EC Rules DT Must Give Competitors Access to its Network
BRUSSELS -- Deutsche Telekom must give rivals more access to its phone network to spur competition in the German high-speed Internet access market, the European Commission said Mon. in a letter to Germany’s telecom regulator BNetZA. The EC was endorsing the regulator’s proposal to give new market entrants access to DT broadband networks.
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“(BNetZA) have taken the right decision,” said Martin Selmayer, spokesman for telecom Comr. Vivian Reding. The EC asked the regulator to implement its proposals “without further delay,” to encourage competition in the German broadband market.
The EC also urged the German regulator to issue access proposals for ATM bitstream, covering business use of high- speed Internet for tasks like video-conferencing. The current rule covers only private customers. Under the proposals, DT would have to open its broadband networks to competitors by letting them buy high speed access links to customer premises from DT with capacity to transmit data via broadband in both directions. That means new entrants would be able to offer competing Internet access services for home and business users via existing networks at varying prices, speed and bandwidth.
Arcor, Vodafone’s German fixed-line phone unit, wants access to DT’s fixed-line phone high-speed Internet network. Arcor wants access to DT’s cable distributer network to individual homes throughout Germany. The company aims to build its own fiber Internet network or rent parts of DT’s network to introduce new services such as Internet TV.
The price of DT infrastructure, or bitstream access, “should prevent any margin squeeze and should therefore be sufficiently below DT’s retail prices,” the EC said. The price new entrants pay for the wholesale access will be approved in advance by BNetZA. The new rule crucially includes bitstream access, covering the last stage of the broadband network, from street cabinets into customer homes, and also covers the new generation VDSL network.
In its letter to BNetZA, the EC reminded the regulator that merely upgrading an existing service by, say, offering a higher bandwidth, doesn’t constitute a new market, so DT isn’t entitled to a regulatory holiday for its VDSL network. Excluding the VDSL-based infrastructure from the access obligation would put the requirement at risk and hurt end- user market competition, the EC wrote.
If DT upgrades its ADSL infrastructure to VDSL in a city by installing fiber between local exchanges and local cable connectors, and removes its ADSL technology, the risk is that end-customers won’t be reachable by alternative providers because they have no access to a DT wholesale product, the letter said. DT’s costs should be weighed in setting a fair access charge -- but those alone shouldn’t justify excusing the VDSL access from preemptive regulation.
“Reding’s demand for bitstream access is a [classic] case of over-regulation,” a DT spokesman said. In Spain, Italy and Luxembourg, incumbents have bitstream access but also higher market share than DT, raising the question of whether bitstream access is really so crucial to competition, he said.
It’s unclear whether VDSL will be regulated. Germany’s parliament hasn’t approved legislation, the DT spokesman said. The high-speed network has been running since Aug. 2 in parts of 10 cities; 3 million households have access to the network.
DT hasn’t decided whether to appeal. Regardless, it must offer bitstream access until a court decides otherwise, the spokesman said.
The EC letter was good news for DT rivals. “We hope that BNetZA will now stop beating around the bush and implement bitstream access as soon as possible,” attorney Axel Spies said on behalf of the German Competitive Carriers Assn. The group applauded the EC for making clear that DT must grant access to its VDSL infrastructure from day one, he said.
But in a written statement Reding criticized how long BNetZA has taken to act on this issue. It’s been 3 years since EU telecom rules took effect, and only now is BNetZA acting, having notified the EU of DT’s dominance more than 8 months ago, she said. DT has 60% market share in Germany.
The EU and the German govt. have talking about the issue for months, with Germany trying to exempt DT from the EU’s law on competition by promising to write a special bill to exempt DT from sharing the network with rivals. The EU threatened to take the fight to the European Court of Justice.
The EU decision is a blow for DT; it may have to rethink a decision to build a new fiber high-speed infrastructure, it said. If DT stops building the new infrastructure, it won’t be able to offer new services, but if it decides to continue, competitors could benefit from its investments.