French Regulator Withdraws Mobile Phone Regulation Plan

PARIS -(Dow Jones)- France's telecommunications regulator said Tuesday it is withdrawing a plan aimed at bringing greater competition to the country's mobile-phone market after the European Union said the move isn't justified.

Analysts said the E.U.'s rejection of the plan was a setback for the French regulator and competition in the market.

The regulator wanted permission to force France's three mobile operators - France Telecom's (FTE) Orange, Vivendi Universal's (V) SFR, and Bougues SA (12050.FR) Bouygues Telecom - to open open their networks to lower-cost competitors known as Mobile Virtual Network Operators.

The regulator, formerly know as ART but now as ARCEP, said in March that the three operators exercised an effective oligopoly in the mobile phone wholesale market.

It asked the European Commission - which had approved similar regulatory measures in Ireland - to approve its plans to force the operators to open their networks to MVNOs, which rent minutes wholesale and then sell services to consumers, undercutting the network operators' own offers.

The E.U. said Monday that recent contracts signed between network operators and MVNOs, such as France Telecom and Tele2 (TLTOB), may have changed the situation. It recommended Monday that the French regulator continue to monitor France's mobile market. The regulator said Tuesday it would publish quarterly reports on the matter.

Analysts at independent research and consulting firm Ovum said the decision could have a ripple effect through the broader European market.

"This is an important setback for the French regulator and the government, which had put much effort into developing MVNOs to increase competition in the French mobile market," said Ovum's Vincent Poulbere and Carrie Pawsey.

"There are lessons to be learned by other regulators considering enforcing mandated access for MVNOs as a means of inceasing competition in their markets. Just because the EC backed Ireland, it doesn't mean it would back every regulator's decision in mandating MVNO access," said Poulbere and Pawsey.

-By Brian Lagrotteria, Dow Jones Newswires; +33 (0)1 40 17 17 55; brian.lagrotteria@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 31st May 2005