Germany Urged To Loosen Deutsche Telekom's Hold On Fixed-Line Telephony Market

by Ulrika Lomas, for LawAndTax-News.com, Brussels

19 June 2006

The lack of competition in the German end-user market for access to the public telephone network requires more effective regulatory obligations, the European Commission announced last week, in its response to the German telecom regulator Bundesnetzagentur (BNetzA).

The Commission called for an efficient price control mechanism in order to protect consumers against the risk of excessive prices being charged by the dominant operator Deutsche Telekom.

“In Europe’s telecom markets, remedies need to be clear and effective in order to improve the competitive situation and to safeguard the interests of consumers”, explained Viviane Reding, EU Commissioner for Information Society and Media, continuing:

“I am determined to ensure a high degree of coherence and effectiveness of regulatory remedies throughout the European Union. This includes remedies at the retail level in cases where measures at the wholesale level have not resulted in a satisfactory degree of competition”.

The Commission on Thursday endorsed the regulatory measures proposed by BNetzA, but at the same time invited the national regulator to increase the effectiveness of the proposed remedies, stating that:

"In line with the EU telecom rules, BNetzA is reminded that carrier (pre-)selection services which allow the end-user to select a carrier of its choice for all, certain or individual calls, must be provided at a price that is based on actual costs and that direct charges to subscribers must not act as a disincentive for the use of such facilities."

"In order to enhance competition and consumer protection against excessive pricing by Deutsche Telekom, the Commission invites the German regulator to consider imposing a more efficient price control mechanism. A number of other national regulators who found the retail access markets not competitive have already remedied the market failure through ex ante price regulation (regulators in Austria, Ireland, Slovakia, Slovenia, Netherlands, Hungary, Malta and Spain)."

"Finally, in order to implement carrier (pre-)selection cost orientation effectively and to make price control effective, the regulator is also invited to impose accounting separation requirements on Deutsche Telekom."

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