In the field of telecommunications as elsewhere, competition must be thought out so as not to prohibit the access of the smallest players to strategic sectors, at the risk of slowing down the socio-economic development of the territories. On Reunion Island, the allocation of the telecommunications frequency market is a heartbreaking textbook case of an attack on competition decided by a regulatory authority that is supposed to be the guarantor.
Distorted competition partially orchestrated by the regulator
At the end of last May, ARCEP finally allocated the low frequencies to Reunion. Unsurprisingly, the smallest player, ZEOP Mobile, was particularly badly off, compared to the giants SFR, Orange and Free. First, it only obtains quantitatively few bands, only 5 MHz in all and for all in low frequencies. Then, the local company will be unable to innovate by offering 5G networks with these bands and therefore remains confined to 4G (DSS). It is impossible for the group to position itself in this way on the trends of the island market and to respond to the prospects of a massive conversion of Reunionese to 5G.
Low telecommunications frequencies are, according to experts in the sector, the most strategic on the market thanks in particular to their proven ability to easily penetrate buildings. In the words of the Regulatory Authority for Electronic Communications, Posts and Press Distribution (ARCEP), the allocation of low telecommunications frequencies must therefore be part of a logic of arbitration between two principles. On the one hand, a logic of regional development and on the other hand, the maintenance of the competitive dynamic on these markets.
Distorted competition is a brake on the development of local players
However, the criteria for allocating telecommunications frequencies specify that they are partly auctioned, which guarantees neither one nor the other. On the contrary, they favor the actors with the greatest financial means, regardless of their local roots and their past investments in the territory. In this context, ARCEP sends a harmful signal to the market by suggesting de facto that local development initiatives in regulated sectors will systematically come up against the glass ceiling of an entry cost set by large players, sometimes even foreign to the territories.
Competition between operators is fundamental, both for economic efficiency and for consumer freedoms, “Free to Choose” (free to choose) said the Nobel Prize in economics Milton Friedman. In fact, economics highlights how competition makes it possible to increase supply (the quantity produced), to reduce prices, while encouraging companies to manage rationally and inviting them to innovate in order to remain competitive. . In addition, for the consumer, competition makes it possible to give everyone more choice as to who and where they wish to allocate part of their income, according to their economic, political, social, cultural and regional preferences.
Rethinking allocation criteria in regulated sectors
The conditions for allocating low frequencies in Reunion are, in more ways than one, particularly hostile to new entrants. Firstly, the opening up to competition developed by ARCEP looks like an industrial rent, because it is regularly the same players who benefit from the contracts, especially since there are only a few players on this market. , as the cost of entry is considerable.
Then, in the case of ARCEP, the exclusion of players, albeit modest ones, but very well established locally, in the face of the industry giants, contributes to preventing the financial development of potential competitors in this sector of activity, while by creating, in a more or less artificial way, rents for the actors already in place.
Thirdly, the duration of the contracts awarded for the tapes, 15 years, seems particularly long and once again remains an “arbitrary” barrier to the entry of competitors. It allows players already present to increase their income over a considerable period of time, while competitors are excluded from the market for a very substantial period to the detriment of potential financial development.
The socio-economic development of overseas territories is partly based on the emergence of powerful local players, including in the most strategic and difficult-to-access sectors. The procedures for awarding public contracts must therefore take into consideration local establishments on the one hand, to favor historical players, but also not to curb the entrepreneurial spirit of local business leaders, assigned to immobility in markets where the cost of entry, both real and perceived, is considered too high.