Application procedure for 3rd generation mobile licenses closed

31 January 2001

The coordinated introduction across the European Union of a 3rd generation mobile communication system (UMTS) was established by a decision of the European Parliament and Council on 14 December 1998.

According to article 3 of this decision, Member States are responsible for taking all necessary measures to allow the coordinated and progressive introduction of UMTS services on their territories by 1st January 2002 at the latest.

The legal framework and the means of introducing UMTS in France were prepared by ART with the active participation of the Commission consultative des radiocommunications. A call for comments on the issues, and the subsequent analysis of the results of the public consultation launched by ART in February 1999, made a significant contribution.

Based on the information received from this consultation and the subsequent discussions it triggered, ART laid down, in an initial decision adopted on 3 March 2000, the means of selecting the future operators of third-generation systems, based on the "Beauty Contest" method, which has also been chosen by six other members of the Union.

While some Member States used the auction method in the absence of Community harmonisation, it is important to note that given the rapid changes to the economic, financial and technical environment, all countries are currently facing difficult situations.

Thus, given the-surprising and unexpected-results of the British auction, discussions were initiated in France to determine whether lessons could be learned from the British experience in establishing the methods to be used in our country.

In this respect, ART spoke out on 11 May 2000 giving the reasons which had led it to hold its position in using the Beauty Contest method, emphasizing that this position met the need to encourage innovation, respect the principles of regional development, take into account the economic conditions for the development of this new market, and most of all, to facilitate access for as many consumers as possible to these new services under bearable pricing conditions.

ART submitted its final proposal to the Minister on 28 July 2000. It is based on the Beauty Contest method in allocating four licenses and includes the financial amounts to be paid by operators to receive frequencies. The government is responsible for setting these amounts; it has sent them to ART.

The deadline set for operators to submit their applications expired today at noon.

Two applications were submitted on time by SFR and France Telecom Mobiles.

ART is holding the selection procedure under the terms of article L.36-7 (1st paragraph) of the Post and Telecommunications Code. It will continue this procedure under the conditions it itself established and which were published on 18 August 2000 by the Minister of Telecommunications.

Based on legal analyses conducted by ART, the existence of two candidates in itself has no impact on the procedure.

Nevertheless, a market structured around just two operators cannot allowed to last. Indeed, such a situation would make it impossible to meet the goals of developing a competitive market inspired by the European and French telecommunications texts, and in particular Community Decision dated 14 December 1998 on third-generation mobile systems.

In order to encourage the development of true competition, in accordance with both Community and French texts, ART considers it necessary to launch an additional application procedure which would make it possible to meet the goal of allocating four authorisations. This procedure will also be based on the Beauty Contest method and will have to take into account the requirement for equitable financial conditions among the various players.

This new procedure, for which ART will draft its proposal for publication by the Minister, will have to be conducted according to the methods and deadlines which will guarantee a competitive situation when the third-generation market is effectively opened to competition.

Today, the situation in France, and in Europe, reflects the tension resulting from a timetable based on the optimistic industrial prospects expressed in the Community decision of 1998. However, financial analyses and current technical realities mean we need to review this schedule.

In accordance with the missions assigned it by French law, ART will continue to realistically oversee regulation in an economic and social prospect in order to serve the consumer, and reaffirms its commitment to its goals of total coverage.

ART remains confident that the services associated with innovative UMTS technology will be developed.

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