ARCEP adopts its decision on SMS call termination in Metropolitan France following a favourable opinion from the European Commission

Paris, 27th July 2006

Following a favourable opinion from France's competition authority, Conseil de la concurrence, and that of the European Commission received on 20 July, ARCEP is now adopting its final decision on the market analysis for the wholesale SMS call termination market on Metropolitan mobile networks.

In this decision, ARCEP establishes the maximum tariff for SMS call termination in Metropolitan France at:

Given the current level of uncertainty on the underlying cost structures, the proposed pricing framework is a temporary decision establishing maximum ceilings.

Along with this decision, a cost accounting methodology for SMS CT will be imposed in the next 12 months to be used as a basis for establishing regulatory accounts.

As a result, ARCEP is limiting the validity of this pricing framework in the decision to two years. Upon completion of this period, and based on the initial audited cost elements available by autumn 2007 at the latest, ARCEP will re-examine the pricing ceilings. In particular, it will examine the gap between Bouygues Telecom's call termination and that of SFR and Orange France, which is justifiably granted to Bouygues Telecom on a temporary basis, and it will specify the conditions for converging SMS call termination towards a symmetrical price cap.

The repercussion of these declines on the retail SMS market will depend on the intensity of competition on the wholesale access and call origination market on which MVNOs buy, among other things, and ultimately on the intensity of competition on the retail market. As suggested by both the Conseil de la Concurrence and the European Commission, ARCEP will closely monitor the impact of these declines in SMS CT levels on these two markets.