Paris, 17 December 2004
Under the law on electronic communications, Autorité de régulation des télécommunications (ART) is responsible for conducting market analyses and for imposing, where appropriate, regulatory obligations on the telecom operators ART designates as having significant market power (SMP) on one of the 18 markets identified by the European Commission.
ART is now entering the first phase of its analysis of the wholesale access and mobile call origination market (market 15), and launched a consultation on its analysis today.
ART suggests designating Orange France, SFR and Bouygues Telecom as having significant power on this wholesale market in Metropolitan France and wishes to impose the obligation to accede to reasonable requests for access from virtual network operators (MVNO) wishing to establish themselves on a host network.
The public consultation is open until 4 February 2005.
- 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 includes 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 that may be identified on the market
The European Commission has identified three relevant wholesale markets in the mobile sector: mobile voice call termination, access and mobile call origination and international roaming.
- What is access and mobile call origination?
Currently, the mobile telephony market in Metropolitan France comprises three mobile operators, each of which owns its’ network and has the right to use radio frequencies.
However, it is possible to provide mobile services without having frequencies, as has been demonstrated in other countries. Operators doing this are designated as "mobile virtual network operators" (MVNO). The term "operator" refers to the fact that the provider is not simply a distributor; and the term "virtual" refers to the fact that, since the provider does not have radio infrastructures of its own, it must sign access agreements with a network operator, known as the "host operator". The wholesale services provided under this agreement are known as "access and call origination" in that they cover both the subscription ("access") and the possibility of making outgoing calls ("call origination").
By purchasing equivalent wholesale services, virtual network operators can propose the same services to the end customer (voice, SMS, special numbers, etc.) as a traditional network operator.
- Action planned in Metropolitan France
ART encourages infrastructure-based competition and wishes to encourage the allocation of the fourth UMTS authorisation by temporarily imposing on current operators the obligation to grant roaming rights on their GSM network to entrantsce at a non-excessive price.
ART’s action must also allow the development of attractive offers, to the benefit of mobile customers, via the entry on the retail market of virtual network operators (MVNO).
In Metropolitan France, the wholesale access and call origination market comprises three agreements. Since 2001, Bouygues Telecom’s network hosts Transatel, a virtual operator for cross-border travellers between France and Belgium, and SFR and Orange France respectively host the Debitel and Breizh Mobile MVNOs since this summer.
ART welcomes these agreements, it considers them insufficient in that they do not foster significant competition on the retail market : Transatel and Breizh Mobile propose niche offers, targeting frequent travellers and low penetration areas. Similarly, Debitel aims for a low market share.
ART notes with regret that the development of the wholesale access and call origination market has been held back. This results from the unsatisfactory configuration of the market, which includes only three suppliers (Orange France, SFR and Bouygues Telecom), who have a common interest in avoiding to establish partnerships with virtual network operators which might provide significant competition on the retail market, particularly as regards the price of key services such as voice and SMS.
Therefore, ART considers it justified to intervene on the wholesale market, although it is limiting its action to a simple obligation, for network operators, to accede to any reasonable request for access from a virtual operator wishing to establish itself on the retail market. This obligation is intended to tip the current market equilibrium, by allowing the emergence of significant, long-term virtual network operators on the retail market. It is therefore a temporary measure, in that, once these players are established, the access obligation will become unnecessary and can be lifted.
In this way, ART hopes to encourage competition on the mobile telephony retail market, particularly with respect to small consumers, but also to encourage innovation, by facilitating fixed-mobile convergence offers, for example. A satisfactory MVNO contract could also serve as a springboard for an operator wishing to acquire the fourth UMTS authorisation.
- Action planned overseas
In the Antilles-Guyana and Reunion regions, ART considers the lack of competition to be due to the imbalance between mobile operators at the retail level and plans to impose on the operators Orange Caraïbe and SRR, declared as having SMP, a simple obligation to allow roaming :
- service continuity roaming, in order to allow operators present in part of the region to extend their offer to the entire region (Antilles-Guyana)
- possibly deployment roaming, for operators having frequency authorisations in the region, subject to an additional analysis of the impact of such a measure on already deployed operators
In Mayotte and Saint Pierre-et-Miquelon, which have just one network operator, ART questions the necessity of obligations on the wholesale level.
The market analysis is submitted for public consultation. Responses to the call for comments should be sent by 4th February 2005 to m15(@)art-telecom.fr.
Once the comments have been received and integrated, ART should be able to submit its analysis to the French competition authority (Conseil de la concurrence) prior to adopting the final decisions which it will then submit to the European Commission, in view of enforcement by the second semester 2005.
The public consultation (pdf - 1.65 Mo) is available for downloading (pdf - 1,6 Mo)