French 3G licences attract few applicants

The two applications received are from the two largest operators of GSM (Global System for Mobile Communications) networks in the country. France Télécom Mobiles, a subsidiary of state-owned telecommunications operator France Télécom, handed its application in scant hours before the deadline, while SFR, owned by Internet, media and environment conglomerate Vivendi Universal, filed its application Tuesday. It said more than 300 staff had collaborated on the 32,000-page submission.

Earlier this month, France's third GSM operator, Bouygues Telecom, ruled itself out of the running for a licence, as did a consortium consisting of utility company Suez Lyonnaise des Eaux and the Spanish network operator Telefónica. With no other major bidders on the horizon, the French government stands to lose out on a substantial proportion of the $US20 billion in license fees that it hoped to raise -- money which has already been promised to the treasury to fund old-age pensions.

The slackening of interest in the French auctions may also be reverberated in Australia. It is widely believed Australia's 3G auction - to be held in the first half of this year -- is unlikely to yield anything near the $2.6 billion that the government is hoping for. One telco industry analyst, Paul Budde, has suggested that $1 billion is a more realistic figure. Cable & Wireless Optus has echoed this belief. Company CEO Chris Anderson at last year's half yearly results announcement issued a warning to the government that it would not be paying "silly prices" for 3G licences.

Although for the moment the number of French licences exceeds the number of applicants, France Télécom and Vivendi are still not guaranteed a licence, as the French have chosen to award their licences through a "beauty contest" rather than an auction.

The licensing procedure will not be affected by the small number of applications received, according to Ingrid Violet-Appenzeller, a spokeswoman for the Authorité de Régulation des Télécommunications (ART), the French telecommunications regulator. She said the authority had sought a legal opinion on the matter.

"Nevertheless, a market structured around just two operators cannot be permitted in the long term. In order to encourage the development of true competition, as required by both European Union and French law, the authority considers it necessary that further license applications be sought," Violet-Appenzeller wrote in an e-mail.

The authority will study the applications and recommend to the government which companies should receive licenses before the end of May. The Minister of Telecommunications is then expected to deliver the final operating licenses to successful candidates by the end of June.

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