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Gemany: Deutsche Telekom urged to seek deal on access to VDSL network August 18, 2006

Posted by Jasper in NGN, Regulation.
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[From Global Insight] Germany telecoms regulator Bundesnetzagentur has raised the stakes in the ongoing saga over Deutsche Telekom’s new VDSL network, urging the telco to seek an amicable deal with rivals in order to avoid intervention from regulators. In an interview with Financial Times Deutschland, Bundesnetzagentur president Matthias Kurth said that Deutsche Telekom cannot prove that the products on offer on the VDSL network constitute a new market—an argument that could have exempted the network from regulation. The regulator is torn between the threat of legal action from the European Union (EU) and the need to give Deutsche Telekom room to recoup the 3 billion euro (US$3.9 billion) that it is investing in the network.

Commentary: This move is similar to that of the French regulator earlier this week (see earlier post). In both cases it would appear that the EC has the upper hand.

This battle between incumbents, regualtors and entrants (which also is being played out in Australia, see another recent post), is classic.

On the one hand we have those that will argue the the pro-regulation view. That is, all loops that exibit bottleneck characteristics and are non-replicable, whether copper, fibre, or hybrids should be regulated as such. Most entrants will argue this view. Regulators will also favour this view, but may be reluctant to regulate if they can be convinced that the market (both infrastructure and services) is emerging or new (this is what Matthias Kurth is saying DT cannot prove).

Then there is the anti-regulation view: imposing regulation on the fibre loop will significantly increase investment risks and reduce and delay that investment. The incumbent will argue this view.

Prima facie, neither viewpoint is convincing. The anti-regulation viewpoint does not deal with the problem of foreclosure of competition, while the pro-regulation viewpoint does not explicitly address the issue of investment incentives. The attempt to bring all the parties together would appear to be an attempt to close the gap and solve the deadlock.

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1. Telconomics » Germany: EC endorses access to DT VDSL network - August 23, 2006

[…] Not unsurprisingly the EC has in a letter sent (21 August) to the German telecom regulator Bundesnetzagentur (“BNetzA”), required Deutche Telekom to provide access to its broadband infrastructure.  Hopefully this will end the this ongoing dispute (see previous post) and provide some certainty on the german market. The following is a edited version of EC press release. […]


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