GERMAN CABINET APPROVES DRAFT TELECOM ACT
The German Federal Cabinet approved a draft Telecom Act Wed., raising concerns among competitive carriers there. The draft now moves to the Second Chamber of the German Federal Parliament (Bundesrat), which is expected to vote on it before the end of the year, after which it goes to the First Chamber (Bundestag) for final approval. The Cabinet decision follows a warning Germany received from the European Commission (EC) last week that it would impose legal sanctions on the country for failing to implement the rules on time. The goal of the draft is to overhaul market regulation, in particular of the incumbent carrier Deutsche Telekom (DT), and to implement 5 European Union (EU) directives into national law.
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Axel Spies, an attorney representing the German Competitive Carriers Assn., criticized the decision, saying the original draft released by the German Federal Ministry of Economics & Labor (BMWA) in April in response to EC’s new pan-European telecom rules had been “diluted by other ministries to protect Deutsche Telekom, which in particular will seriously hamper those competitors who rely on Deutsche Telekom to reach their end users.” He said the German competitors were “not happy with the draft and fear that it will stifle competition in favor of the incumbent in which the German government has a large stake.”
Spies said the new draft contained a number of modifications that he said would be “bad for competition” such as: (1) Lifting the threshold of significant market power to 40% from 33% that he said would “curb the ex ante price control of RegTP [German telecom regulator] in favor of” DT. “I doubt whether this is in line with the EU law,” he said. (2) Eliminating “market abuse” if DT offers its wholesale service to its subsidiaries, such as T-Online or T- Mobile, before it does so to the competitors. That “would give [DT] a head start in new markets,” he said. (3) Dropping the obligation that RegTP impose billing and collection requirements for competitive services on DT. “For many competitors it wouldn’t be economically viable to send out separate invoices to their customers,” Spies said.
Other changes include: (1) RegTP would be allowed to reclaim profits from its abusers and would raise the penalty cap to 500,000 euros. (2) RegTP could determine fees that could be charged for telecom services. (3) It would expedite the legal process of dispute resolution by reducing to 1 from 2 the number of appeal courts that would look into the facts. (4) It would give a more specific definition of “market abuse” to include price dumping, price squeeze and bundling of certain products to affect the market.