4 Orange France Bouygues Telecom and SFR

June 16, Arcep has notified the European Commission and implemented in public consultation until July 17 its project of regulation of the wholesale market of the SMS termination on mobile networks. This proposal is a "first", no other national regulatory authority (RNA) who still regarded the market as being relevant to the meaning of the directive "framework" (1) and as such subject to ex ante regulation. Between July 2004 and July 2005, Arcep has led two phases of collection of information that allowed him to refine his understanding of the economy of the SMS and find the need to define a relevant wholesale market of the termination of the SMS on the mobile networks for the provision of wholesale price regulation to "energize" competition in the retail market. The SMS retail offer is based on two big benefits: a departure of appeal SMS from the terminal of the transmitter (appellant) and the SMS termination to the terminal of the receiver of the message (called) on the same network (SMS said "on net") or on a third-party network (SMS said "off net" (2)).

Current load of TA SMS: 4.3 cts

Euro (s)

On the net wholesale for off SMS market, the operator of the appellant must pay operator called a load of SMS endpoint for the provision of delivery of the message from the border of its network to the terminal of the callee. Gold, with more than 13.2 billion SMS sent in 2005 (Metropolis and DOM - TOM) on the networks of the operators (3) and "the appetite of consumers for this type of service that is dry up", Arcep has found that a "high level of interconnection charges requested by mobile operators for from the network of a third-party operator sending of SMS to their network."", is a real obstacle, which discourages the launch of alternative offers". Currently, the regulatory authority stressed that termination (TA SMS) SMS charges amounted to 4.3 cents to HT per SMS for each of the three mobile telephony operators (4) despite a sharp decline in the unit cost of the SMS. On the basis of this finding and the y allows the recommendation of the Commission on the relevant markets (5) European, Arcep has identified a wholesale market the termination SMS for each of the networks of Orange France, Bouygues Telecom and SFR, each of these markets including, according to the regulator, all SMS (offer for SMS and SMS Push interconnection) termination benefits regardless of the origin of the SMS (mobile network)(, fixed, Internet, national or international), regardless of the recipient, client and the operator an MVNO (6) using the operator, and regardless of the technology used to produce this benefit (GSM or UMTS).

Existence of entry barriers

After thus identified and delineated these markets, Arcep examined in the light of the "relevant criteria" applied by the European Commission to define the list of relevant markets susceptible to ex ante regulation (existence of entry barriers, absence of possible developments in the market to a competitive situation and relative effectiveness of the competition law / usefulness of ex ante complementary regulation.) It concluded that the existence of barriers to entry, because "impossible technical and structural of arrival of a new entrant to provide an end of SMS to a client of a certain operator, only the latter can complete technical SMS traffic intended for the called", and pointed out that this barrier is not likely to evolve the "monopoly structural each operator on the SMS network endpoint will endure". It considered that the ex-ante regulation had tools most appropriate that "the right of competition which would not necessarily be able to impose adequate benefits of SMS termination control". In its opinion of 10 March 2006 (7), the competition Council shared this analysis of the relevance of the SMS termination wholesale markets.

The regulatory authority also found that the existence of a significant power of the three mobile network operators on the SMS termination wholesale markets. It considers that each operator has 100 market share on the market of the SMS termination on its own network and that any alternative tender is technically impossible. The market share held by the operators is only an indicator of market power, Arcep has deepened its analysis and demonstrated the absence of counterforce of consumers on the retail market.

3 cts (Orange, SFR) and 3.5 cts (Bouygues)

