French telecom operators hit out at 3G entry fee

NEWS French telecom operators have spoken out against the French government's entry fee to bid for a UMTS licence. France Telecom, Vivendi's Cegetel and Bouygues, three of the operators expected to bid for a licence, have claimed the fee of FF32.5bn (£3.1bn) to enter the beauty contest was too high. Finance Minister Laurent Fabius announced yesterday the French government was hoping to raise FF130bn (£12.5bn) from the distribution process. In a statement, Jean-Marie Messier, head of media, telecoms and environment group at Vivendi called the fee unreasonable. State owned France Telecom said it was pleased the licence distribution would not be subject to an auction but said the set price was too costly. A spokeswoman at France Telecom said: "It is a high price but we are happy with the beauty contest. The price of deploying the network is already high - higher than in the UK." She claimed France Telecom would not sell any of its assets to fund the licence nor would the user be affected. She said: "It is not just about getting the best services but also the problem of providing good services to people with little money as well as those with lots. We want Internet mobile services to be available to all." Daniel Grundy, analyst at Datamonitor, disagreed. He said: "How much of the extra cash that goes into the coffers of corporate France will end up in the treasure chest of France Telecom to fund its auction price." Grundy claimed the high entry price would discourage many smaller operators such as Bouygues Telecom from entering the race. He said: "Many small operators will have to consolidate with larger players to get the money on the balance sheet and show they are serious players. If you are a smaller company you will have a harder time raising the cash."