Global Insight Perspective | |
Significance | The fourth 3G licence in France could once again be up for grabs, as regulator Arcep announces plans to launch a new tender |
Implications | The tender is meant to stimulate competition in the French mobile market by allowing a new 3G operator to compete with the established mobile players Orange, SFR, and Bouygues. |
Outlook | There is clearly room in the French market for a fourth 3G player—but whoever wins the tender is likely to face significant resistance and competition from the current operators. |
French telecoms regulator Arcep has announced plans to re-launch its tender for the country's final 3G licence, following the failure of a tender in October last year. The announcement follows a public consultation, launched by Arcep in June, when the telecoms regulator said it would consult with market players and publish its conclusions by the end of September (see France: 13 June 2008: ARCEP Launches Consultation on Fourth 3G Licence).
The regulator said it has now gathered opinion on the matter from 23 different parties, and the French government will soon hold a parliamentary debate on the recommendations. Arcep has stated that tender will follow similar criteria to the previous one last year, but the regulator did not say when the auction would actually be launched, or provide any details of financial criteria.
Arcep rejected Iliad's sole bid in 2007 following objections from the three existing 3G operators in France: France Telecom's Orange, Vivendi's SFR, and Bouygues Telecom (see France: 10 October 2007: Regulator Rejects Iliad's 3G Licence Application). Iliad had emerged as the sole candidate but demanded that payment for the licence fee of 619.2 million euro (US$902.9 million) should be spread into deferred annual payments (see France: 1 August 2008: Iliad Emerges as Sole Candidate for France's Fourth 3G Licence).
Outlook and Implications
- Increasing Market Competition: The tender is meant to stimulate competition in the French mobile market by allowing a new 3G operator to compete with the established mobile players Orange, SFR and Bouygues, who already control over 95% of the market. Competition is currently vital, as mobile penetration within metropolitan France was only 87.1% in 2007—well below the EU average.
- Priority for a New Entrant: Arcep has stated that they will give priority to a newcomer, following similar conditions that governed the previous tenders. The regulator also said the possibility of splitting up the licence into different frequency packages, open to all operators, was rejected unanimously.
- A Fresh Chance for Iliad? Following last year's failed bid, Iliad is still likely to be the favourite to make its entry into the mobile market. However, it has suffered a poor relationship with the other operators over fixed-line unbundling, and attempts to launch an MVNO have similarly stalled (see France: 22 April 2008: Chaos over Sharing French FTTH Networks). There is little doubt there is room in the French market for a fourth 3G player—but whoever wins the tender is likely to face significant resistance and competition from the current operators.
- New Enthusiasm for a Fourth 3G Player: The move also represents increasing enthusiasm for a fourth 3G player in France on the part of the government, who were considering cancelling the tender as recently as April this year (see France: 4 April 2008: Government Mulls Cancelling France's Fourth 3G Licence).