Marc Lebourges is currently Head of European and Economic Regulation, France Telecom Corporate Regulatory Affairs. He was previously marketing director of France Telecom domestic wholesale division. He started as a researcher in operation research and network management studies at the Centre National d’Etudes des Télécommunications and moved to France Telecom’s strategic planning division were he was involved in the preparation and the implementation of interconnection, access and universal service regulation in France and in the elaboration of France Telecom’s Internet strategy. Marc Lebourges is a graduate from the Ecole Nationale Supérieure des Télécommunications and holds a PhD in Computer Science from Université Paris VI.
I noticed you hold a PhD in Computer Science. How did your career unfold to lead you to becoming an Economist?
I specialised in Operations Research so I worked in, what was at the time, the Research Department in Operations Research, Queuing Theory and Network Modelling. I have a degree in Telecommunication Engineering and Computer Science in the domain of the areas just mentioned, so I became an expert in Network and Traffic Modelling.
I then switched to Strategic and Regulatory Studies and Economics because the topic of Economic Network Modelling became very important for Network Cost calculation in the context of the opening of telecommunications to competition.
I came to the Strategic and Economic Research Division of France Telecom during the debate of opening up the network to competition. In particular I was working on financing universal access.
I came to be an expert in Network and Electronic Communication Economics by having contact with academics, being part of regulatory debates and then being involved in competition law issues. After some years in more operational positions in marketing within France Telecom, I had the opportunity to come back to Regulatory Affairs and organise a team of economists, some dedicated to practical issues, others to research questions.
Are there many professional Economists working at France Telecom?
There are some: on one hand, there are economics graduated who are working at France Telecom no longer as Economists and on the other, people like me who have a different background but who tend to work in economic studies.
To be more specific, I work in the domain of Regulatory and Competition issues with people of different backgrounds: for example, there are engineers, who work on network cost calculations or service cost calculations, as well as management graduates from business schools and PhDs in economics. Often they need to have legal knowledge as well as economic expertise, as we work very closely with legal experts.
There are also people working in the Marketing and Strategic Division who may have an economic background. There are people in R&D developing new types of business models such as long-term business models and the evolution of the service. France Telecom also has Economists in the Accounting and Finance Division.
If France Telecom wants to raise debt for instance, we have Macroeconomists checking, very precisely, the market conditions around the world in order to decide where best to issue the debt.
Is there a graduate scheme for young economists to grow through the company, or is it the case, as you’ve said, that people are either taken from other areas within the company or taken as experienced hires?
In general, Economists tend to study firms from the outside rather than from the inside. It is more management science within the company, so being an Economist is not a standard position within France Telecom. Standard positions are in Marketing, Engineering, Finance and Accounting.
Economists are needed due to regulatory debates and competition law cases. Economic analysis is used to inform debate on public policy issues. It is also important that we can justify our position to our competitors and various forms of Public Authorities.
During the Business Talk you spoke briefly about the long relationship between France Telecom and TSE. Could you give us some insight into this partnership?
France Telecom has supported the IDEI since its creation in 1991. At this time the issue of regulation of networks was very important and this was the expertise of Jeans-Jaques Laffont and Jean Tirole. In particular Access Pricing and Interconnection Issues have been a very important field of research in our sector.
We were involved in trying to encourage the use of high quality economic research and analysis to create a rational regulation and market structure. We were looking for economic research to enlighten political decisions in this field.
Currently, Bruno Jullien and Wilfried Sand-Zandman are researching a Net Neutrality issue, which will have significant practical consequences. It regards how the network should allocate its cost; either to Internet users or content providers.
The problem is that there is traffic sent to subscribers that is not required by these users. However, even for the traffic that is required by users, the quantity of traffic generated is not controlled and cannot be predicted by the user or the provider. Therefore if the end user is to be charged for this traffic we have an inefficiency in the market because they do not have full information regarding controlling their consumption.
In certain circumstances the content provider doesn’t have full information either so there is a theoretical issue of how to price in a two-sided market when neither side of the market has the correct information to be efficiently priced.
On the one side it is the cost of information, on the other, it is the demand of the value information, both of which are not available. It appears difficult, but we need a theoretical approach to decide on a satisfactory pricing system. The working paper by Jullien and Wilfried Sand-Zandman has been presented at different conferences and helps to analyse this problem.
Are you working with other researchers at the IDEI?
Our relationship with the IDEI is made up of three main parts. Firstly, researchers at the IDEI keep us informed on economic developments on critical issues that concern France Telecom.
Secondly, we ask the researchers at the IDEI to verify that our reasoning in our own economic analysis, used in our on going debate with public authorities, is sound or not.
Finally, there is a list of research topics that they have been working on. For example whether local authorities should subsidise or develop their own networks in parallel or in complement to privately owned networks. The IDEI have also generalised the issue to a more generic contract theoretical problem.
Other topics include Access Pricing and Margins Squeeze. To what extent should margins squeeze be banned or not and what are the economic consequences of this? Is brand loyalty strategy welfare enhancing or not? Should companies be allowed to develop them or not? Wilfried and Bruno have also done work in these areas.
Is the IDEI your main academic partner and to what extent do you use Economic Consultancies?
The IDEI is our main academic partner. It is useful to society to use rigorous economic analysis to inform public decisions. Therefore it is in our interest to contribute to the fact that this economic analysis is shared within the academic community. We also have partnerships with more sector specific economic specialists, for instance with the laboratories of Telecom Paristech and of École Polytechnique.
We also use consultancies but it is usually on a short-term basis. For example, we use their economic expertise on a case when we are in court with a competitor or competition authority. With consultancies we are defending our case while with academic partners we are trying to help inform public decisions.
What proportion of your team’s time is spent conducting research? Where do you source the majority of your data?
I am working on operational issues and also have management duties so I do not personally do research. In my team there are 4 Operational Economists, 2 Research Economist’s and 3 PhD students. So that gives you the proportion of the activity.
In terms of data, we buy outside data from public databases (such as Informa) and we also use our own anonymised data from the company (from our subscribers etc.). I would say its 50:50.
On behalf of the TSE students, thank you for your time, it has been very insightful!