The UFC-Que-Choisir reports on competition from operators in France

The consumer association UFC-Que-Choisir has put online a huge report on the prices charged by operators in France. The association will show that the arrival of Free has a lot of good for consumers and is concerned about a potential return to three players.

The UFC-Que-Choisir published a long report on the state of the market for mobile telephony in France since the arrival of Free. And the consumer association did not hide his satisfaction: while in 2010, prices for mobile communications were 25% more expensive in France than in the rest of Europe, in 2014 prices are now half higher than in neighboring countries. UFC-Que-Choisir also wrote in his report that “Free freed consumers.”

To support the facts, UFC-Que-Choisir piled tons of numbers and data. We learn that at the end of last year, nearly 43.9% of subscribers had an offer without commitment. This is twice more than in January 2012 and the trend is expected to increase further in 2014. “The” no commitment “should become the rule in 2014,” writes the UFC-Que-Choisir. Evidence that consumers have not hesitated to go in the competition, 13 million telephone numbers were ported from one operator to another between late 2011 and late 2013.

This upsurge of the subscriber number without commitment is good news. Looking more closely packages with commitment and phone subsidy, UFC-Que-Choisir notes that the term subsidy is a bit overused, especially on entry level phones. UFC-Que-Choisir took three phones (Nokia Lumia 520, Galaxy S4 Mini and iPhone 5S) and compared the prices of phones with and without package with commitment. Not surprisingly, it is more expensive to take a terminal with a fixed 24-month bare terminal with a package without commitment. The additional cost varies between 16% and 50% depending on whether one takes an entry phone or upscale.

These two factors – the decline in package with commitment and decrease the number of subsidized device packages – have drastically reduces the bill of the consumer in recent years. This has decreased on average by 30% over the last four years, from 24.1 euros to 16.9 euros. UFC-Que-Choisir has calculated that in the end, these price drops have allowed the French economy of around 7 billion euros.

Purple curve recorded average prices for each quarter since the end of 2011. In orange, the stock price means such that it would have evolved if Free had not arrived on the market, according to Consumers Union.

As for the possible social impact would have caused this competition, the association cut short alarmist arguments: “Employment in the sector has increased since 2012 and released purchasing power is likely to have created 50,000 jobs in all sectors confused. The impact on public finances is rather beneficial and that the income of operators in perspective in terms of market saturation. ” In fact, and as noted by ZDNet rightly, it is unclear where UFC-Que-Choisir out these figures. They do not exactly correspond to reality.

The last point of this study concerns the future operators. The Consumer Association is wary indeed of future mergers. If the redemption SFR by Numericable will keep four players in the market operators, UFC-Que-Choisir fears for the future of Bouygues Telecom judge it now too fragile to stay in such a competitive environment. “Today there is no longer question of holding forth on the four operators, but to set the conditions for a return to three that bad company would be detrimental to consumers.” And take the example of Austria, which had a return in 2013 to 3 operator and a joint rising prices by 10% in one quarter.

To avoid this nightmare scenario, UFC-Que-Choisir recommends two things. She asks one hand to ARCEP and the Competition Authority “to position itself in the short and medium term with regard to the restructuring of the sector, including setting any conditions to safeguard a intensity of competition serves consumers. ” In other words, to ensure that prices are still too low even if the market returns to three operators. On the other hand, she asks “to lower in the shortest possible time the wholesale tariffs charged by network operators to MVNOs to direct them to the real costs, that MVNOs can play the role of market agitators” . Specifically, to give more weight to the MVNO by lowering prices applied by operators to the virtual operators.