Sébastien Soriano is a firm believer in modernisation. He is bidding to turn Arcep into a next-generation regulator, which he believes is necessary in order to align private incentives with the public interest in the 5G era.
Operators are in the best position to manage frequencies in the 3.5 GHz band
Once a protégé of former French president François Hollande, Soriano was appointed to lead Arcep in 2015. He also chaired the European regulators’ body BEREC in 2017 and became its vice-chair in 2018.
For him, 5G is all about verticals and the Internet of Things (IoT). “5G is an opportunity to roll out IoT on a new scale,” he told us. “It’s a new type of connectivity service, being a key transformer of many verticals ranging from industry to infrastructure providers.”
For regulators, “it means we’ll have our classical role to design and shape the market, ensuring players are bringing competitive services, in terms of prices, quality, performance and coverage. But we must leave the door open because we don’t exactly know what will be the interaction between telecoms operators, vendors and verticals”.
He mentioned a recent report published by Arcep which concludes that “regulators have to not regulate”. It says that “the main mission for regulators in the IoT world is to open the door, not to impose any model, technology or interoperability”.
Soriano may have faith in verticals and IoT, but so far he is “a little bit disappointed” with their involvement in 5G, in particular in the 3.5 GHz band. “I’ve personally written to 50 decision-makers in France’s big business and infrastructure companies but received very limited answers,” he said.
“My impression is that France is lagging behind in terms of technology in its economy: the country has a very low level of automatisation and robotisation. That may explain why we have limited 5G demand.”
Arcep has even had limited contact with French automakers like Peugeot and Renault. “I do not know their strategy,” Soriano said.
Although Soriano was well-known in telecoms circles, the “new deal” (in which France agreed last year to extend mobile operators’ LTE licences in return for infrastructure investments to provide better coverage) brought him wider recognition.
People in the industry often tell PolicyTracker reporters, sometimes unprompted, how much they like the new deal. France has seen an increase of 40 per cent in investment during the last four years, up to €10 billion in the telecoms sector alone. According to Arcep, the ratio of investment over revenue is close to 25 per cent– one of the highest in the world.
Upcoming 5G tender
France has opted for an unusual procedure for its upcoming 5G award. It will use a mixed assignment format whereby some of the spectrum is auctioned to the highest bidder and some is assigned directly to mobile operators.
Soriano said the move was linked to the current shape of the market. “While we have intense competition, we’re asking the sector for big investments. To make this possible in the long run, we must ensure that the telecoms sector has enough growth opportunity.”
He added: “We really believe 3.5 GHz is more suitable for operators. There are still questions of interference… it’s not so easy to distribute it geographically so operators are in the best position to manage these frequencies and that will create market opportunities for other players.”
However, Soriano insisted that verticals would be able to ask for both service and coverage. “It means verticals can ask for extra coverage both indoor and outdoor and operators will have to respond to this.”
Operators will also be asked to offer network slicing tools by 2023 and host any MVNOs. “MVNOs will have the ability to ask a host operator to activate several fixtures on 5G even if the host operator is not activating them for its own usage,” Soriano said. If mobile carriers opt to deliver all these optional commitments, which Arcep expects them to, they will receive at least 40 MHz of spectrum for a fixed price.
Despite his emphasis on vertical markets, Soriano doesn’t expect sudden changes in the telecoms business. “It will happen progressively, it’s not a u-turn,” he said. All bidders taking part in the 3.5 GHz award will be subject to a series of coverage obligations. Operators will have to install up to 12,000 5G sites by 2025 and deliver speeds of 240 Mbps.
Soriano emphasised that 25 per cent of 3.5 GHz band sites must be located in sparsely populated areas. “We don’t expect operators to use 3.5 GHz all over the country, that doesn’t seem reasonable,” he said. “However, many industrial hubs are located in non-urban areas, so if we want them to be covered, we will have to ask operators to roll out a network in these areas.”
A fragmented Europe
Are obligations getting more strict in general? “Obligations are getting more intrusive than before… but Germany’s obligations, for example, are pretty much 4G+ services, not 5G,” Soriano said.
That points to a broader problem with European policies, he said. “The initial intention of the European Electronics Communications Code was to move from purely competition-oriented regulation to connectivity-oriented regulation. But in the end, that wasn’t exactly adopted in the code. Spectrum assignments, for instance, were meant to be harmonised at EU level but this has not been adopted.”
He added: “Regulators and governments are assigning spectrum without any European convergence. Peer review mechanisms have not been used by Germany, the UK or Spain. Today, I don’t think there is a common approach.”
By Manuel R. Marti - Policy Tracker