Deutsche Telekom vows to fight EU broadband ruling

German telecom giant Deutsche Telekom has vowed to fight the European Commission for the right to expand its high-speed internet technology (VDSL) without having to allow competitors to use it.

Following a meeting on Monday (19 December) between Kai-Uwe Ricke, the company's chief executive, and Viviane Reding, the information society commissioner, the telecom operator hit out at suggestions that the disagreement was over.

"There has been irritation about information apparently coming from the Commission on the results of the meeting," said a Deutsche Telekom spokesman. "We would still say that we are not accepting the demand for regulation on our VDSL network."

Under EU law, incumbent operators are bound to allow competitors access to their networks, regardless of age or technology, unless the latter will create an entirely new market. In such cases, the rules can be relaxed because the Commission looks more kindly on nascent markets.

The Commission has repeatedly argued that VDSL does not give rise to a new market, because the integrated services it can provide - such as internet, video-on-demand and digital television - can be provided through other services.

Because no other technology can offer these services together, as VDSL can, Telekom argues that it should be considered a new market. The spokesman said that the company would not seek redress through court action, but show that over time it would become clear that a new market would emerge.

On Friday (23 December), the Commission will send a formal letter approving the Bundesnetzagentur's plans to regulate VDSL, after voicing 'serious doubts' over initial plans to exempt it. This will be the first time that broadband has been regulated in Germany. "The case is over, it's closed," insisted a Commission spokesman.

"The Bundesnetzagentur [Germany's telecom regulator] has laid out its case and we still think there is room for manoeuvre," said the spokesman. "We think that we will demonstrate that VDSL will establish a new market."

Ricke was also in Brussels to lobby Reding over the Commission's review of the entire electronic communications network, planned for 2006. The German incumbent wants the EU to phase out its sector-specific legislation and rule that the telecom market is sufficiently liberalised and therefore only subject to 'normal' competition rules.

The telecom sector is not considered a normal market because it is mostly dominated by large, often state-owned operators. As a result it is subject to stricter competition rules than other markets.

A spokesman said that the commissioner was "open to all proposals" but would not take action unless there was sufficient competition in the market. And he added that any modification would take time.

"If we did change the rules, there would not be a legislative proposal until the end of 2006 at the earliest, which means that any new law would not apply until 2009," he said.

Last week the Commission made further efforts to get its house in order before the review, launching an extensive round of infringement cases to ensure that member states implement existing electronic communication laws.

Germany may not be in the best position to argue that its market is liberalised, since it has the lowest rate of broadband take-up in the EU. According to a December study of 16 member states from the European Competitive Telecommunications Association (ECTA), Germany and Greece share joint last place in promoting investment and competition in their telecom markets.

ECTA is lobbying against a regulatory 'holiday' for incumbent operators. "Europe is at a crossroads, where it must decide between effective competition and re-monopolisation," said Sandro Bazzanella, ECTA's director of EU affairs. "I don't think that anyone would say that we saw low prices, good services and high quality when there was a monopoly."

Germany's biggest telecoms operator, Deutsche Telekom, is to pursue with the European Commission its demands for the right to expand the company's high-speed internet technology (VDSL) without having to allow competitors to use it.