As a result of the European Commission's earlier investigations, the German telecoms regulator (BNetzA) has improved its draft proposal to allow the German operator Deutsche Telekom (DT) to upgrade its network with vectoring technology in areas of 550m around a local exchange (also known as "nearshore areas"). The new German plan introduces necessary competitive safeguards, which were required by the Commission to ensure an appropriate balance between gains in network performance and continued effective competition from alternative operators, both of which benefit internet users.
However, the Commission has also warned BNetzA that it must further improve the conditions through which alternative operators can provide internet access over DT's upgraded/vectored networks. In this respect, the German regulator will need to submit separately to the Commission its detailed plans concerning both the technical parameters and the prices for the product which enables such access. This submission is expected in the early autumn and will be carefully scrutinized by the Commission notably with respect to its impact on competition. The Commission will indeed assess these proposals against its previous guidance and the expectations it has set out in its decision today.
Welcoming the progress made in the recent discussions with BNetzA, Günther H. Oettinger, Commissioner for the Digital Economy and Society, said: "As a result of our intervention, the German regulator has drawn a better balance between network upgrade and high quality access for competitors. The additional safeguards BNetzA now proposes protect sustainable competition and create incentives to invest in future-oriented networks for the gigabit society. However, further improvements must be made and we will remain vigilant to ensure that they are made."
Vectoring technology can upgrade copper networks to bring higher broadband speeds. It is used as an intermediary upgrade technology instead of the deployment of optic fibre networks. It is estimated that BNetzA's revised proposal would lead to broadband speed gains across Germany bringing connection speeds above 50 Mbit/s to 1.4 million households for the first time. However, the technology currently only works when it is applied to an entire bundle of copper cables, and, thus has the potential to restrict competition by excluding competitive unbundling of such lines.
In the Commission's view, BNetzA' revised proposals now provide adequate competitive safeguards and restrict the negative effects vectoring deployment can have on the position of alternative operators in Germany.
For example, BNetzA proposes to remove the restriction on the number of alternative operators which can access street cabinets to provide connectivity services and to grant access to ducts and dark fibre for two years to those alternative operators currently present at the local exchange. These measures will allow a more efficient use of existing infrastructures. In addition, the fact that alternative operators will be able to deploy vectoring in more areas than before, together with BNetzA's commitment to improve further one of the access products led the Commission to endorse the overall proposal.
BNetzA must improve plans for virtual access product
However, the Commission also points out certain aspects which require further improvement. Since the use of vectoring in the areas of 550m around a local exchange means that alternative operators cannot directly access the wires linking customers' premises to the local exchange to provide high-speed broadband, the Commission requires BNetzA to ensure that competitors have an adequate and alternative means of offering internet access to customers.
The Commission has also called upon BNetzA to improve their plans concerning the technical specifications for the main replacement product (a Layer-2 virtual access product) and notify them to the Commission. The Commission will then assess these proposals against the guidance in the Explanatory Note to the Commission's 2014 Recommendation on Relevant Markets and the more detailed expectations expressed in today's decision. It is essential that the new virtual access product will replicate the main characteristics of the today's physical product. This will follow the processes under the Commission's powers under Article 7 of the Electronic Communications Framework Directive.
Today's decision aims at ensuring that the introduction of the so-called nearshore vectoring technology in Germany goes with adequate safeguards restricting the negative effects vectoring can have on the position of alternative operators. In May, the Commission had indeed opposed BNetzA's initial plans and opened an in-depth investigation into the German regulator's proposal to allow Deutsche Telekom (DT) to upgrade its network with vectoring technology (see here). In the following months the Commission and BNetzA worked closely together, as required under the EU relevant legal provisions, to find a solution that could be acceptable under EU telecoms rules.
The Commission's letter sent to the German regulator will be published at: https://circabc.europa.eu/w/browse/0fc4cbf9-3412-45fe-84bb-e6d7ba2f010e