Market analysis

ART publishes its first public consultation on the market analysis the wholesale voice termination market on mobile networks

Paris, 16 April 2004

Autorité de régulation des télécommunications (ART) made public today its first public consultation on the market analysis for the wholesale voice termination market on mobile networks.

This document contains ART’s analysis of the competitive situation on this market. It defines the markets, identifies the powerful operators and the obligations ART believes should be put in place to resolve the competitive problems.

This document will be submitted for public consultation for a period of six weeks.

After considering the comments received, ART will submit its analysis to the Conseil de la Concurrence which will rule on the market definition and the designation of operators with significant market power. The planned measures and their justifications will then be submitted to the European Commission and to the other national regulatory authorities (NRAs) of the Member States of the European Union.

  • The market analysis process
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The so-called "telecoms package" directives adopted in 2002, which establish a new Community framework for the regulation of electronic communications—whose transposition into national law is currently under examination by Parliament—stipulate that obligations may be imposed on wholesale or retail market players only based on a market analysis.

There are three essential steps in the market analysis process:

  • defining the relevant market (which involves defining its borders, in terms of products, primarily based on the criteria of "substitutability" by supply and demand)
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- determining the competitive nature of the market, and its degree of competition, as well as identifying any players who might enjoy a dominant position

- defining "remedies" in the form of obligations which are proportionate to the competitive problems identified The directives outline the types of obligations which may be imposed on the operators: publication of a reference offer, pricing control, accounting separation, etc..

The European Commission has identified 18 relevant markets which might be subjected to ad hoc regulation. In the mobile sector, the Commission has identified three wholesale markets which must be analysed at the national level by the regulator: ART in France. These are the wholesale voice termination market for mobile networks, international roaming, access and call origination on mobile networks.

  • What is call termination?
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This wholesale service covers the termination services provided by mobile operators to other operators, whether fixed or mobile, to terminate a fixed-to-mobile call or a mobile-to-mobile call (see diagrams below).

In 2002, fixed-to-mobile call termination represented a volume of traffic of 10 billion minutes for sales of €2.2 billion, for an average price of €0.22 per minute. Mobile-to-mobile termination, which represented 12 billion minutes, was not invoiced in Metropolitan France (because of the "bill and keep" operator compensation system).

The price of call termination represents a significant share of the retail price of fixed-to-mobile calls. Already in 1999, ART took action to ensure that the interconnection prices of Orange France SFR were lowered. In 2001, it imposed a 40% decrease in the call termination price of these two networks for 2002-2004, leading to a wholesale price of €0.15 per minute in 2004.

Thus, this market analysis is part of ART’s ongoing work in this area.

  • ART’s analysis of the voice call termination market on mobile networks
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ART considers that all French mobile operators have significant power on this market

In accordance with the European Commission’s recommendation, ART proposes defining as relevant markets the voice call termination markets on each of the mobile operator’s individual networks. Indeed, every operator controls 100% of market share on its voice call termination market.

Therefore, ART considers that each of the three operators in Metropolitan France, and each of the seven operators in the overseas territories and departments, enjoys significant market power on its voice call termination market.

For the three mobile operators in Metropolitan France, ART proposes:

  1. imposing an obligation of transparency and non-discrimination between fixed and mobile operators, which should result in the elimination of the bill and keep system by the end of 2004
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  3. imposing an obligation to publish a reference offer
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  5. a continuing decrease in the level of the call termination charge resulting, in 2007, in a target level corresponding to the costs of an efficient operator, excluding commercial costs. To this end, price controls must be established, with ceilings for the years 2005, 2006 and 2007
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As regards the overseas mobile operators

ART considers that the main overseas mobile operators (SRR, Orange Caraïbe, Orange Réunion, Bouygues Télécom Caraïbe) must be subject to obligations comparable to those of the operators in Metropolitan France.

In particular, ART proposes imposing price controls in the form of a multi-year price decrease over three years, which must lead to price decreases equal to those in Metropolitan France.

ART considers that mobile operators of a significantly smaller size—SPM Télécom, Saint-Martin Mobile and Dauphin Télécom—must be imposed obligations proportional to their size. Therefore, no price controls are proposed. These operators must, however, practice fair and reasonable prices.

Responses to the call for comments should be sent to m16(@)art-telecom.fr.


Linked documents

The  public consultation (pdf - 1.21 Mo)  and the  questions asked  in the call for comments are available fr