The Commission is concerned that maintaining SMS termination rates at a level not observed in competitive markets prevents alternative messaging services to develop thus hindering competition in the medium- to long-term. This could ultimately reduce end-users benefits in terms of choice, quality and price. The in depth investigation by the European Commission was triggered by a notification of a regulatory draft measure under Article 7(3) of the Framework Directive and will last for two months.
Background
SMS termination rates are paid at wholesale level by the operator receiving a SMS text message to the operator sending the text message and could ultimately be passed on to mobile phone subscribers. Despite the wide-spread use of smart phones in the French market and frequent usage of other messaging services as an alternative to SMS, ARCEP considers that the market for SMS termination is not competitive for the third consecutive review period, and requires regulation. The Commission is of the view that the proposed market analysis has not been carried out in accordance with competition law principles. Therefore, the Commission will investigate ARCEP's proposal more in depth to determine if the SMS termination market, which is not regulated in 25 out of 28 Member States, does indeed need regulatory intervention in France.
The Commission now has two months to discuss the case with ARCEP, in close cooperation with the Body of European Regulators (BEREC), to make it compliant with EU law. The Commission will also consider observations from third parties. The Commission may, at the end of the investigation period, either lift its reservations or request ARCEP to withdraw the proposed measure.