Paris, 1st February 2005
- ART completes its market analysis of mobile call termination for the overseas départements
As part of its implementation of the telecoms packet, which has been transposed into national law, ART completed on 10 December 2004 its analysis of the wholesale voice call termination market on mobile networks in Metropolitan France, a service used for both fixed-mobile and mobile-mobile traffic.
Today, it completed its analysis for the overseas départements.
The decisions adopted are the fruit of a long process initiated in mid 2003, which included:
- an initial public consultation launched in April 2004
- consultation of the competition authority (the Conseil de la Concurrence) in June 2004
- notification of the European Commission of its draft decisions for the overseas départements on 10 December 2004, along with a second public consultation
Before adopting its final decisions, ART was required to await approval from the European Commission, which it received on 19th January.
- ART imposes a pricing framework and a wholesale price decrease of 49% over three years on major operators
Under the new electronic communications regulatory framework, a regulator can impose obligations on an operator only following a market analysis. ART’s analysis has led it to declare as "powerful" (that is "having significant market power") all the mobile operators present in the overseas départements (Orange Caraïbe, SRR, Orange Réunion, Bouygues Télécom Caraïbe, SMM, Dauphin Télécom and SPM Télécom) and to impose on them a number of obligations, including price caps.
As of 1st April 2005, the two main operators, Orange Caraïbe and SRR (which control 83% and 72% of retail market share, respectively) will be required to decrease their wholesale prices by 20%. Subsequent 20% decreases will be required on 1st January 2006 and 1st January 2007, for a total decrease of 49% over three years.
Call termination charges
Estimated average price in €/min excluding VAT (*)
<font size="2">(*) consumption profile 75% peak periods and 25% non-peak periods (excluding primary digital block)</font>
For the other operators, to a lesser degree, ART imposes the obligation to avoid practicing excessive wholesale prices, especially with regard to costs and effects on the market. This should also result in significant price reductions.
- Significant savings for fixed customers in overseas départements
The decreases in wholesale prices—which represent 3/4 of the cost of a fixed-mobile call—should lead to a corresponding decrease in the retail price of fixed-mobile calls in the DOM, to the benefit of fixed-line customers, of about:
- 16% in 2005
- 15% in 2004
- 14% in 2007
Savings will total 38% over three years, provided the fixed-telephone operators pass on the decreases to retail prices in their entirety.
- The market analysis process
The EC directives adopted in 2002, which establish a new common framework for the regulation of electronic communications, stipulate that the imposition of ex ante obligations on players on wholesale or retail markets must be based on a market analysis.
The market analysis procedure has three major steps:
- defining the relevant market in terms of products and geographic area
- identifying players with significant influence on this market
- defining "remedies" in the form of obligations which are proportionate to the competition problems identified
The European Commission has identified 18 relevant markets which might be subject to sector-based regulation. In the mobile sector, the Commission has identified three wholesale markets: mobile voice call termination, access and mobile call origination, and international roaming.
- What is call termination?
This wholesale service corresponds to call termination offered by mobile operators to other operators, whether fixed or mobile, in order to terminate a fixed-mobile or mobile-mobile call.
<font size="2">Fixed-mobile call termination (CT) value chain</font>
<font size="2">Mobile-mobile call termination (CT) value chain</font>
In 2002, the termination of fixed-mobile voice calls represented 10 billion minutes of traffic and €2.2 billion in sales, for an average price of €0.22 per minute (excluding VAT).
The mobile call termination fee paid by the fixed operator represents approximately two-thirds of the retail price of fixed-mobile calls, with the remaining one-third covering technical and commercial costs and the fixed operator’s profit margin.
ART’s decisions :
05-0111 (pdf - 360 Ko) Decision on the determination of relevant markets in Overseas
05-0112 (pdf - 482 Ko) Orange Caraïbe
05-0113 (pdf - 489 Ko) SRR
05-0114 (pdf - 470 Ko) Orange Réunion
05-0115 (pdf - 479 Ko) Bouygues Telecom Caraïbe
05-0116 (pdf - 477 Ko) Saint-Martin Mobile
05-0117 (pdf - 477 Ko) Dauphin Télécom
05-0118 (pdf - 421 Ko) SPM Télécom The observations of the European Commission ( pdf (pdf - 32 Ko) )
The results of the second public consultation held from 8 December 2004 to 21 January 2005 ( in Zip format (zip - 677 Ko) )