According to it, consumers are very sensitive to the SMS call termination rates. It also noted the absence of the buyer bargaining power, be it mobile between operators, or the non-mobile players (SMS aggregators, fixed operators, ISPs, or publishers of services). Therefore, Arcep considers that in the absence of control ex ante of the SMS termination charge, three mobile network operators can act independently of the purchasers on the wholesale market, this situation being reinforced by the fact that subscribers of operators are not charged for the received SMS, which encourage not operators to maintain reasonable termination SMS rates. The obligations

ex-ante Arcep then proposed to impose on the three mobile network operators are only benefits relating to interconnection SMS offers. The proposed obligations were: the obligation to grant any reasonable request for access and interconnection (that are already three mobile operators, as noted itself Arcep) including in negotiating in good faith with the network operator who requests the provision of benefit and avoiding to withdraw access already granted; the obligation of non-discrimination; the obligation of transparency; accounting obligations of accounting separation and cost accounting; the obligation of tariff control. The duty of tariff control is twofold. On the one hand, Arcep proposes to impose a "duty of reflection of costs" applicable to the only destination of three mobile operators (8) services. On the other hand, relying on article 311 of the CPCE (9), she proposes to establish a maximum tariff of TA SMS in metropolis to 3 eurocents per SMS effective (10), for Orange France and SFR and 3.5 eurocents for Bouygues Telecom (11).

In mind the European Commission

It is interesting to note that the regulatory authority has partially followed the opinion of the Council of competition (see box above). The European Commission should send its observations on this project by July 17 to Arcep. This period may be postponed, pursuant to article 7.4 of the directive "framework", the European Executive considered that the draft measures had an impact on trade between Member States and constituted a barrier to the single market or, if he had serious doubts as to the compatibility of measures with Community law. The adoption of measures by the Arcep draft would be delayed by two additional months, time in which the European Commission may ask him to remove his project.

(1) Directive 2002/21 / EC of 7 March 2002 on a common regulatory framework for networks and electronic communication services (directive "framework").

(2) - Talking SMS offnet as the receiver of the SMS Network differs from that of the transmitter.

(3) - Is 8.6 times more than in 2000, according to data of Arcep.

(4) - Orange France, Bouygues Telecom and SFR.

(5) - In its recommendation on relevant markets in February 2003 (page 13), the Commission stated that the national regulatory authorities (NRAs) can define markets that differ from those contained in the recommendation so that they follow the procedures provided for in articles 6 and 7 of the directive "framework" ".

(6) - Mobile Virtual Network Operator (MVNO).

(7) Opinion of the Council of competition no. 06-A-05 on March 10, 2006.

(8) - The Arcep warns against a termination fee that would be less than 1 cent of euro since this would encourage the massive sending of unsolicited messages to randomly generated numbers.

(9) - Under article 311 of the CPCE, ARCEP may, in its tariff control obligations, "ask the operators to comply with guidance multi-year rates or fully justify their rates and, if necessary, require the adaptation".

(10) - SMS MT actually received by the client.

(11) - The Arcep justifies the introduction of this tariff between SFR and Orange France gap, on the one hand, and Bouygues Telecom, on the other hand, by the analysis of cost that it conducted and the risk of marginalization on Bouygues Telecom because of its share of lower market and the absence of effect club. " This gap is only transitional.

BOX .

The opinion of the competition Council, "partially" followed by Arcep

The regulatory authority has that partially taken into account in the opinion of the competition Council to define the regulatory measures that it proposes to impose. Indeed, the competition Council, supported the principle of control ex ante of the SMS (SMS TA) termination wholesale market, said that only the terminating SMS charges decline can not to alone to exercise competitive pressure down on details of the SMS rates where there is no guarantee that the three mobile operators affect the drop their retail tariff (1). Therefore, the competition Council made three key recommendations to the attention of Arcep. The first is to take measures to ensure that the declining rates of TA SMS is effectively passed by mobile operators on the wholesale price of SMS charged virtual mobile operators (MVNO). The second relates to the necessary development of the MVNO full who, setting themselves their termination charges, more widely open competition in the retail market.

Promote the substitualité of the SMS

Therefore, the competitive situation on the retail market for the SMS would, according to the competition authority, closely related to that prevailing in the wholesale market of access and the departure of appeal on mobile networks. Finally, the third recommendation relates to the need to promote the substitutability of the SMS with other modes of interpersonal communication not sent from a mobile.

CC and CH

1 - The competition Council recalled that declining TA SMS following the settlement of dispute of the November 2005 ARCEP has not passed on to prices of wholesaling of SMS to the MVNO.