Free Mobile SMS termination rate key battleground - Orange

Rather than focusing on whether Orange France's 3G roaming agreement with Free Mobile enabled the latter to undercut rival operators' prices, France Telecom deputy CEO Pierre Louette told Les Echos that observers should pay attention to the SMS termination prices the new operator is negotiating. Mobile operator SFR's CEO Franck Esser recently said that his company would never have signed a 3G roaming deal with Free. (All three MNOs signed agreements for 2G roaming.) Louette said that as market leader and under a degree of pressure from telecom regulator Arcep, Orange felt a certain responsibility to sign the 3G roaming deal with Free, which includes a variable portion, like any MVNO, plus a fixed portion, which MVNOs do not pay. The financial details were never released. Given the new entrant's relatively low subscriber figures it made sense for SMS termination to be assymetrical, but to what extent? Free CEO Xavier Niel recently told a National Assembly committee that he was seeking to be paid EUR 0.0285 per SMS sent to its subscribers for the first six months, then EUR 0.0235. Free would pay other operators EUR 0.015 per SMS sent to their network initially, then EUR 0.01. According to Louette, on the basis of 500 SMS sent per month, Free would generate a margin of EUR 7 a month on a EUR 19.99 subscription, which means that it could offer voice communications free of charge.