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PRO-INVESTMENT REGULATION

The Conseil d'Etat validates Arcep's action on network sharing between mobile operators, and the roaming agreement between Free Mobile and Orange 

Paris, 15 December 2017

Since it was signed in 2012, the roaming agreement between Free Mobile and Orange has been a heated topic of debate in the telecoms sector. Designed to enable a new operator to enter the market by giving it access to existing infrastructure, had it continued for too long, this roaming could have lowered the hosted operator's incentive to invest in deploying its own infrastructure.

Following a proactive move from Arcep, in June 2016 Free Mobile and Orange agreed on a timetable for phasing out this agreement. This trajectory was then validated by Arcep. In a decision dated 13 December 2017, referred by Bouygues Telecom and Free Mobile, France's highest administrative court, the Conseil d'Etat confirmed Arcep's analyses.

Challenging the roaming agreement in light of Arcep's guidelines

The Act of 6 August 2015 on Growth, Business and Equal economic opportunity invested Arcep with a new power, namely the ability to request that operators amend their mobile network sharing agreements when it proved necessary to achieve Arcep's regulatory objectives (1). After the law came into effect, Arcep began its work on mobile network sharing: in May 2016 it adopted guidelines on the matter, and invited mobile operators to submit the changes they planned to make to their existing contracts. In June 2016, Bouygues Telecom and SFR (2), on the one hand, and Orange and Free Mobile (3) on the other, sent Arcep the amendments to their mobile network sharing agreements. After having examined these amended contracts, Arcep concluded that it would not be required to employ its newfound power with respect to these operators.

Three applications were then filed with the Conseil d'Etat in summer 2016

First, Bouygues Telecom lodged an appeal against:

- the Arcep guidelines published on 25 May 2016,

- and the Arcep decision of 30 June 2016, not to request an amendment of the roaming agreement between Free Mobile and Orange.

Second, the guidelines of 25 May 2016 were also challenged by Free Mobile.

The Conseil d'Etat rejected all of the applications filed by Bouygues Telecom and Free Mobile, thereby upholding Arcep's actions

Concerning the Arcep decision not to request an amendment of the roaming agreement between Free Mobile and Orange (made public in its Press release of 30 June 2016), the Conseil d'Etat validated the Authority's analysis of the situation. In particular, it stated that, "Free Mobile is meeting its network rollout obligations, under [Arcep's] supervision; the technical and economic terms and conditions of the roaming agreement between the companies Free Mobile and Orange, in its amended version of 15 June 2016, do not pertain to 4G, which represents a sizeable cost for Free Mobile, involving differences in coverage and quality of service which are detrimental to the company, and which give this company an incentive to deploy its own network; that this agreement provides for an end to roaming through a gradual decrease in the maximum uplink and downlink speeds available to Free Mobile customers using the Orange network, starting in January 2017 and up to the end of 2020". It concludes, "that, under these conditions […] it is not clear from the documents provided that, as of 30 June 2016 […], the implementation of the roaming agreement […] had anti-competitive effects on the mobile telephony market, nor that the decision being challenged, in its authorisation to extend roaming privileges until at least 2020, gives Free Mobile an undue competitive advantage".

Regarding the guidelines that Arcep adopted in May 2016, the Conseil d'Etat ruled that they could be challenged should their purpose be to "have a significant influence over the behaviour of the entities they target". The Conseil d'Etat therefore applied its case law relating to "soft law". As to the merits, it confirmed the soundness of Arcep's analysis, and particularly the principle whereby, "roaming can only continue in a lasting fashion in a limited portion of the country, which corresponds to the least densely populated areas where there is very little incentive to invest".

Arcep welcomes this decision which confirms its approach to and analysis of the mobile network sharing issue.

_____________
1) Article L. 34-8-1-1 of the French Postal and Electronic Communications Code.
2) In January 2014, Bouygues Telecom and SFR signed a contract to share their 2G/3G/4G networks in a portion of the country, and for Bouygues Telecom to provide SFR with 4G roaming access temporarily.
3) In March 2011, Orange and Free mobile signed a 2G/3G roaming agreement for the whole of France.



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