According to an article in Les Echos (and assuming my translation skills are up to the job) the French government has decided to split the soon-to-be-allocated 3G spectrum into three lots and award it in two stages, the first to a new operator and later the second and third lots to existing operators. Nominations are invited by mid-March for the new licence holder, with spectrum to be awarded in the summer. The spectrum reserved for existing licence holders will be allocated by the end of the year.
The splitting of the spectrum block removes one of the main barriers to a new entrant, the cost. In 2007 there were no bidders for the full block of spectrum. Although EUR619 million seems cheap by the standards of 1999/2000 it seems that it has discouraged some would-be bidders. The price for the smaller blocks should be around EUR200 million each. A bargain, but there will be coverage obligations.
The French government is also clearly weighing up its options with regard to the allocation of the additional spectrum to the existing operators. It may, for instance, mandate wholesale access for MVNOs, which would further encourage competition. Or it may include tougher coverage obligations. The option of awarding by auction, rather than beauty contest, has not been ruled out.
Front-runner for the new licence is CLEC Free which has caused waves in the French telecoms market with its discounting approach, with Les Echos particularly identifying its EUR29.99/month triple play (or "le triple play") as an indicator that it will be a catalyst of increasing competition in the market.
I've recently been putting together European mobile broadband forecasts and France is one of the more difficult markets to call. It's certainly underdeveloped at the moment due to a lack of competition and high prices. The question is, will it follow the same growth trajectory as other comparable markets in Europe. My view is that eventually it will. The addition of a fourth greenfield 3G operator will certainly help, as will the arrival of mobile broadband MVNOs and more stringent coverage obligations. By 2012 this will start to have an impact.
In other European markets the presence of a new 3G operator (usually Hutchison 3G) has tended to spur competition greatly. The one exception is Spain, where Yoigo has yet to make much headway in mobile broadband. That is mostly a coverage issue. Once it reaches a reasonable proportion of the population I think we can expect Yoigo to pursue this opportunity. If the coverage obligations are strict enough, we're unlikely to see a similar thing occur in France.
A potential stumbling block in France is the strides being made in next generation access. However, my assumption is that mobile broadband will be predominantly a complementary service, meaning that the impact of NGA rollouts will be modest. Leadership in fibre deployment would not preclude a relatively high mobile broadband penetration. Check out Benoit Felten's Fiberevolution blog for all you could want to know about the latest on NGA.
The main barrier to adoption of mobile broadband in France is high prices caused by lack of bandwidth and lack of competition, both of which are being addressed rapidly by this announcement.