UPDATE 2-Bouygues gets go-ahead to use mobile spectrum for 4G
* Bouygues Telecom will have to give back some frequencies
* Bouygues Telecom will announce decision shortly
* France Telecom's Orange says keeping options open (Adds details, regulator and company comments)
By Elena Berton and Blandine Hénault
PARIS, March 14 (Reuters) - Bouygues Telecom won permission to re-use mobile spectrum deployed for voice calls for new superfast fourth-generation mobile data services as of Oct. 1, raising the pressure on its competitors.
French telecoms operators, hit by a price war sparked by the arrival of low-cost player Iliad in January 2012, are vying to take advantage of growing demand for data services from customers keen to access the Internet from their mobile phones.
French telecoms regulator ARCEP said on Thursday that the operator, part of conglomerate Bouygues, would be allowed to recycle its 1800 megahertz spectrum for 4G use on condition that it paid more than when it was using it for voice services and also gave up some frequencies.
"There is an advantage since (Bouygues) will be able to go a bit faster than the others for maybe six months ... but on the other hand it will have to pay six times more than the others," ARCEP President Jean-Ludovic Silicani told BFM radio.
He added that the decision should push Bouygues' competitors to speed up the rollout of 4G services in France.
Bouygues has more 1800 MHz spectrum than its rivals, and being allowed to re-use it for 4G would reduce the overall cost and the time it needs to roll out 4G networks.
Unlike the other spectrum used for 4G - 800 MHz and 2.6 MHz sold in a December 2011 auction - which requires new equipment, the 1800 MHz spectrum can be switched over to 4G largely with existing equipment and through software upgrades.
France Telecom said ARCEP's decision would create an unfair advantage, and it would consider contesting it, depending on whether Bouygues chose to accept it.
"No decision has been taken at this stage, but we are looking at all the options," a spokesman said.
Vivendi's SFR was not immediately available to comment, while Iliad declined to comment.
Bouygues, the country's third-placed mobile operator, requested the change last July and now has a month to decide whether to go ahead with it. Bouygues said it would announce its decision in the coming days.
The operator would have to give back part of its frequencies within the 1800 megahertz (MHz) spectrum by Oct. 1 to reduce them to a level equal to or inferior to those of France Telecom's Orange unit and SFR.
Bouygues said it would also have to pay a fixed fee of 70 million euros per year as well as 1 percent of the annual revenue linked to the use of 1800 MHz frequencies for 4G.
ARCEP said in its statement that SFR and Orange may request at any time to extend their 1800 MHz licences to include 4G.
Iliad's Free Mobile, which does not have 1800 MHz spectrum, may apply to receive available frequencies in this spectrum, it added.
Bouygues, France Telecom, SFR and Iliad all bought 4G licences in late 2011, bringing 3.6 billion euros ($4.67 billion) to state coffers, and construction of the new networks only began last summer.
France Telecom and SFR have launched 4G services in a handful of cities, but the new technology, which allows download speeds roughly five times faster than 3G, will not likely reach national coverage until 2014. ($1 = 0.7704 euros) (Writing by Elena Berton and Leila Abboud; Editing by James Regan and Helen Massy-Beresford)
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