Regulator hopes for U-turn on German broadband law

Telecoms regulators at the European Commission are hoping the German government will have a last-minute change of heart over a new law aimed at protecting national champion Deutsche Telekom from competition rules while it invests in new broadband infrastructure.

The Commission has been poised to take legal action against the German government ever since the beginning of this year when the new law was supposed to come into effect.

The German authorities said the law was intended to enable Deutsche Telekom to invest in so-called VDSL technology, which cuts down the time it takes users to download and send large data files, such as video or music.

"There is something going on," said a Commission official. "We understand that there is a change of strategy at Deutsche Telekom, which has a new CEO. There are not many subscribers [to VDSL], so it won’t be profitable. If this is the case, they won’t need the law."

René Obermann, who took the helm of the telecoms company in November, is said to be taking a step back from ambitious plans to wire up to 50 German cities with VDSL connections capable of delivering 50 megabits per second.

Instead, Obermann, who announced a cost-cutting drive at the beginning of this year, is said to be keener on delivering lower-capacity ADSL services, which deliver a maximum of 24 megabits per second to consumers. If this second, cheaper option were to become Deutsche Telekom’s core broadband strategy, the German government’s justification for the protectionist law would be undermined.

A German diplomat confirmed that the law had yet to be signed off by German Economics Minister Michael Glos and Chancellor Angela Merkel, the final steps that would have to be fulfilled before it entered into force. He insisted, however, that his government’s plans had not been laid aside. "It is approved, so what we’re talking about is when it enters into force," he said.

But the Commission has a different take on matters. "The law is still on the desk of the German chancellor," said the official. "There can be two explanations. First, they understand that the law doesn’t make sense. Second, they want to avoid controversy during the German presidency."

Telecoms regulators at the European Commission are hoping the German government will have a last-minute change of heart over a new law aimed at protecting national champion Deutsche Telekom from competition rules while it invests in new broadband infrastructure.