IP/07/876

Brussels, 25 June 2007

Telecoms: Commission insists access network competition must be maintained in Germany

The European Commission has today requested the German regulatory authority BNetzA (Bundesnetzagentur) to secure adequate access and ensure a level playing field in the transition to high bandwidth Next Generation Networks (NGN). BNetzA is also asked to complete its market analysis for access to NGN without further delay.

“The Commission is keen to ensure that Next Generation Networks can be deployed and made accessible in a consistent and transparent manner across Europe”, said Viviane Reding, EU Telecoms Commissioner. "It is vital that we ensure effective competition and the legal certainty necessary for all market players to invest in new products and services that will benefit consumers ".

On 25 May 2007, BNetzA notified the Commission of measures intended to continue the obligations imposed on Deutsche Telekom to grant competitors access to its copper fixed telephone network. Since Deutsche Telekom is upgrading its network by rolling out fibre-based Next Generation Networks, BNetzA's regulatory measures also include remedies to tackle the transition to this.

In a letter sent to BNetzA on 25 June, the Commission did not challenge the market definition of local loop unbundling by BNetzA, but raised a number of issues on regulatory remedies. It should be noted that under today's EU telecom rules, the Commission powers with regard to such remedies are limited to issuing comments.

The Commission considers that whilst regulatory measures proposed by BNetzA go in the right direction they are not yet sufficient. The roll-out of fibre closer to the customers, normally to the street cabinets, enables the provision of high bandwidth services. However, it raises important issues regarding the position of alternative operators who currently benefit from access obligations of Deutsche Telekom. As alternative operators in Germany already have started to roll-out their own infrastructure to local exchanges, or more central levels of the network, these operators now need an economic way of reaching the new access points provided in street cabinets.

Therefore, the Commission has requested the German telecom regulator to guarantee that access to Deutsche Telekom's existing copper network by its competitors remains efficient during the roll-out of Next Generation Networks. BNetzA is therefore asked to ensure that competitors have economically viable access to Deutsche Telekom's ducts and fibre network, if appropriate, in order to deploy, their own networks down to the street cabinets and so that the necessary equipment can be installed in those cabinets.

In the new networks, the number of access points required by an alternative operator will be many times higher than that for the traditional fixed telephony network. In many cases there would no longer be a business case for alternative operators to extend their network down to the street cabinets. Therefore, the Commission stresses the importance of ensuring appropriate alternative access solutions as Next Generation Networks are deployed and urges BNetzA to complete its market analysis for access to such Next Generation Networks without further delay.

Background:

The Commission response concerns a market notification received from BNetzA on wholesale access to local loops. This market covers the "last mile" of the public fixed telecommunications network connecting subscribers to the local exchange and to the main distribution frame, respectively. Once access is granted, new market entrants can provide both voice and data services to end users over local loops rented from the incumbent operator.

Competition in the access and broadband markets has developed in Germany largely based on the obligation of Deutsche Telekom to grant competitors access to local loops. Currently more than 4 million access lines are rented by competitors who use this to provide their own "self contained" portfolio of services. This appreciable development of competition should not be impaired by unnecessary delays in the adoption of the appropriate remedies to access the Next Generation Network (NGN) currently being deployed by Deutsche Telekom.

NGNs are all IP (Internet Protocol) based networks which are more efficient and provide end-users with a possibility to receive high bandwidth broadband services. At the same time the deployment of NGNs raises questions as to how competitors may continue benefiting from current access obligations, in the future, whilst maintaining incentives to invest for both the incumbent and new entrants.

Further information:

The letter sent on 25 June 2007 is published at:
http://ec.europa.eu/information_society/policy/ecomm/article_7/commission_decisions/index_en.htm

For the Article 7-procedure between the European Commission and national regulators, see:
http://ec.europa.eu/information_society/policy/ecomm/doc/article_7/052_art7.pdf