Federal Network Agency wants to relax Telekom regulation in four cities

The Federal Network Agency (BNetzA) plans to lift the pre-regulation of the Telekom network in four cities. This is according to the preliminary results of the current market analysis, which the regulatory authority published on Wednesday and made available for discussion.

According to the Federal Network Agency's findings, the former monopolist Deutsche Telekom now only has low market shares in Munich, Cologne, Ingolstadt, and Wolfsburg. These cities are "highly covered by cable and fiber optic networks," offering consumers some choice.

"No longer necessary"

"Where effective competition is lacking, the Federal Network Agency will continue to regulate these sub-markets," explains BNetzA President Klaus Müller. "However, according to our preliminary findings, there is no longer any need for pre-regulation in Munich, Cologne, Ingolstadt, and Wolfsburg in the future."

Until now, Telekom, as a former state-owned company, was considered "market-dominant" nationwide. In particular, the access networks to households are controlled by the ex-monopolist. The regulatory authority therefore ensures, through access obligations and price regulations, that competitors can also offer their services to customers.

The regulatory authority now considers these obligations no longer necessary in the four cities. The background is the ongoing expansion of fiber optic networks, which offer consumers an alternative to Telekom's network. In Cologne, for example, regional network operator Netcologne has been expanding fiber optics and TV cable networks for twenty years and achieves high coverage in the city.

The Federal Network Agency will discuss the results of the market analysis with industry representatives on March 16. In an initial statement, Telekom evaluated the authority's paper as a step in the right direction, but one that does not go far enough.

If the authority actually relaxes the obligations for Telekom in the four cities, it would be a novelty in the regulation of the broadband market. Considering possible regional monopolies in fiber optics, it is currently also being debated whether and how the developing fiber optic market should be regulated.

"Far-reaching paradigm shift"

Frederic Ufer from the Association of Providers in the Digital and Telecommunications Market (VATM) speaks of a "far-reaching paradigm shift" and warns of a "nationwide dam break." "However, the discussion must not start with the wrong assumption that regulation must be generally dismantled," Ufer urges. "The opposite is the case."

Sven Knapp, head of the Berlin office of the Federal Association for Broadband Communication (Breko), also criticizes the partial release of Telekom from regulation as coming at the entirely wrong time. "At a time when Telekom is acting as aggressively as never before, deregulation would further strengthen the ex-monopolist's market power, jeopardize investment security, and noticeably slow down fiber optic expansion."

The broadband association Anga also sees risks for fiber optic expansion and competition. The association warns against "hasty deregulation steps in favor of Telekom" and criticizes the basis for the assessment: "Merely stating that two networks can theoretically cover 60 percent is not enough to attest to self-sustaining competition. A reliable study must consider the actual market shares of companies among end customers and wholesale services."

(vbr)