Bouygues Telecom has announced that it will not apply for a French 3G mobile license.
French mobile operator Bouygues Telecom yesterday announced it would not apply for a E4.95 billion 3G license in its home market, following in the footsteps of Suez Lyonnaise and Telefonica, who pulled out of the process last week. Bouygues has rather more to lose, though. It is the only existing mobile operator in Europe apart from Sweden’s Telia not to secure a 3G license.
Telia has ensured 3G access by teaming up with rival Netcom to build a network, sharing costs and possibly ending up better off than if it had won a license. But out of the two remaining French operators, SFR, controlled by Vivendi, has already said it will not give mobile virtual network operators (MVNOs) access to its network. Market leader France Telecom does not look likely to do so either. Generally, new entrants and small operators with little market share (such as One2One in the UK, which rents capacity to Virgin) deal with MVNOs. There’s little incentive for firms that have plenty of cash and dominate the market to allow Bouygues into a joint venture.
Bouygues is not in as much trouble as all this implies, though. The French government is unlikely to modify the awards process it planned last year – but when it’s over there will be two unsold licenses. The government may later sell them at a more realistic market price, giving Bouygues a major advantage over its rivals. If not, Bouygues could still buy them for the current asking price when market sentiments have improved, borrowing money is cheaper and finding partners to share license costs is easier.
And maybe Bouygues won’t lose that much from not going 3G anyway. After all, certain operators in the US are hinting that they will do without 3G licenses, instead going for GPRS and particularly EDGE. These are fast mobile Internet solutions that use the same spectrum as conventional 2G phones. Whilst these solutions cannot match 3G in terms of bandwidth, many feel that they will meet consumer and businesses needs for high-speed wireless applications.
