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Summary

The French telecoms regulator, ARCEP, has started a public consultation on the gradual termination of mobile roaming agreements in France. Its draft guidelines on mobile network sharing aim to encourage further investment in 4G networks, especially in remote areas. Interested parties are invited to submit termination date proposals ahead of the consultation deadline of February 23, 2016.

Terminating roaming agreements will encourage operators to invest in their own 4G infrastructure

In August 2015 the introduction of the Act on Growth, Business, and Equal Economic Opportunity gave ARCEP additional powers to request that operators amend their mobile network sharing agreements where it is deemed necessary to achieve regulatory objectives. To provide clarity on the conditions under which it will implement these powers, the regulator has published draft guidelines on mobile network sharing, including outlining changes it would like to make to existing agreements.

Two mobile sharing agreements are currently in place in France. One allows Free Mobile customers to access Orange France’s 2G and 3G networks; the other is between SFR and Bouygues Telecom for 2G, 3G, and 4G networks and was intended to improve both coverage and service quality for customers. ARCEP plans to terminate the Free–Orange contracts ahead of their expiration dates, with 3G roaming scheduled to end between 2018 and 2020 and 2G services between 2020 and 2022. ARCEP believes that when Free Mobile originally joined the market in 2012 its roaming agreement was justified, but that this is not the case in the longer term. The plan is for the termination of these roaming arrangements to align with Free’s network rollout, which had reached 57% 4G coverage as of September 2015.

To encourage further investment in 4G infrastructure, ARCEP also plans to terminate SFR and Bouygues Telecom’s 4G roaming agreement sometime between 2016 and 2018 on the grounds that further 4G rollout is vital for the market. The regulator wants to avoid the possibility of mobile operators using roaming agreements to delay the construction of their own networks. In particular, it hopes that these plans will improve coverage in less densely populated areas of the country.

The consultation document was based on the market’s current four-MNO structure, but ARCEP will amend it in the event of consolidation in the market, for example if the merger between Orange France and Bouygues Telecom is confirmed. In January 2016 the regulator warned that it had competition concerns around the Orange–Bouygues deal, in particular its effect on markets where Orange is already considered dominant. One way to satisfy these concerns could be for Orange to sell parts of its infrastructure and spectrum to rivals; for example, the operator is rumored to be in in talks with SFR. Not only would this overcome competition issues, it would also allow Orange’s rivals to more easily meet ARCEP’s coverage requests following the termination of roaming agreements.

Ultimately, regardless of the outcome of the merger talks, ARCEP’s priority must be to encourage operators to invest more in 4G networks to ensure universal coverage in the future.

Appendix

Further reading

Regulatory Scorecard 2016: EU5, TE0007-000971 (January 2016)

“Proceeds from the 700MHz auction in France exceed expectations,” TE0007-000961 (November 2015)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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