France is preparing to follow Germany's lead and mount a super-auction covering multiple spectrum bands, and should launch the process within a few weeks. Regulator Arcep aims to kick off proceedings before the close of May, aiming to raise about €2bn.
Arcep told journalists that the conditions for the auction are currently being finalized and then prices will be defined. "If all goes well, we could imagine that the procedure will be launched by early May and spectrum should be awarded by the end of 2011," said Arcep president Jean-Ludovic Silicani.
As in other countries such as the UK, smaller players are concerned that they will be squeezed out of the 4G map if caps are not introduced on how much spectrum large operators can purchase. Vivendi SFR, Bouygues and Iliad are all lobbying the government to impose caps, as in the UK and Spain, to prevent France Telecom Orange gaining a huge spectrum lead.
"Our nightmare scenario would be that France Telecom puts big money on the table and buys half of the frequencies," one industry source told Reuters. There is particular concern about the 800MHz licenses, which are good for cost effective rural coverage and will help carriers meet 3G and 4G coverage targets. There will be four allocations, but unless new rules are introduced, Orange could buy two of these, leaving at least one cellco out in the cold (as happened to E-Plus in Germany).
The incumbent, unsurprisingly, has argued in recent filings that the government should take a light touch in regulations such as caps or compulsory spectrum sharing. Arguments over the best way to balance a boost to competition with free market and auction revenue considerations have created bitter divisions between Arcep and the government, which it seems have already delayed the auctions. Arcep is keen to protect smaller players, even if that reduces the value Orange places on licenses.
As Hutchison 3 has argued in the UK, the smaller French cellcos believe that, if they cannot get sufficient spectrum, they will end up with inferior services and will be pushed out of the market.
Most vulnerable is Iliad, which only recently acquired France's last 3G license and is adopting a policy of undercutting its larger rivals under its Free brand.
Original article: French cellcos demand spectrum limits on Orange