The European Commission has launched an investigation into the mobile termination rates (MTRs) put in place by French regulator Arcep, questioning its justification to allow new market entrants to charge higher rates.

Arcep justifies its policy on the grounds that new players face higher costs in providing termination services.

For new network operator Free Mobile, as well as French MVNOs Lycamobile and Omea Telecom, the regulator has proposed an MTR of EUR0.024 per minute in 2012, compared to EUR0.015 per minute for incumbent operators Orange, SFR and Bouygues. While this higher rate is expected to reduce over time, it is thought there will still be a 40 percent difference between the two by the end of 2013.

In a statement on Friday, the Commission noted that “asymmetrical rates are acceptable in principle, but raises concerns as regards the justifications brought by Arcep." 

"The entrance of new operators ensures that the French mobile market is competitive and vibrant, giving greater choice to consumer,” said European Commission VP, Neelie Kroes. “However, imposing higher mobile termination rates for new entrants only make sense if this reflects real higher costs."

Arcep said it will work with the Commission over the three-month investigation to find “practical ways to make effective the provisions of the recommendation, in view of the Commission’s comments and the situation of these new entrants on the French mobile market."