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European Commission

Press release

Brussels, 4 June 2012

Digital Agenda – Commission puts on hold German telecoms regulator's plans to regulate high bandwidth leased lines

The European Commission has put on hold, pending further investigations, plans of the German telecoms regulator (BNetzA) to set price levels for dedicated secure lines of ultra-fast broadband lines that are rented out to competitors- so-called "very high bandwidth leased lines", which the incumbent German telecoms operator, Deutsche Telecom (DT), can charge alternative operators.

This type of line is mainly used by operators to provide businesses such as banks, insurance companies or hospitals with robust telecoms systems linking different locations. The Commission has serious doubts if BNetzA's proposal to impose cost-oriented prices for access to leased lines with a bandwidth of above 155 Mbps is compatible with EU telecoms rules, and has requested more information justifying the proposal.

Neelie Kroes, European Commission Vice President, said: "EU telecoms rules are there to ensure adequate competition in the market so it can provide continually-improving services to consumers. Where competition is already delivering, we should avoid imposing additional rules that deter investment and hinder the introduction of competitive services."

The EU telecoms rules require a national regulatory authority to impose proportionate remedies based on the nature of the specific problem identified. This means that regulators must not regulate in markets which are already competitive.

The Commission has issued this letter of serious doubts because further justification is needed from the German regulator that the proposed price regulation is both appropriate and proportionate. The Commission questions, in particular, the need for continued regulation given that the BNetzA itself notified the Commission at the end of 2011 that the market for very high bandwidth leased lines in Germany is now competitive. The Commission has therefore suspended BNetzA's plans and begun a 3 month investigation.

The Commission's decision to start an in-depth investigation begins a "second phase" procedure under Article 7a of the EU Telecoms Directive (MEMO11/321). BNetzA has now has three months to work with the Commission and the body of European telecoms regulators (BEREC) on a solution to this case so that the proposal is compliant with EU law. Meanwhile implementation of BNetzA's proposal is suspended.

Background

In May 2012 the Commission received a draft decision from BNetzA concerning the market for the wholesale terminating segment of leased lines. BNetzA proposes to regulate the prices which Deutsche Telekom will be able to charge to alternative operators to access its terminating segment of leased lines in Germany. The proposals include a price control for leased lines with a bandwidth of over 155 Mbps. At the end of 2011 BNetzA notified the Commission that Deutsche Telekom has significant market power for terminating segments of more than 2Mbps up to 155 Mbps included. However, in this second round review BNetzA concluded that terminating segments with a bandwidth of over 155 Mbps are prospectively competitive and, thus, no longer susceptible to ex ante regulation. In the Commission's view, BNetzA's proposal could have a negative effect on competition and the future offer of leased lines under competitive conditions as well as potentially creating barriers to the development of the single market.

Under the new powers of Article 7a of the Framework Directive, the Commission can open a so-called second phase investigation during which the Commission, in close cooperation with BEREC, will discuss with the national regulatory authority concerned how to amend its proposal in order to make it compliant with EU law. During that period the implementation of the proposal is suspended

Useful Links

The Commission's letter sent to the German regulator will be published at:

https://circabc.europa.eu

Digital Agenda website

Neelie Kroes' website

Follow Neelie Kroes on Twitter

Contacts :

Ryan Heath (+32 2 296 17 16), Twitter: @ECspokesRyan

Linda Cain (+32 2 299 90 19)


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