Achtung! Regulators Force DT to Share

Deutsche Telekom AG (NYSE: DT) will be forced to play nice and share its broadband network with competitors, after the European Commission upheld a ruling by German regulator BNetzA that the incumbent holds too dominant a position in the market. (See EU Orders DT to Share VDSL.)

The Commission approved BNetzA's decision to require Deutsche Telekom to offer local loop unbundling after it had been amended to include the carrier's €3 billion (US$3.9 billion) next-generation network.

In Phase 1 of the rollout, DT has deployed ECI Telecom Ltd. gear in 10 cities and plans to extend the network to Germany's 50 largest cities by 2007. (See ECI Drops Despite VDSL2 Coup .)

DT has been lobbying to keep its network closed, arguing that it will have to charge monopoly prices to recoup its investment in the network, which consists of fiber-to-the-curb and VDSL2 links from street cabinets to subscribers' homes. (See DT Flings Billions at Fiber Access.) It has threatened to halt the buildout if it's made to share the network.

The European Commission's Information Society and Media Commissioner, Viviane Reding, said in a statement: "I welcome that... the German regulator has proved its independence by proposing to the Commission, as required by EU law, to remedy the well-known competition problems on the German broadband market. To open the German broadband market to competition will lead to better services and lower internet access prices for consumers."

Since DT has refused to permit unbundling of its network -- allowing operators to install equipment in its exchanges -- competitors have to build their own infrastructures, making it cost-prohibitive to extend their services to rural areas. As a result, DT holds a 60 percent share of the German broadband market, above the EU average of 50 percent for incumbent carriers.

The European Competitive Telecommunications Association (ECTA) issued a statement recently warning that broadband growth in Germany is at the low end of the European Broadband League at 14 percent and could be in "serious jeopardy" if Deutsche Telekom’s network were to remain closed. (See ECTA Warns of VDSL Threat.)

In the past, the German government has tried to exempt Deutsche Telekom from EU competition law, and Reding chided the German regulator for taking more than three years to enforce the rules while incumbents in other European countries have been offering local loop unbundling for several years, adding, "I therefore urge the German regulator to implement this remedy now without any further delay."

The Commission ruled that Deutsche Telekom should submit its access prices to the German regulator for approval, saying they should be far enough below DT's retail prices to prevent a margin squeeze for competitors, or calculated by BNetzA on the basis of actual costs in line with EU law.

The statement also "urges" BNetzA to make a similar ruling on wholesale ATM services, which it also found to be dominated by Deutsche Telekom, but has yet to notify the Commission of its decision.

— Nicole Willing, Reporter, Light Reading

JimKnopf 12/5/2012 | 3:43:50 AM
re: Achtung! Regulators Force DT to Share Dear Nicole,

if you write about who is setting up the network of Deutsche Telekom, pl. be complete and name also the other supplier for VDSL DSLAMs, which is Siemens Communications.

Michael Harris 12/5/2012 | 3:43:49 AM
re: Achtung! Regulators Force DT to Share It is outright heresy not to mention Zee-mens as a key player in a large Deutschland deployment. ;)
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