The French competition authority Conseil de la concurrence (equivalent of the FTC in the US) wants the government to ease regulations governing mobile virtual network operators (MVNOs) to increase competition in the mobile telephony market, which is dominated by SFR, Orange and Bouygues Telecom. The competition authority recently issued a report in which it noted that MVNOs play a significant role in fostering more competition. Eric Besson, minister in charge of new technology and communications in the Sarkozy cabinet, says that, based on this report, he will seek to relax the regulations under which MVNOs operate in France, for example, allowing MVNOs greater independence from the operators that host them and getting them better access to mobile networks at more competitive prices.
Eric Besson adds: “It is necessary to allow the MVNO to play a role in the competition for the retail market in mobile telephony, and to be able to compete with the retail offerings of network operators. There is no reason French consumers should be deprived of the diversity of new services brought by mobile virtual operators.” According to the report, MVNOs have experienced difficulty in increasing their market share in France because of onerous conditions: contracts mixing exclusive clauses, duration of contracts and no ability to renegotiate them, limitations on investments by MVNOs, price conditions forced upon the MVNO by the hosting operator to ensure the MVNO does not compete, and restrictions on new service offerings.
The first MVNOs launched in France in 2004 but today, they represent only 5% of the mobile market which is far below the 15 to 25% in the UK, Germany or the Netherlands.
In another release, Christine Lagarde, Minister of Finance, asserted that the competitive conditions of the mobile telephony market in France could be improved to give low-income households better control of their telephony bills. Lagarde says that the personal budget for mobile communications in France is about 55 Euros per month, but “consumers cannot lower their monthly mobile phone bill if they want; they just have the choice to call more for the same price.”
Eric Besson says he will adopt the conclusions of the competition authority in his “Digital plan for 2012”. The plan, which had been scheduled for release on 31 July 2008, contains proposed measures to improve and develop information technology infrastructures and usage in France. The Digital Plan will now be presented to Prime Minster François Fillon in late August for approval.
MVNO is a tough business
MVNOs have had a rough time in Europe and the US with many companies going out of business, merging or getting acquired. Recently, Helio (an MVNO joint venture of SK Telecom and EarthLink) was acquired by Virgin Mobile for a mere $39 million. EarthLink and SK Telecom had invested close to $500 million in Helio, which after three years, has only 170,000 subscribers.
However, Blyk, an MVNO with a unique business model, launched in the UK last year and is enjoying considerable success. Blyk gives away free voice minutes and text messages, but in exchange, subscribers have to view up to six ads (via SMS or MMS) per day. The service is open only to persons between 16 and 24 years of age. Read up on why Blyk’s MVNO model is working well so far (hint: it’s because they’re not really a telecom operator).
It will be interesting to see if Besson’s proposals result in lower mobile telephony prices and better service.
- – - – - – - – - – - -
About the author
Alain Baritault is the Editor in Chief and co-founder of Cités Numériques, a French publication for elected officials and technology decision makers in the French municipalities, territories and the national government. He has been a journalist, analyst and columnist based in Silicon Valley for the past 20 years covering technology and business for French magazines and newspapers as 01 Informatique, La Tribune, Sciences et Vie Micro and l’Informaticien. Along with his press activities, he has been an analyst and consultant for French companies, organizations and local governments focused on emerging technologies as wireless technologies and all technologies related to mobility. He is also following the emerging ultra high speed broadband market in France. Previously Alain was Editor of several French computer magazines as Decision Informatique and Temps Micro. He has an MBA and post-graduate degree (DEA) from University Paris 9 Dauphine.
No comments yet.