ARCEP launches a public consultation on the usefulness of halting the use of automatic call-back mechanisms from public telephone booths and on the practical means of doing so.The current practice threatens the public telephone booth economic model and could result in a reduction of the public telephone offer if it persists.

Paris, 22 December 2006

Telephone card operators and automatic call-back mechanisms

Pre-paid telephone card service providers allow their customers to make national and international telephone calls from France Telecom’s fixed, mobile and public telephones. These offers are sold in the form of coded pre-paid telephone cards via various distribution channels, including small retail outlets, tobacconists and on Internet.

According to ARCEP Observatory figures, this market segment represented 2.125 billion minutes with sales of 28 million cards worth €240 million at 31 December 2005.

The automatic call-back mechanism is one of the means pre-paid card providers use to offer their customers competitive call rates. Calls made are converted into "received calls", thereby entirely allowing callers to bypass the retail pricing grid of the operator connecting them to the telephone service

Under this mechanism, the telephone card operator’s customer calls a number, generally a toll-free number, which connects him or her to a service platform, which identifies the origin of the call and then automatically calls back the customer to connect him or her to the called party and deduct the cost of the call from the pre-paid card.

This mechanism has existed for many years and lets telephone card operators offer their customers competitive rates for the most expensive calls from fixed or mobile local loops. In this way, they meet consumer demand for access to particularly competitive rates, although the call connection mode is more complex. By their very existence, these mechanisms benefit all consumers by exercising competitive pressure on all rates of traditional operators whether fixed or mobile.

So, ARCEP attributes particular importance to the existence of this market segment which proposes offers which are suited to certain usage profiles, complement offers from mobile operators and play an important role in the competitive balance of the sector.

Automatic call-back mechanisms and public telephone booths

However, and specifically for calls from France Telecom public telephone booths, this automatic call-practice back compromises the public telephone economic model by not helping finance the access infrastructure of public telephone booths, and threatens the very viability of a service which is the only access some consumers have to telephone service.

For universal electronic communications services, under the terms of its specifications, France Telecom is required to provide the public with approximately 41 000 phone booths. The universal service fund covers part of the cost of phone booths which are unprofitable (about 25 000 of them) because of low use, primarily in rural towns and villages. Independently of this universal service obligation, France Telecom operates some 140 000 phone booths across France.

The automatic call-back practice, which is commonly used by telephone card operators competing with France Telecom, could threaten the economic model of all public telephone booths. Therefore, it may artificially increase the cost of the public telephone component of universal service, which is financed by all operators and therefore by all of their customers, and push France Telecom to reduce its public telephone offer at a time when consumer demand justifies that the current public telephone offer be maintained or developed.

Furthermore, the current situation creates competition which is artificially favourable to the competitors of France Telecom which use public telephone booths to operate on the telephone card market, since only France Telecom finances the access infrastructures to the public telephone booths.

Public consultation

Because of these considerations, ARCEP is submitting for consultation its analysis of the operation of the telephone card market segment, of the usefulness of halting the use of automatic call-back mechanisms specifically from public telephone booths and practices which make it possible to meet this objective.

Contributors are invited to comment on these elements and to share any additional information by 25 January 2007.