TV companies bid to free cable system

Date: 15/05/1997

By Chris Johnstone

GERMANY'S biggest grouping of private television companies has lodged a complaint with the European Commission accusing Deutsche Telekom of abusing its dominant position as the virtual monopoly operator of the country's cable networks.

The complaint comes as Commission competition watchdogs are finalising a strategy for cable networks across the EU which will allow them to compete with telecoms companies for telephone, data and multimedia services.

One option which could be considered would be to force telephone companies such as Deutsche Telekom to dilute or sell off their stakes in cable firms.

The Bonn-based lobby group for private German cable and television companies, the Verband Privater Rundfunk Und Telekommunikation (VPRT), claims that Deutsche Telekom is preventing its members from screening new services on normal broad-band analogue networks and setting unreasonable conditions for gaining access to new digital services.

These include demanding that firms seeking to offer digital services must allow Deutsche Telekom the final say on how programmes should be 'packaged' - in other words, when and how they should be shown - and to set out terms for the management of subscribers.

The VPRT claims this amounts to a virtual licence to print money.

“We have decided to complain to the Commission against this abuse of a dominant position,” said a spokeswoman, adding that past Commission decisions had clearly come out against the companies running the cable infrastructure being involved in management of the channels.

Première (the cable network owned by media magnate Leo Kirch, the Bertelsmann media empire and French company Canal Plus) and Deutsche Fernsehen 1 (DF1) are seen as the main victims of Deutsche Telekom's approach.

DF1 is Germany's first digital pay-TV channel. Its sole backer, Leo Kirch, has pumped huge sums of money into it for, so far, disappointing subscriber figures compared with rival Première.

It is now seeking to widen its audience by branching out into cable from its current satellite broadcasting base.

But the difficulties encountered in reaching a satisfactory deal with Deutsche Telekom have blocked this crucial move on to cable networks.

Although Deutsche Telekom's de facto cable monopoly disappeared last August, no one has come forward with plans or deep enough pockets to develop a rival network.

The VPRT claims that the main reason for Deutsche Telekom's tough approach is the pressure it is under to make money from its cable network, which was originally built up with huge subsidies from the German government but now no longer receives state support.

However, some industry observers suggest that the partly privatised phone company may also be aiming for more hands-on involvement in television and cable stations in the future.

British Telecom is already cooperating with dominant UK cable company BSkyB and Spanish phone company Teléfonica in an attempt to carve out a role for itself as a major television and cable player.

Commission competition officials are expected to spell out their plans for the development of Europe's cable services towards the end of the year, in the wake of a consultants' report on the issue which is due to be completed by the end of June.