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Brussels, 17 December 2009

Telecoms: European Commission urges German telecoms regulator to create better conditions for competition in the retail access market

The European Commission has sent a letter to the German telecoms regulator, Bundesnetzagentur (BNetzA), calling on it to make the provision of fixed subscriber lines more competitive. Today the market is still dominated by the incumbent operator, Deutsche Telekom (DT). While Deutsche Telekom's offer means that other operators can sell-on to consumers the use of land lines that they have leased from the incumbent, Deutsche Telekom charges these operators the same price as it does its own consumers. This makes it harder for alternative operators to offer consumers a competitive deal. The Commission wants the German regulator to oblige DT to make its land lines available to other telecoms operators. It also asks BNetzA to supervise wholesale prices for alternative operators providing competing services using Deutsche Telekom's network.

"I urge the German regulator to ensure that alternative operators can give consumers more choice by making sure they can rent phonelines at a wholesale price instead of a retail price, so that German phone users feel the real benefits of competition, rather than marginal benefits," said Viviane Reding, the EU's Telecoms Commissioner. "I call on Germany's regulator to reassess Deutsche Telekom's voluntary offers and to oblige DT to resell their subscription lines in a way that German consumers can benefit from the full potential of openness and competition for their landline, which is a basic and crucial service."

Competition Commissioner Neelie Kroes said, " Regulation of wholesale line rental opens doors for alternative operators to enter the telecoms markets. In Germany it would allow competitors to offer consumers their services in areas where their own network infrastructure has not yet been deployed. It would also enable providers of carrier selection and carrier pre-selection services to offer bundled retail services which would enhance competition to the benefit of the consumers."

On 16 November 2009, BNetzA notified the Commission that it planned to oblige the incumbent operator Deutsche Telekom to provide carrier selection (where customers can select a different operator to use each time they make a phone call, no matter which operator technically provides their phone line) and carrier pre-selection (where the customer which operator to use on a permanent basis). BNetzA also informed the Commission of its plans to impose price control of DT's retail access rates. However, it does not plan to regulate the conditions for alternative operators using the incumbent's network, arguing that it is already voluntarily provided under retail conditions. This means that competing operators can use the network to provide alternative services to consumers, but have to pay Deutsche Telekom the same rate as consumers.

The Commission told BNetzA that regulated wholesale prices were the only way to make the fixed phone services market competitive. It questioned BNetzA's position that Deutsche Telekom's voluntary commitment has the same effect as a regulatory obligation which could sufficiently redress competition problems identified in the market particularly since Deutsche Telekom's voluntary commitment had neither been consulted nationally nor did it show any substantial sign of take up in the market. The Commission further stressed that conditions on the rental of wholesale lines should be designed by BNetzA to avoid a price squeeze, while not discouraging investments in local loop unbundling (LLU) in geographic areas where such investment would be economically feasible.


The Commission's comments to BNetzA follow the " Article 7 procedure ", under the Framework Directive of the EU telecoms rules ( MEMO/09/539 ). This procedure leaves some scope for regulators to achieve effective competition in their national telecoms markets, while ensuring consistency across the EU, and therefore requires them to notify the Commission of draft regulations. Where these concern market definitions and analyses of whether operators have significant market power, the Commission can require the regulator to withdraw the measure. Where they concern regulatory remedies – as in the present case – the Commission may make comments of which the regulator must take utmost account.

The Commission's letter sent to the German regulator will be published, in the coming days, at:

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