French Antitrust Watchdog Gives Green Light to Network Sharing

By Sam Schechner

PARIS--France's antitrust authority Monday gave the green light to cellphone operators sharing some parts of their networks, a decision that could set off dealmaking among the country's four main phone operators as they reel from a brutal price war.

France's independent competition watchdog, the Autorite de la Concurrence, said Monday that it would be open to allowing cellphone operators to share passive cellphone towers, and also full cellular networks in rural areas.

The authority didn't explicitly rule out the sharing of active network equipment, such as so-called "base stations" in urban areas, but said that it would be vigilant about maintaining competition before allowing such deals.

"It's a path that we are opening," said Bruno Lasserre, chairman of the antitrust body. "But it seems completely compatible with maintaining competition in network infrastructure."

The ruling Monday signals a shift in French telecommunications and competition policy. In recent years, independent agencies, such as France's telecom regulator, Arcep, have pushed for more competition--including granting Iliad SA (ILD.FR) the country's fourth mobile-phone license--in order to lower costs for consumers. But now, under a new socialist government, some argue that low prices are hurting a French industrial base that is already reeling from a sputtering economy.

France's phone operators have been hit particularly hard by competition, following the launch just over a year ago of Iliad's Free Mobile, which has so far won nearly 8% of the market with prices as low as 2 euros ($2.6) per month. All of the operators have themselves slashed prices to keep up, leading to profit declines and proposed job cuts at Vivendi SA's (VIV.FR) SFR and Bouygues SA's (EN.FR) Bouygues Telecoms.

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