Europe : The process for the allocation of the 4th 3G licence in France was officially launched on 8 March. Candidates have until 31 July to submit their application. The cost of the 4th licence is the same as for the 3 others: one-off €619 million + 1% of the 3G service turnover every year. The coverage conditions are also unchanged.

Inset is Vincent Poulbere, Senior Analyst, Ovum who wrote this article .

The new entrant will have to cover a minimum of 25% of the French population two years after the licence allocation, and 80% after eight years. Comment: The launch of the allocation procedure of the remaining 3G licence in France brings nothing new in the debate, as the government and the regulator have finally confirmed that the conditions of the licence should be the same as for the three other operators. Several companies had indicated their interest last year, such as ISP Free and cable operator Noos-Numericable, but had warned that the licence conditions should be relaxed for the new entrant.

So as things stand today it is unlikely that there will be any serious applications on the regulator's desk by 31 July, though of course we cannot exclude anything. So who could take the financial risk of setting up a new mobile operator in France? Building a positive business case for a new entrant in the slowly-growing French market is extremely challenging. In theory the new entrant could lower its infrastructure costs by deploying larger cells at 900 MHz, but UMTS900 handsets won't be widely available any time soon. In France, we already know Free and Noos Numericable are interested, but they'd need financial backing.

We can also think of foreign operators that want to expand their international footprint - Telefonica or Deutsche Telekom for instance, and maybe TeliaSonera which is launching the fourth 3G Spanish operator. However, for these, there may be an alternative and more attractive option - if Bouygues finally decides to sell Bouygues Telecom, the third French operator, which it so far has denied any plans to do so. One last element may change the deal. France will elect a new president and government soon, following elections due in May and June. There will be very little time to change anything before 31 July, but if there is no candidate for the 3G licence at the first round in July, it is not impossible that the new government might reconsider the whole procedure for a second round.

---

About: This article is an extract taken from Ovum's EuroView Daily Comment service. Providing our expert's views and opinion of the important news and events in European IT & Telecoms, this daily email bulletin is a component of Ovum's EuroView advisory service.