Deutsche Telekom forced to open up broadband

The European Commission fired a broadside at German incumbent Deutsche Telekom Monday, endorsing a regulatory measure that will give new market entrants access to the carrier’s new broadband network.

This measure, proposed by German telecom regulator Bundesnetzagentur (BNetzA) in accordance with EU regulations, is meant to remedy Deutsche Telekom’s position of dominance in the German broadband market. The proposal requires bitstream access for competitors regardless of the technology used – be it ADSL2, ADSL2+, SDSL or the forthcoming VDSL network.

“I welcome that in spite of considerable political pressure, 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”, said Information Society and Media Commissioner Viviane Reding.

While bitstream access has already been available to new market entrants in the vast majority of EU Member States for a number of years, Reding noted that it has taken the German regulator more than three years since the entry of EU regulation and more than eight months since Deutsche Telekom was found to be dominant, to take the required measures.

The most difficult part of this ruling for Deutsche Telecom to swallow, affects its new Eur3bn VDSL network. Deutsche Telekom had proposed the network be exempt from competition for two to three years, so it can establish itself, but the ruling today requires that bitstream access to its VDSL infrastructure currently built in several German cities will need to be granted.

The EC also requested that access prices should prevent any margin squeeze and should be sufficiently below Deutsche Telekom’s retail prices or, alternatively, be calculated efficiently by the regulator on the basis of actual costs.

But David Tansley, telecoms partner at Deloitte said: “By treating the VDSL offering as being in the same market ‘basket’ as other broadband offerings, Deutsche Telekom will now be forced to open up this technology to other providers.

“While this may appear to be a short-term win for the consumer, in the long run such moves may stifle innovation and infrastructure investment in next generation access.”