Paris, 2 November 2004
Under the electronic communications law, the Autorité de régulation des télécommunications (ART) is in charge of carrying out market analysis and of imposing, if applicable, regulatory obligations on the 18 markets identified by the European Commission.
ART is currently initiating the final phase of its analysis of the wholesale mobile voice call termination market. It proposes to designate Orange France, SFR and Bouygues Telecom as having significant market power on their individual call termination markets. The detailed obligations which would be imposed on each of these three operators are being released and includes a price cap resulting in a 36% decrease of the wholesale prices over two years. It will allow corresponding decreases of about 11% in 2005 and 15% in 2006 in the retail prices of fixed-to-mobile calls to the benefit of fixed-line users.
These draft decisions are available for public consultation until December 3rd and have been notified to the European Commission and other European regulators.
- The market analysis process
The directives (the so-called "telecommunication package") adopted in 2002 establish a new Community framework for the regulation of electronic communications and require that the imposition of ex ante obligations, if applicable, on undertakings be based on market analysis.
The market research process comprises three stages:
- defining the relevant market in term of products and geographical area
- identifying players who have a significant market power
- defining "remedies" in the form of obligations proportionate to the competition problems identified
The European Commission has identified 18 markets likely to be subjected to ex ante regulation. In the mobile sector, the Commission has identified three wholesale markets: mobile voice call termination, access and mobile voice call origination, and international roaming.
- What is call termination?
This intermediate service corresponds to call termination that mobile operators provide to other operators, whether fixed or mobile, in order to terminate a fixed to mobile or mobile to mobile call.
Fixed-to-mobile call termination (CT) value chain
Mobile-mobile call termination (CT) value chain
In 2002, the termination of fixed-to-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). Mobile-mobile termination, which represented a volume of 12 billion minutes in 2002, was not billed in Metropolitan France (through the compensation system between operators known as "bill and keep").
The mobile call termination charge paid by fixed operators represents approximately two-thirds of the retail price of fixed-to-mobile calls, with the remaining one-third covering technical and commercial costs and the margin of the fixed operator.
ART intervened in 1999 to ensure that the interconnection fees of Orange France and SFR were reduced. In 2001, it imposed a decrease of about 37% over three years for call termination on these two networks, leading to a wholesale price of €0.15 (excluding VAT) per minute in 2004.
Therefore, the proposed course of action is consistent with ART’s past policy.
- Market analysis for call termination on mobile networks in its final phase
ART initiate today the final step of its analysis of the wholesale market for call termination on mobile networks. ART was committed to carry out this analysis as soon as possible to ensure continuity with the measures adopted under the old framework and in particular under the current price cap which will expire on December 31st, 2004. Thus, it launched an initial public consultation in April 2004, and requested and received the opinion of the Conseil de la Concurrence (opinion 04-A-17 of 14 October 2004).
Today, ART is releasing its analysis and its proposed measures for Metropolitan France in the form of four draft decisions:
- Draft decision 04-936 defining mobile voice call termination markets:
This draft decision identifies 11 mobile call termination markets; one market for each operator (three in Metropolitan France, four in the Antilles-Guyana region, two in Réunion, one in Mayotte, and one in Saint-Pierre-et-Miquelon);
- Three individual draft decisions 04-937 to 939 designating Orange France, SFR and Bouygues Telecom as having significant market power and establishing corresponding obligations on them:
ART proposes to designate the three metropolitan operators as having significant market power on their respective markets and to impose on them access, transparency, non-discrimination, accounting separation and price control obligations.
It proposes to further reduce the prices beyond the 37% price cap implemented over the period 2002-2004. These new reductions will be of 16.3% in 2005 and 24% in 2006 for Orange France and SFR, reaching €0.125/min (excluding VAT) in 2005 and €0.095/min (excluding VAT) in 2006 compared with the current price of €0.1494/min (excluding VAT).
As for Bouygues Telecom, which call termination fee is currently estimated at €0.1789/min (excluding VAT), ART recognises that it does not yet benefit from the same economies of scale like its competitors, but also that the difference between its call termination price and Orange France and SFR price must gradually be reduced. Thus, the reduction will be of 17.3% in 2005 and 24% in 2006, respectively, leading to a level of €0.1479/min (excluding VAT) in 2005 and €0.1124/min (excluding VAT) in 2006. This will reduce the difference between Bouygues Telecom’s call termination charge and its competitors to €0.0295/min (excluding VAT) in 2004, €0.0229/min (excluding VAT) in 2005 and €0.0174/min (excluding VAT) in 2006.
Termination charge for calls originating in France | |||
2004 | 2005 ** | 2006 ** | |
Orange/SFR | 14.94 | 12.50 | 9.50 |
Bouygues Telecom | 17.89 | 14.79 | 11.24 |
(*) consumption profile: 75% peak hours and 25% off-peak hours on the "intra-access switch" service
(**) draft decisions subject to public consultation and submitted tot the European Commission
ART’s action on wholesale prices will result in decreases in the retail prices of fixed-to-mobile calls to the benefit of fixed telephony consumers. These reductions can be estimated to be of 11% in 2005 and 15% in 2006, since call termination represents close to two-thirds of the retail price of fixed-mobile calls.
ART is currently finalising its market analysis relative to over-sea operators, which will be released at a later date.
ART’s four draft decisions are submitted for public consultation. Responses to the call for comments should be sent to ART before 3rd December at: m16@art-telecom.fr.
Simultaneously, ART notified these draft decisions to the European Commission and other European regulators.
Once comments have been received and integrated, and subject to publication of the "SMP operator" decree under the electronic communications law, ART should be able to adopt the final decisions which will make possible the application of the various measures on 1st January 2005.
Linked documents
Slides of the conference (
ppt (ppt - 468KB) 
) 
The public consultation ( pdf (pdf - 171KB) )
The four draft decisions :
| Project n° 04-936 (pdf - 453KB) | Draft decision on the determination of relevant markets |
| Project n° 04-937 (pdf - 616KB) | Orange France Project |
| Project n° 04-938 (pdf - 615KB) | SFR Project |
| Project n° 04-939 (pdf - 627KB) | Bouygues Telecom Project |