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September 07, 2011

French Court Says Wireless Auctions to Proceed
By Peter Bernstein
Senior Editor

France's Conseil d'Etat, France's highest administrative court, rejected a bid by broadband service provider Iliad to block the French government's September 15 first round of auctions for fourth-generation mobile licenses. The caveat on the action was that while the auction can proceed the court indicated it will rule on the on the merits of Illiad’s arguments about the auctions being unfair in the coming months. A favorable ruling could halt or alter the process.

Iliad had argued that a requirement that operators pay upfront for licenses favored larger companies, and stated that operators should to allowed to pay in installments. However, the court issued a statement on September 7 that found that Iliad had not proved that it would be damaged irreparably if the process went ahead.

The auctions represent and inflection point in the evolution of Europe’s third-largest wireless market. With the ability to provide nationwide 4G services seen as critical to commercial success, as France, like the rest of the world, is seeing explosive growth in smartphones and tablets that thrive on next generation bandwidth and speeds, the freeing of spectrum for competitors to established players like France Telecom and Vivendi SFR (which on April 3, 2011 announced that it was acquiring a 44 percent stake in SFR (News - Alert) from Vodafone for €7.75bn) to create a foothold on a relatively even playing field is seen as key to the development of a competitive market.

 France Telecom (News - Alert), SFR, Bouygues and Free will bid on a first batch of 4G licenses on September 15 and then a second bundle of better frequencies on November 15. Smaller operators like Bouygues and Iliad feel that superior financial strength would give established players an unfair ability to dominate the auction process. This is why they advocated an installment plan and why they have also asked the government to cap on how much spectrum any one company could purchase.

The French government aims to make at least €2.5 billion from the 4G auction, but based on the history of auctions around the world in the past this could be, and the French government buffeted by the continuing European economic crisis obviously hopes will be, a conservative estimate.

How all of this plays out over the long-run will be interesting. In the U.S., for example, despite a series of auctions dating back decades, ultimately the strongest financial organizations have prevailed which is one of the reasons the U.S. Department of Justice recently filed a lawsuit to prevent AT&T (News - Alert) from taking over Deutche Telekom’s T-Moible USA assets on antitrust grounds. The September bids are sure to be a popular indicator of the tactics bidders will employ throughout the process and the value of 4G, especially as a prelude to the November auctions.

The 4G Wireless Evolution Conference will be collocated with ITEXPO (News - Alert) West, the world’s premier IP communications event, to be held Sept. 13-15 at the Austin Convention Center in Austin, TX. Now in its third year, 4GWE has become the industry's premier gathering place for Mobile Network Operators, fixed carriers, handset manufacturers, mobile internet device manufacturers, application providers, the enterprise, and venture capitalists.  Don’t wait. Register now

Stay in touch with everything happening at ITEXPO… follow us on Twitter.

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent (News - Alert), Telcordia, HP, Siemens, Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.

Edited by Rich Steeves


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