VDSL monopoly threat to broadband in Germany
Germany’s growth in broadband penetration, which currently stands at 14% and at the low end of the European Broadband League, could be in serious jeopardy if both the German government and telecoms regulator give in to the request from the incumbent, Deutsche Telekom, for a regulatory holiday on high-speed services based on vDSL technology, the European Competitive Telecommunications Association (ECTA) warned.
Deutsche Telekom is demanding a regulatory moratorium, which would effectively prevent competitors from gaining access to its newly upgraded network, alleging that consumers need to pay monopoly prices if it is to recoup its investment in vDSL technology. ECTA believes that if granted,
this will have a long term detrimental effect to consumers not only in Germany but potentially Europe-wide as incumbents copy the tactic to maintain their grip on the market.
For ECTA, the pro-competition body, Deutsche Telekom’s request is particularly disturbing as it follows a lengthy battle to open up Germany’s DSL-based broadband services, which is only now nearing conclusion after nearly four years of consultation.
In its Broadband Scorecard to be published in September, ECTA will report that after many months trailing in the broadband league table, there are some early signs of progress in Germany. In particular, growth has been driven by competitor activity in local loop unbundling, and customers in suburban and rural areas are for the first time seeing some limited choice in providers as a result of competitors’ reselling Deutsche Telekom’s service. In addition, competition for ADSL- and SDSL-based services is expected to receive a welcome boost when the regulator acts to ensure that Deutsche Telekom is required to offer wholesale terms that are fair and openly available.
But unless the regulator also ensures vDSL access is opened to competition, Germany will end up with another monopoly just like the one that they have fought hard to dismantle since the market was liberalised in 1998. Monopolies mean higher prices, less choice and ultimately less take-up by consumers. Everyone loses except the monopolist.”
Without wholesale access customers are being denied the benefits of free markets: innovation and competition provide customers with choices over different service performance, price and quality. These are not available where there is only one retail supplier. These choices are critical for the development of the broadband and triple play markets, and the German economy.”
The situation in Germany reflects the situation in Australia where Telstra tried similar tricks to get a regulatory holiday. This has been persistently rejected by the government and the regulator. In August 2006 Telstra finally declared defeat and withdrew its plans. ECTA insists that also in Germany, the regulator needs to take decisive action to ensure competition is protected as the vDSL technology is rolled out. They have the chance to set a positive example which will make a real difference to Germany’s consumers and economy, and show that they value investment by all players in the sector including new entrants. Otherwise incumbents across Europe will get the message that it is easier to sidestep competition than to face it head on.”
Competitors currently in the market have invested billions of Euros (€3.1b in 2004 alone) and some have rolled out networks right up to the local exchange and unbundled local access lines, but Deutsche Telekom has recently upgraded its access network in selected locations and on the 2 August launched a triple-play bundle of TV, voice and high-speed Internet, without ensuring that competitors can offer a similar product.
ECTA believes that the only solution is for the regulator to ensure that effective access is in place to allow all operators to compete on an equal basis. ECTA’s other benchmark study, its annual Regulatory Scorecard, shows that in countries such as the UK and Denmark, where regulation is generally more effective, competition is a key driver of investment and adoption, and that in the absence of competitive challenge, service delivery suffers and markets stagnate.
See also:
Germany
Australia – FttN plans from Telstra and competitors
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