EU Urges German Regulator to Step Up Telecoms Competition
June 16, 2006
The commission said that the German telecoms regulator Bundesnetzagentur should step up price controls to encourage greater competition and ensure consumers are protected from excessive prices charged by dominant operator Deutsche Telekom.
In a letter to the Bundesnetzagentur, EU officials said Telekom should be made to show exactly how it charges for calls, and if its prices are based on actual costs. Prices for telecommunications services are higher in Germany than in most other EU countries.
Commission spokesman Martin Selmayr told reporters that, with 94 percent of the fixed-line call market, Deutsche Telekom had "significant market power that needs to be regulated."
"There is a problem of competition on the German fixed access market," he said. "The German telecoms regulator should use its powers under the EU telecom rules to impose efficient remedies on this market."
Suggested remedies fall short
Selmayr said that the EU Information Society and Media Commissioner Viviane Reding was not satisfied with the "remedies" put forward by the Bundesnetzagentur so far. Last month, the regulator sent a proposal to Brussels describing a plan to ask Deutsche Telekom to inform it of future prices.
"The commission doesn't believe the proposal of remedies is sufficient," he said. "To achieve cost orientation we believe that … price regulation is necessary."
The commission has also criticized Deutsche Telekom's plans for a three-billion-euro ($3.56 billion) high-speed network, saying a new monopoly must not be created to replace the old and that the company must open up infrastructure to rivals.
As the EU recommendations are only "semi-binding," Germany is not required to fulfil them, but a national regulator must take "utmost account" of a request from Brussels.
Should the German regulator fail to implement Brussels' recommendations, Germany could face breach of contract procedures based on EU telecoms legislation. The procedure could lead to a lawsuit at the European Court of Justice.
According to the commission, other EU states including Austria, Ireland, the Netherlands, and Spain have already tackled a lack of competition in their retail phone markets.