Brussels, 21 August 2006
“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”, commented Information Society and Media Commissioner Viviane Reding. “To open the German broadband market to competition will lead to better services and lower internet access prices for consumers. I however note that time is a crucial factor. While bitstream access has already been available to new market entrants in the vast majority of EU Member States for a number of years, it has taken the German regulator more than three years since the entry into force of the EU telecom rules and more than eight months since the finding of dominance of Deutsche Telekom to take the required measures. I therefore urge the German regulator to implement this remedy now without any further delay to ensure that both competitors and consumers can profit from fairer competition also in Germany.”
On 21 July 2006, the German telecom regulator BNetzA notified to the Commission measures to remedy the dominant position of Deutsche Telekom on the German broadband market. Already in December 2005, BNetzA had found that Deutsche Telekom holds a position of significant market power on the German wholesale broadband access market. The Commission agreed with this analysis, after it had been amended to include also, in principle, the new VDSL-infrastructure of Deutsche Telekom (see IP/05/1708).
The remedy proposed by BNetzA on 21 July and endorsed today by the Commission will require Deutsche Telekom to open its broadband networks to competitors by allowing them to purchase a high speed access link to the customer premises from Deutsche Telekom with transmission capacity for broadband data in both direction, thus enabling new entrants to offer their own, value-added services to end users. The price for such bitstream access needs to be approved in advance by BNetzA.
Under the remedy endorsed by the Commission today, bitstream access will need to be granted by Deutsche Telekom also to its new VDSL infrastructure currently built in several German cities. In its letter with comments under Article 7 of the EU Framework Directive for electronic communications, the Commission makes clear that this access obligation should apply when this new infrastructure is in place. The Commission notes that at present, there is no indication of a lack of substitution between VDSL-based access and other bistream products, and recalls that a mere upgrade of an existing service (such as an offering with a higher bandwidth) is not considered in itself to lead to new products or services. In any event, a finding of non-substitutability of a particular product or service by BNetzA and consequently an exclusion of a certain product from the remedies imposed would require an amendment of the market analysis and the remedy in force and thus would need to be notified again to the Commission.
In its further comments in the letter sent today, the Commission asks the German regulator to ensure that the remedy is applied without further delay; that also stand-alone bitstream access (the provision of broadband access independent of the obligation to buy a telephone connection from Deutsche Telekom) should be imposed in the near future; and that access prices should prevent any margin squeeze and should therefore be sufficiently below Deutsche Telekom’s retail prices or, alternatively, be calculated efficiently by the regulator on the basis of actual costs, as provided in EU law. The Commission finally urges the German regulator to notify without further delay also remedies regarding ATM bitstream access, which is crucial for effective competition in broadband services for business clients. BNetzA found Deutsche Telekom to hold dominance also on the market for wholesale ATM bitstream access in December 2005. However, so far, no remedies were notified to the Commission in this respect by BNetzA.
The text of the letter sent today by the Commission the German regulator today will be published on 25 August at: http://ec.europa.eu/information_society/policy/ecomm/article_7/commission_decisions/index_en.htm
On the Article 7-procedure under which today’s letter was adopted see MEMO/06/59.
See also memo of today: MEMO/06/308