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French antitrust agency wants to limit Free/Orange roaming

Deal must be for limited time only, says the authority, as it reviews whether the new entrant has unbalanced the mobile market


Published: 13 March, 2013

READ MORE: Spectrum | France | MVNO | Regulator | UMTS

The MVNO and roaming deal between French incumbent Orange, and the country's disruptive new entrant Free Mobile, has been highly controversial since Free launched its low cost 3G services and sparked a price war. The other cellcos, SFR and Bouygues, have hit out at Orange for enabling the unwelcome new competition. And now the antitrust agency, the Autorite de la Concurrence, has joined their criticism.

Free has its own 3G spectrum, but while it builds out its network, it relies on Orange's systems to fill in the gaps. This has provided welcome revenue for the leading operator, as prices have fallen in the mobile sector, but has aroused anger at the other two players. The government has also questioned whether Free is meeting the build-out targets in its licence.

Now the competition authority reiterates that Free should see its national roaming agreement with Orange brought to an end within the time limits already agreed, with no extensions. It insists that the roaming deal should be merely a stopgap to enable the new entrant to offer services even before its own network is complete. The current arrangement last until 2018, with a break clause at 2016. Free is said to be paying Orange over €1bn a year, a cost similar to that of rolling out its own network.

The statement from the Autorite came after an investigation into broader issues in the mobile market, including a review of policies on telco M&A or investment/network sharing. The probe also looked into whether roaming deals give new entrants an unfair advantage that could break competition laws and unbalance the market. The three cellcos would argue that Free has done this, with its cut-price, flat rate plans, its free Wi-Fi and its bundling of mobile services with its existing broadband and IPTV offerings.

However, the French regulator has already said that Free's entry has been "an effective instrument for the creation of jobs, growth and improving the country's competitiveness" in the long term, and said it would oppose any merger with a larger player. Free was rumored last year to be considering a merger with SFR.

The roaming issue will also rear its ugly head in 4G. In the French LTE spectrum auction, Free won 2.6GHz spectrum but none of the 800MHz licences considered essential for national coverage. The Autorite said the smallest player as the right to sign a roaming deal with SFR, but it is "not desirable that it is used to compensate for an inadequate frequency allocation strategy". It also conceded that, with regard to 2G roaming, there would be no "economic logic" to Free building a GSM network but a roaming agreement could allow the newcomer to support users with 2G-only devices. Any deal for GSM roaming in place after 2016 should be limited to that dwindling band of consumers, it suggested.

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