ARCEP accepts the applications submitted by SFR and Orange France. Procedure made it possible to secure commitments to improve hosting conditions for MVNOs and close to €600 Bn in revenue for the State.

Paris, 18 May 2010

Following the assignment of the fourth 3G licence to Free Mobile on 12 January 2010, there remained a 5 MHz block of spectrum and a 4.8 MHz block of spectrum still available in the 2.1 GHz frequency band.

The application procedure for the allocation of this remaining spectrum was issued on 25 February 2010. Three applications were submitted on 11 May, by the companies Free Mobile, Orange France and SFR.

The terms of the selection process planned for the blocks to be allocated in two stages: first the award of the 5 MHz block followed by the award of the 4.8 MHz block.

For each of these blocks, the applications were assessed based on two criteria:

• the commitments made to improving hosting conditions for mobile virtual network operators (MVNOs), for which the different levels suggested in the procedure are included in the appendix;
• and the financial amount bid.

Through its Decision No. 2010-0581 of 18 May 2010, ARCEP selected the best applications for each of the two blocks: the one submitted by SFR for the 5 MHz block and the one submitted by Orange France for the 4.8 MHz block.

For the 5 MHz block, SFR submitted a bid of €300 million, and chose commitment level 1 for hosting MVNOs. SFR also chose to position this block of spectrum between the frequencies operated by Free Mobile and those operated by Orange France.

For the remaining block of 4.8 MHz, Orange France submitted a bid of €282,098,871 and also chose commitment level 1 for hosting MVNOs.

These two blocks have therefore been awarded for the total sum of €582,098,871 which, when added to the €240 million that Free Mobile paid for its block of 5 MHz in January 2010, comes to a total of more than €820 million.

The two goals that had been set for the procedure were therefore achieved, namely to make significant improvements to the hosting conditions offered to MVNOs and to bring in substantial revenue for the State.

In the coming weeks, ARCEP will be allocating the corresponding spectrum to the two operators. Once this has occurred, the 2.1 GHz frequency band will be shared by the four operators in the following manner:

Appendix: MVNO commitment levels contained in the procedure

The candidates were asked to indicate the level of commitment for MVNO hosting, from among those listed below, that they would make for each of the blocks of spectrum.

Each level of commitment was attached to a coefficient multiplier ranging from 1 to 2. To rank the offers submitted by the applicants, the financial amount that each candidate bid was multiplied by this coefficient.

SFR and Orange France both made a level 1 commitment, which corresponds to a commitment to "grant all reasonable demands for access to their network". They also made the commitment that hosting conditions "would not unjustifiably impede the goal of achieving competition in the wholesale market for hosting MVNOs or MVNOs’ commercial autonomy in the retail market". The operators must also "offer MVNOs that are already hosted on their networks the option of amending the terms of their contracts as soon as possible, to allow them to benefit from these new commitments".

Levels 2 and 3 included strengthened technical and economic commitments.

The exact terms of the corresponding clauses are contained in Paragraph 3.3.3 of Document 2 in the annex to ARCEP Decision No. 2010-0199.