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IP/05/1708

Brussels, 23 December 2005

Telecommunications: Commission approves decision of the German regulator to open up broadband markets, including very high-speed internet access (VDSL)

The European Commission today approved the amended proposal by the German telecoms regulator Bundesnetzagentur (BNetzA) on the market for wholesale broadband access. Following serious doubts expressed by the Commission on 11 November 2005 with regard to the exclusion of VDSL from the market, BNetzA amended its proposal by including it. Broadband access or “bitstream” allows new entrants to provide their own broadband services (such as high speed internet access, internet telephony or IP television) to end-users by controlling the quality of the products to a high degree.

"I welcome that the German Regulator has undertaken to include VDSL into the bitstream access markets”, commented Viviane Reding, EU Commissioner for Information Society and Media. “This means that Deutsche Telekom’s competitors will now have access to the new infrastructure where appropriate. Given that broadband competition in Germany is weaker than in the majority of Member States and that – contrary to most EU Member States – bitstream access has so far not even been opened up to competition, these measures will play a key role in stimulating the growth of broadband in Germany ”

The amended measures of the German regulator enable competitors to compete on an equal footing with the incumbent operator Deutsche Telekom by allowing them to buy bitstream products on a wholesale basis and to compete for retail customers. Following these amendments, Deutsche Telekom needs to grant competitors access to its broadband infrastructure, including in principle its VDSL infrastructure.

In its original notification the German regulator had found that Deutsche Telekom has significant market power in the German wholesale broadband access (bitstream) markets. Unlike other European regulators who have analysed these markets so far, it had however proposed to exclude VDSL from these markets. In the Commission’s view, this would have seriously hampered the development of competition in one of the key markets in the electronic communications sector.

As far as regulatory remedies are concerned, BNetzA, under the EU rules, enjoys discretionary powers to impose appropriate obligations that do not discourage investment to new infrastructures. The remedies BNetzA intends to impose on Deutsche Telekom have not been notified to the Commission yet, but will need to be notified in the near future.

Background:

On 11 October 2005, BNetzA notified the Commission, as required by the EU regulatory framework for electronic communications, of a draft measure concerning the markets for wholesale broadband access in Germany. The notification included the market definition and the SMP designation only and proposed to exclude VDSL from these markets.

On 11 November 2006, the Commission, in line with the so-called “Article7-procedure”, expressed “serious doubts” and indicated that BNetzA had not provided sufficient evidence as to the exclusion of VDSL from the relevant market(s). The Commission subsequently invited interested parties to comment on this issue.

On 14 December 2005, BNetzA amended the notified draft measures by concluding that bitstream access to VDSL is included in the wholesale broadband access markets (together with products based on ADSL (2/2+) and SDSL) unless it proves not to be a substitute for the other access forms in these markets.
More detailed information on this case can be found at:

http://ec.europa.eu/information_society/policy/ecomm/article_7/index_en.htm

On the Article 7-procedure: MEMO/05/255.


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