Updated: Sept. 19, 2012 (Initial publication: Dec. 15, 2010)

Sectorial Analysis

II-2.10: The French telecommunications Regulator publishes a decision relating to the wholesale market of mobile voice termination rates

by Alex Raiffe


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The Autorité de régulation des communications électroniques et des postes (ARCEP — French Telecommunications and Postal Regulatory Authority) published decision 2010-1149 on November 2, 2010, by which it details its plans for regulating the wholesale market for mobile voice termination rates over the period 2011-2013.



Fiche thématique (télécommunications) : L'ARCEP publie une décision relative à la tarification sur le marché de gros de terminaisons d'appel mobile

L'Autorité de régulation des communications électroniques et des postes (ARCEP) a publié le 2 novembre 2010 sa décision n°2010-1149 dans laquelle elle explicite son projet de régulation du marché de gros des terminaisons d'appel mobile pour la période 2011-2013.



Thematischer Bericht (Telekom): die ARCEP, die französische Post- und Telekommunkationsaufsichtsbehörde, veröffentlicht eine Anordnung über Mobilfunkterminierungsentgelte.

Die Autorité de régulation des communications électroniques et des postes (ARCEP, die französische Post- und Telekommunikationsaufsichtsbehörde), hat am 2. November 2010 eine Anordnung n°2010-1149 veröffentlicht, in der sie erklärkt ihre  Entscheidung, zwischen 2011 und 2013 die Mobilfunkterminierungsentgelte zu regulieren.




Informe Temático (Telecomunicaciones): El regulador francés de telecomunicaciones publica una decisión relacionada con el mercado de mayoreo y sus tarifas de terminación de llamadas vocales en redes móviles.

La Autorité de régulation des Communications électroniques et des postes (ARCEP – la Autoridad francesa de regulación postal y de telecomunicaciones publicó su decisión 2010-1149 el 2 de noviembre del 2010, en el que detalla sus planes para regular el las tarifas de terminación de llamadas vocales en redes móviles del mercado de mayoreo durante el periodo 2011-2013.

Relazione tematica (Scommesse): Il regolatore francese in materia di telecomunicazioni ha reso una decisione riguardante il mercato all’ingrosso delle spese per l’uso della rete di telefonia mobile
Il 2 novembre 2010, l’Autorité de régulation des communications électroniques et des postes  (ARCEP – l’autorità francese di regolazione in materia telecomunicazioni e poste) ha pubblicato una decisione 2010-1149 nella quale dettaglia i suoi progetti per regolare il mercato delle spese per l’uso della rete di telefonia mobile nel futuro periodo tra il 2011 ed il 2013.
主题性报告(电信) : ARCEP(法国邮政电信管理局)公布了一项与大型移动语音终端市场资费相关的决定
Autorité de régulation des communications électroniques et des postes (ARCEP-法国邮政电信管理局) 于2010年11月2日公布了n°2010-1149决定,旨在于详细说明在2011-2013年度内对于大型移动语音终端市场的监管方案。

Other translations forthcoming.


Context and Summary


The publication of the document entitled Décision portant sur la determination des marchés pertinents relatifs à la terminaison d’appel vocal sur les réseaux mobiles français en métropole et outre-mer, la designation d’opérateurs exerçant une influence significative sur ces marchés et les obligations imposées à ce titre pour la période 2011-2013 (Decision relative to the determination of pertinent markets for mobile voice termination rates on French mobile networks in metropolitan France and overseas territories, the designation of operators exercising significant influence on these markets, and the resulting obligations applicable for the period 2011-2013) lays out the ARCEP’s plans for regulating the wholesale mobile termination market over the next three years.
Mobile termination rates are the fee charged by mobile operator A to mobile or landline operator B when one of operator B’s clients calls one of operator A’s clients.
In France, like in much of Europe, operator B pays all costs for terminating the call to operator A, unlike in the United States, for example, where both operators share costs. This means that in France, it is free to receive a call on any telephone, landline or mobile, and the person dialing bears the entire cost of the call.
The ARCEP reiterates in its decision that it is necessary to regulate the wholesale market of termination rates, because each operator has 100% market dominance over its own termination market. Therefore, in the absence of regulation, the operator has no incentive to charge a reasonable price for call termination.
Thereby, the ARCEP fixes the maximum rate that one operator may charge to another for terminating a call.
The ARCEP has adopted a model of cost-oriented rates, meaning that the price charged should be as close as possible to the terminating operator’s actual costs.
However, the exact rate in metropolitan France has not yet been published for the 2011-2013 period. Instead, the decision maintains current rates until July 1st, 2011, after which the rates are expected to be reduced.
The document is also interesting in that it provides a complete topography of the French mobile market, both in metropolitan France and in its overseas territories, the latter being subject to very different constraints and realities than the European market.
Also, it remains to be seen whether the ARCEP will prolong its asymmetrical tariff structure after July 1st, 2011. Indeed, currently Orange and SFR, the two larger mobile telephone operators in France may charge a maximum of 0,03 € per minute, and the smaller operator, Bouygues Telecom may charge a maximum of 0,034 € per minute. This asymmetrical tariff structure is said to be justified by the ARCEP because of Bouygues’ higher costs resulting from its smaller client base. Orange and SFR both contest this asymmetry and have requested that the ARCEP put an end to this practice.

