Update 21 Nov 2005: Without awaiting the final outcome of the public consultation, ARCEP has issued two dispute resolution decisions, setting wholesale SMS termination charges at 4,3 eurocents/SMS, retroactive to 1 July 2005.

The decisions were issued on 17 Nov 2005, upon application of Bouygues Télécom, imposing the reduction in SMS call termination charges on Orange France and SFR.

The French regulatory authority ARCEP has followed up on its announcement of mid-2004 (see the relevant T-REGS news item) and has conducted a market analysis of "wholesale SMS termination".

Today, the ARCEP announced that its provisional conclusion is that single-network markets for wholesale SMS termination should be defined as being susceptible to ex-ante regulation (going beyond the list of 18 markets contained in the European Commission's Recommendation, and subject to a veto power of the European Commission, but the matter has already been extensively discussed within the European Regulators Group), and that it considers that all three French mobile operators have Significant Market Power for terminating SMS messages on their individual network.

The ARCEP proposes to impose the following regulatory obligations on each mobile operator:

1) obligation to provide access and interconnection;

2) non-discrimination in the supply of wholesale SMS termination;

3) obligation of transparency, including publication of the main wholesale charges;

4) price control, in the form of an initial wholesale charge cap of 2,5 eurocents (which includes a contribution to common costs but an exclusion of a contribution to commercialization costs) per SMS message termination, from the date of entry into force of the decision;

5) supporting cost-accounting and accounting separation obligations.

T-REGS Note 1: Interestingly, the ARCEP's market analysis document discusses risks of SMS spam, and suggests that maintaining the wholesale charge cap at or above 1 eurocent per minute in the long run would preclude any risks of SMS spam, and would be compatible with the other regulatory objectives the regulatory authority is obliged to pursue by law (notably consumer protection and network security). It is also worth noting that the cost calculation which was contained in the mid-2004 document is not repeated in this formal market analysis consultation.

T-REGS Note 2: The ARCEP market analysis document reveals that the current wholesale charge applied between French mobile operators for SMS termination is 5,336 eurocents, unchanged since the launch of SMS interoperability in 1999.

The full text (in French only) of the ARCEP's market analysis consultation document (116 pages) can be accessed by clicking here. 

The deadline for responding to this consultation is 25 Nov 2005.

For an in-depth discussion, please contact Yves Blondeel.