Carole Arribes Robert Follie November 27 2002 Industry Update Hogan Lovells | Tech, Data, Telecoms & Media - France Carole Arribes, Robert Follie Tech, Data, Telecoms & Media Orange in Tariff Dispute Obstacles to Masts Removed 3G Application Approved National Mobile Coverage Agreement Universal Service Financing Challenged Orange in Tariff Dispute Bouygues Telecom, the third largest mobile operator in France, has started proceedings before the French Competition Council alleging abuse of a dominant position by Orange. On September 15 2002 Orange implemented a new charging system. However, for customers who opted for the new system, Orange introduced extra charges for mobile calls made from its network to the other French mobile operators' networks (Bouygues Telecom and SFR). These extra charges amount to €0.12 per minute, or €0.62 per minute for calls made with prepaid phone cards. Bouygues Telecom claims that the introduction of the extra charges is an abuse by Orange of its dominant position, and that there is no economic justification for the extra charges. In view of Orange's already strong position (nearly 50% of the market), Bouygues Télécom feels that the extra charges will further marginalize the other two mobile operators on the French market. Bouygues Telecom has asked the French Competition Council to order Orange to suspend the application of extra charges for calls to other mobile networks.Obstacles to Masts RemovedThe French Administrative Supreme Court has annulled the decision of several French mayors who had forbidden the installation of mobile phone masts in areas located near day-care centres, schools, retirement homes or even houses. The mayors refused to authorize the installation of mobile phone masts because of perceived public health risks, basing their decisions on an expert's report published in January 2001. However, the Supreme Court overturned their interpretation of the report. It considered that the report recommended the removal of the masts simply to reassure the population, as no real health risks had been proved. Therefore, the Supreme Court found that the measures taken by the mayors were at best futile, at worst counter-productive.As a result of this decision, French local authorities can no longer forbid the installation of mobile phone masts for public health reasons. 3G Application Approved On September 27 2002 the French Telecommunications Regulatory Authority announced that it had approved the third generation application filed by Bouygues Telecom on May 15 2002. The Telecommunications Ministry will issue Bouygues Telecom's 3G licence shortly.Bouygues Telecom has announced that it will not implement its 3G services until the end of 2004. It recently decided to launch i-mode services by the end of December 2002, and has signed a 10-year licensing agreement with NTT DoCoMo for the right to use this technology in France. National Mobile Coverage AgreementPressure from the regulatory authority has led the three French mobile operators (Bouygues Telecom, SFR and Orange) to conclude an agreement to achieve national mobile coverage. This agreement sets out the option to share the totality of each mobile operator's network, or certain elements of each network only. The first option, equivalent to local roaming, is preferred. It would be implemented in 'white areas', that is, areas where there are no mobile operators and which are large enough to justify the application of the roaming solution (instead of the simple extension of a nearby network). On September 26 2002 a bill was filed in the French Senate which favoured local roaming and specified amendments to the French Telecommunications Code in order to implement this solution, and thus achieve mobile coverage in all French regions.The minister of industry, Nicole Fontaine, met the three mobile operators on October 10. They undertook to (i) determine the location of the first 200 shared radio towers and the three areas for local roaming trials by October 24, and (ii) start building infrastructure in white areas before the end of November 2002, after consulting the competent local authorities.The government has promised a contribution of €88 million toward the financing of radio towers. Universal Service Financing Challenged France Télécom's competitors are contesting the level of their contributions to the financing of universal service (about 27.6% of €297 million in 2002). Although the French system, based on a decree of May 13 1997, was overturned by the European Court of Justice, the decree is still in force. New entrants are now suing the government before the French Administrative Supreme Court, hoping to have the decree cancelled and a new universal service financing system implemented. For further information on this topic please contact Robert Follie or Carole Arribes at Lovells by telephone (+33 1 53 67 47 47) or by fax (+33 1 53 67 47 48) or by email ([email protected] or [email protected]).