulator outlined its plans to require cloud providers to publish technical reference offers for interoperability and portability for their services. Arcep is also seeking further input on harmonising reference offers in order to improve comparability, including through creating standards and benchmarks or codes of conduct created by industry. Though reference offers in this context would be directed to consumers as opposed to interconnecting operators as in the case of telecoms, the obligation to publish an offer nonetheless appears aligned with the ongoing argument in Europe to regulate cloud services in a similar fashion to telecoms.
