Market analysis

ART concludes its first market analysis, on mobile call termination in Metropolitan France.It imposes a 36% reduction of wholesale fixed-mobile call prices over two years on three mobile operators.ART issues a positive opinion on France Telecom’s retail prices, which pass on the price decrease to consumers as of January 2005

Paris, 10 December 2004

  • ART completes its firts market analysis

    ART completed today the first of its market analyses which is required to conduct under the transposition of the EC directives on electronic communications. This first completed analysis deals with the wholesale mobile voice call termination market in metropolitan France, a wholesale service which is used for both fixed-mobile and mobile-mobile traffic.

    The decisions adopted today are the fruit of a long process initiated in mid 2003 and which included :

  • an initial public consultation launched in April 2004

 

  • consultation of the Competition Authority (Conseil de la concurrence) in June 2004

 

  • notification to the European Commission of its draft decisions on 2nd November, along with a second public consultation

In view of obtaining the right to adopt its final decisions, ART was required to await the European Commission’s approval as well as the publication in the Journal Officiel of one of application decrees of the law on electronic communications. This has now been done: the "market analysis" decree was published on 30th November, and the Commission granted its approval on 1st December.

  • ART imposes a significant decrease in wholesale prices on Orange France, SFR and Bouygues Telecom

Under the new regulatory framework for electronic communications, obligations can be imposed on an operator only upon completion of a market analysis. ART’s analysis led it to declare the three French mobile operators in metropolitan France as having significant market power (that is "exercising significant influence on the market") and to impose on them a number of obligations, including a multi-year price reduction glide path.

Orange France, SFR and Bouygues Telecom will be required to lower their wholesale prices as of 1st January 2005: Orange France and SFR by 16.3%, and Bouygues Telecom by 17.3%. Prices will be reduced an additional 24% on 1st January 2006. A third decrease is planned for 1st January 2007, the amount of which will be determined in 2006.

 

 

Termination charge for calls originating in France
Estimated average price in € cents/min (excluding VAT)*

 

2004

2005

2006

Orange/SFR

14.94

12.50

9.50

Bouygues Telecom

17.89

14.79

11.24

Déplacez le curseur pour consulter le contenu du tableau


(*) consumption profile: 75% peak hours and 25% off-peak hours on the "intra-access switch" service

N.B.: Bouygues Telecom’s prices are higher due to lower economies of scale than its competitors Orange France and SFR, as a result of its late entry on the market.

  • A €250 million gain for consumers in 2005. Following approval by the Minister of Industry, ART’s decisions will lead to a reduction in retail prices for fixed-mobile calls of around 11% in January 2005.

The reduction in wholesale call termination charges—which represent 2/3 of the cost of a fixed-mobile call—should lead to a corresponding decline in the retail price of fixed-mobile calls, to the benefit of fixed-phone customers. Retail prices should decline by about 11% in 2005 and 15% in 2006, provided fixed telephony operators pass them on to retail prices.

ART today issued a favourable opinion to the Minister of Industry on the retail price reduction for mobile phones planned by France Telecom for its customers. Following approval by the Minister, the decline in wholesale prices will be applied to base prices and the prices of certain options on 17 January 2005.

These decisions are of particular importance for consumers: since fixed-mobile traffic represents more than 10 billion minutes per year, the reduction in wholesale prices imposed by ART on mobile operators will save consumers calling on fixed lines—whether residential or business—€250 million in 2005, and €560 million in 2006.

France now finds itself amongst the leaders of the 25 member countries of the European Union in implementing the mobile call termination market analysis.

 


Annexe

  • The market analysis process

The EC directives adopted in 2002, which establish a new common framework for the regulation of electronic communications, stipulate that the imposition of ex ante obligations on players on wholesale or retail markets must be based on a market analysis.

The market analysis procedure has three major steps:

  • defining the relevant market in terms of products and geographic area
  • identifying players with significant influence on this market

  • defining "remedies" in the form of obligations which are proportionate to the competition problems identified

The European Commission has identified 18 relevant markets which might be subject to sector-based regulation. In the mobile sector, the Commission has identified three wholesale markets: mobile voice call termination, access and mobile call origination, and international roaming.

  • What is call termination?

This wholesale service corresponds to call termination offered by mobile operators to other operators, whether fixed or mobile, in order to terminate a fixed-mobile or mobile-mobile call.

Fixed-mobile call termination (CT) value chain

 

Mobile-mobile call termination (CT) value chain


Linked documents

ART's decisions view on tariffs (n°  04-1074 (pdf - 171 Ko) ) fr
The ART's decisions
 04-936 (pdf - 350 Ko)  Decision of the determination of relevant markets fr
 04-937 (pdf - 521 Ko)  Orange France's decision fr
 04-938 (pdf - 517 Ko)  SFR's decision fr 04-939 (pdf - 531 Ko)  Bouygues Télécom's decision fr
The European Commission’s decision ( pdf ) The reponses of players of the second public consultation (2nd November to 3rd December 2004) ( zip (zip - 831 Ko) )