DT and FT Plan Joint R&D

BONN, Germany -- Deutsche Telekom intends to make broadband a mass market in Germany and attract at least ten million T-DSL customers be 2007. Deutsche Telekom is also launching an innovation drive, which will include pooling a considerable proportion of its research and development activities with the Technische Universität (TU) Berlin and its partner universities. Deutsche Telekom is also examining the possibility of establishing joint research and development projects with France Télécom. These were the main points announced by Chairman Kai-Uwe Ricke to around 300 journalists at Deutsche Telekom's 13th Internationales Presse Kolloquium in Berlin.

Deutsche Telekom wants to work closely with the TU Berlin in the field of research and development in future. For this purpose, Deutsche Telekom is building its own institute on the university's campus - a kind of idea and innovation think tank for telecommunications and information technology. The Deutsche Telekom Innovation Center will be part of the Deutsche Telekom innovation section as well as part of the scientific research faculty at the TU Berlin. At the institute, around 25 top Deutsche Telekom researchers will be working closely together with approximately 50 scientists from leading universities worldwide. "We are convinced that we have established an almost perfect showcase model for targeted innovations research and the quick, commercial implementation of innovative technologies and applications", Ricke declared. The Innovation Center will create an international team of specialists who are concentrating both on the needs of the market and the needs of research.

Deutsche Telekom and France Télécom are examining the possibility of establishing joint research and development projects with France Télécom in order to give together Europe new momentum. In the presence of Thierry Breton, Chairman and CEO of France Télécom, Ricke said: "I am very pleased that we have renewed the dialog between France Télécom and Deutsche Telekom." He then went on to say he saw a renewed opportunity to work together again, not only at a national level, but also at a European level, with the clear intention of setting an innovation process in motion with which the European economy could be given important new momentum. Breton also emphasized the significance of broadband for the competitiveness of Europe and, on behalf of France Télécom, underlined his considerable interest in cooperating with Deutsche Telekom.

The successful broadband initiative is not the only facet of Deutsche Telekom's innovation drive. With over 4 million T-DSL subscribers, said Ricke, broadband is already a mass market in Germany. Deutsche Telekom is particularly committed to developing this market further, for example with its new T-DSL offers of 1, 2, and 3 MB bandwidth. T-DSL infrastructure coverage is also to be expanded in rural areas - wherever possible and economically viable. Ricke also pointed out, however, that Deutsche Telekom is only prepared to invest in areas where an appropriate return on capital can be expected.

Deutsche Telekom would also welcome greater commitment to the broadband market by other companies, such as cable network operators. "Effective competition at the infrastructure level could speed the progress of Germany's broadband market even more", said Ricke, underlining the point. He also said he would welcome more competition between broadband infrastructures. "We would be happy to see other network operators investing more in broadband networks." Deutsche Telekom is currently reviewing its terms and conditions for line sharing and, with its new "Bitstream Access" offer, will be introducing further upstream products to stimulate the broadband market and give competitors direct and risk-free access to customers on the basis of T-DSL lines.

Broadband communication in Germany should not be strictly regulated, however. Regulatory policy should set appropriate incentives to reward and promote the independent development of market forces. The market needs a regulatory framework that leaves the necessary freedom for broadband innovations. "We want to trigger an innovation process which will give crucial impetus to the European economy," said Ricke in conclusion.

Deutsche Telekom AG

France Telecom SA