Internet giant under scrutiny

Date: 03/07/1997

By Tim Jones

PLANS by one of the world's biggest communications companies to give 8 million Dutch customers free access to the information superhighway have run into a roadblock.

The move has prompted accusations from rivals that the Netherlands' telephone operator, Koniklijke PTT Nederland (KPN), is trying to stitch up the market ahead of full liberalisation.

Following a campaign by some of the country's 154 other Internet access providers, Competition Commissioner Karel van Miert has launched an investigation into the ambitious superhighway construction prog-ramme of the former monopoly.

In response to a question from Dutch Green MEP Nel van Dijk, Van Miert said he was determined to “ensure that the provision of new competitive telecommunications services is carried out in a fully competitive manner and that companies with dominant market positions do not transfer those positions into new markets”.

From September, PTT Telecom, the phone division of KPN, is offering a 270-million-ecu national network for its clients (Het Net), together with an electronic mailbox and an e-mail address. Customers will receive the address free of charge for six months, but will then pay a fee of just over two ecu every month. Het Net will be a new network built, owned and run by PTT Telecom.

Since KPN lost its monopoly status in the Dutch market this week, it has been seeking to boost its share in related markets. If it takes off, Het Net will generate extra telecoms traffic and add to the revenues already going to the KPN-owned market leader in web-access provision, Planet Internet.

The other access providers are worried. “PTT Telecom is using money earned from its telecoms concession to conquer a large market share in a new market,” said Felipe Rodriquez, chairman of the Dutch Association of Internet Providers and managing director of the country's third-ranking provider XS4ALL.

Van Dijk, who is an XS4ALL subscriber, is convinced that those who receive e-mail addresses from PTT Telecom will be reluctant to change later even if better services are on offer elsewhere. “At the same time, a lot of people will leave their current providers which, I think, is an abuse of a dominant position,” she said.

Dutch Communications Minister Annemarie Jorritsma has insisted on changes to the company's plans in an attempt to allay rivals' concerns. She has obliged PTT Telecom to provide an e-mail 'gateway' out of Het Net so that customers can find their way to people on other networks, but it is still unclear whether subscribers will be able to go through Het Net on to the World Wide Web.

Van Miert is insisting that there should be an accounting separation between PTT Telecom's former monopoly activities and non-monopoly activities - a demand the company claims it has already met. “Het Net will be a separate business unit with its own accounts,” said PTT spokesman Ernst Moeksis. “We do not transfer any income.”

Rodriquez is hopeful that Van Miert's intervention will keep PTT Telecom under control. “At the very least, it should ensure that the company is very precise in the way it accounts for its money,” he said.

As full telecoms liberalisation in Europe approaches in January next year, Van Miert is watching all the established operators for signs that they are attempting to stitch up the nascent online and multimedia markets.

As well as looking into Deutsche Telekom's tentative plans to link up with America Online in Germany, Van Miert is also scrutinising the stated aim of the new British government to trade off the end of restrictions on BT providing broadcast services against free Internet access for schools.