Brief commentary

The ARCEP’s document provides a wealth of information about the structure and particularities of mobile telephone markets and regulation in France, both in France’s European territory and its overseas territories, through a detailed analysis of these various mobile markets and each operator’s costs and specific operating context.

However, we must note that the term habitually employed to describe the sector of wholesale mobile termination rates is “market”, whereas this sector hardly corresponds to the definition of “market” at all: indeed, on a market, one can expect that the interaction between supply and demand will produce a fair-market price. In the sector of mobile termination rates, there is no competition: each operator has a 100% market share over the rates it charges to its competitors to route an incoming call to its subscriber.

Therefore, Regulation must intervene by fixing tariffs in order to simulate a market, by setting the price that the hypothetical market would have fixed. This is performed asymmetrically, by according the smallest operator with the most favorable tariff in order to compensate its weaker market strength. In this way, asymmetrical regulation of the upstream sector (the wholesale market for call termination) allows for symmetrical regulation of the downstream market (retail to consumers). In other words, such asymmetrical regulation of wholesale tariffs is the necessary predicate for competition based on price and services on the retail market.

The decision to provide operators with tariff predictability over a period of three years corresponds to the ARCEP’s habitual methods, since this is the third three-year regulatory scheme published by this authority.

However, annex D of the ARCEP’s decision shows that one of its major regulatory goals for this decision is to lower landline-to-mobile costs for consumers, which remain expensive and are relatively little-used by consumers because of their cost. The ARCEP believes that the high cost of such calls is attributable to the overly-high rate of mobile termination rates, and hopes that its third regulatory package for 2011-2013 will remedy this problem and lower the cost for consumers of landline-to-mobile calls.

Furthermore, the ARCEP attributes the fact that mobile telephone offers include more ‘free’ services and are more and more ‘unlimited’ to its previous regulatory package. It therefore considers that its previous regulatory package was a success.

Nevertheless, prices of mobile telephone subscriptions in France are amongst the most expensive in Europe for equivalent services, a situation that contrasts with the fact that France has amongst the least-expensive high-speed Internet subscription prices in the whole world.

This situation leaves us to wonder if the ARCEP’s regulation of mobile telephony, mainly performed by regulation of mobile termination rates, is sufficient in increasing the competition necessary to lower prices and increase services for consumers. Indeed, the ARCEP itself notes that mobile operators have a strong incentive to encourage their subscribers to call ‘within-network’, because this avoids having to pay a mobile termination fee to another operator.

Therefore, one may wonder whether in this given situation asymmetrical regulation is sufficient to improve competition on the market. If this is true, the arrival in 2012 of a fourth mobile telephone operator on the French Market (Free Telecom) should lower end-consumer prices and increase services simply by the arrival of a new competitor, and would have more immediate, beneficial results for consumers than the ARCEP’s regulation of call termination rates.

Nonetheless, sector-specific regulation of the telecommunications sector, and notably of mobile termination rates is completely justified. Indeed, the French Competition Authority recently condemned French banks to pay record fines for ‘colluding’ on fees paid to one another for check image processing (Decision of the Autorité de la Concurrence, September 20, 2010, Decision 10-D-28). Check processing fees are conceptually analogous to mobile termination rates: the emitter of the call or check pays the processor of the call or check. However, unlike mobile termination rates, the banks agreed on a tariff, which was considered to be collusion by the French Competition Authority, even though this is arguably beneficial to consumers. Therefore, it is positive that such tariffs be regulated by a sector-specific Regulatory Authority, since it is beneficial to consumers that the rate be low, and cannot be considered as collusive by the Competition Authority. Indeed, markets where one operator has a monopoly over its own termination market present structural market failure, and require ex ante regulation of tariffs. In the mobile telephony market, simply, it is desireable that the ARCEP’s ex ante wholesale-tariff regulation be enhanced by increased competition on the ex post retail market.

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