French MVNOs looking for 3G market shake-up

Posted by Chris Garland Wednesday, January 28th, 2009

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Orange France, Bouygues, and SFR will no doubt dismiss the suggestion that France’s 3G market is an “oligopoly”, but the claim from little-known MVNO collective Libre Choix, arguably bares some truth.

France’s fourth 3G license has faced almost continual delays over the last two years, as new obstacles have been thrown down.

Despite a crowded market of nine MVNOs, these have tended to split each others’ share of revenues, comprising less than 5% of the total of the French mobile market, otherwise carved up by the three incumbents.

According to Libre Choix, the fourth license holder should be a new entrant which would open up a market that is presently “locked by the oligopoly of the three incumbents.”

The collective has said it believes merely splitting the available frequency blocks among existing incumbents would not materially help stimulate growth in the sector.

Since most French MVNOs concentrate on the lower-end prepaid segment, it would be a significant move toward opening data-heavy 3G services to prepaid subscribers who traditionally have much lower ARPU levels, were an MVNO to gain the country’s fourth 3G license,

Going back to November 2007, France’s economic ministry said it was considering modifying the terms for the country’s fourth 3G license, including the possibility of allowing the winner to make payments over a period of several years, instead of a one-off up front payment – an option that had been requested by ISP Iliad (Free) as part of its unsuccessful bid for the license.

In October 2008, ARCEP rejected Iliad’s bid on the grounds that it had not met financial conditions, after failing to settle the €619 million (US$876 million) fee for the license in one payment, as stated in the license conditions.

It remains to be seen whether telecoms regulator ARCEP will offer the 3G license to an MVNO, or whether this will remain split between Orange, Bouygues, and SFR, but the fact that the economic ministry is planning on reserving at least one lot of the proposed three 5MHz lots is a good indication that it is keen to see a new player enter the three-way fray that exists currently.