ARCEP places the wholesale markets for SMS termination under surveillance

The wholesale market for SMS termination is a structural monopoly. The regulation of this market is a key element for maintaining a decent level of competition between telecom operators in France (especially the regulation of the price paid by an operator when one of its client sends a SMS to a client of another operator).It is precisely this regulation which allowed operators to offer more innovative and attractive packages to their clients rendering the service interoperable, universal and available.

Fearing a regression of the level of services for consumers on the wholesale market for SMS termination, the French agency in charge of regulating telecommunications and postal services (ARCEP) notified the European Commission the 28th of October 2014 a draft proposal for a market analysis on the SMS termination market and proposed to freeze the actual regulation of the market for three years.

On November 28th, the European Commission asked the ARCEP for complementary justifications. In its response, the ARCEP emphasized the benefits for competition, consumer and companies of the interconnection for an open and interoperable service such as SMS.

A dialogue started between the ARCEP and the European Commission. However no consensus was found on the competition threats or the regulatory action to prevent them despite the requirement to submit a draft decision within two months resulting from article 7 of the 2002/21/CE framework directive of the European Parliament and the Council from March 7th 2002. The ARCEP then decided to withdraw its draft decision so as to continue the dialogue with the European Commission in order to determine the actions necessary to ensure the efficient regulation of the wholesale markets for SMS termination in France.

Nevertheless, ARCEP announced that it will monitor closely at the evolution of the wholesale SMS termination market in in France, as well as the potential repercussions on the details market. The ARCEP underlines the importance of professional use of SMS, notably the push SMS used to send clients service notification (transport confirmation booking, medical appointment, secured payment).

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