"Hasty decision": Telekom competitors criticize regulator's reform plans

The telecommunications industry is currently facing several regulatory initiatives aimed at accelerating fiber optic expansion, driven by the Federal Federal Ministry for Digital Affairs and State Modernization (Bundesministerium für Digitales und Staatsmodernisierung, BMDS) and the Federal Network Agency (BNetzA). These activities were generally welcomed at the Digital and Fiber Optic Trade Fair Fiberdays 26. “I think the speed at which the BMDS under Mr. Wildberger is working is really good,” said Reinhard Sauer, CEO of Deutsche GigaNetz, at the event in Frankfurt am Main.

However, there is one issue that the industry finds is moving too fast – the so-called market 1 regulation. The BNetzA no longer sees homogeneous competitive conditions due to the different levels of expansion of fiber optic and TV cable networks. Therefore, in a position paper published in mid-March, it proposed to consider the broadband market regionally rather than nationwide. Competition in the broadband market would then be analyzed per district or independent city.

The BNetzA identifies three sub-markets. In cities like Cologne, Ingolstadt, Munich, and Wolfsburg, there are at least two alternative competitors besides Deutsche Telekom, whose networks achieve coverage of at least 60 percent each. The BNetzA interprets this as a sign of effective infrastructure competition. It no longer sees a need for regulation here, which would mean that Telekom would be released from regulation in these cities.

“This is going in the wrong direction”

“This is going in the wrong direction,” fumed Jens Prautzsch, CEO of Unsere Grüne Glasfaser (UGG). At Fiberdays 26 in Frankfurt, he called the BNetzA's plan a hasty decision. “We did not expect such a proposal to come so quickly,” said Soeren Wendler, spokesperson for the M-net management, also expressing surprise.

In cities and districts where alternative competitors do not achieve such high coverage, but Telekom does not hold a so-called dominant market position either, the BNetzA intends to establish a so-called symmetrical regulation. This would affect not only Telekom but also its competitors. The sub-markets remaining are those in which Telekom continues to be the dominant company. Here, asymmetrical regulation to the disadvantage of Telekom would remain.

“Then Telekom can do whatever it wants”

Timo von Lepel, Managing Director of NetCologne, a subsidiary of Stadtwerke Köln, is directly affected by this BNetzA initiative. “The methodology is more than questionable,” he warns. His criticism: Coverage says nothing about usage. “If this goes through, it will apply to all cities,” warned von Lepel at Fiberdays. “Then Telekom can do whatever it wants.”

The unanimous opinion of the alternative competitors at Fiberdays 26: Telekom is still a dominant company. Therefore, it is too early to release it from regulation. “You can't just base this on network coverage; you have to look at what Telekom brings to the table overall,” said M-net Managing Director Wendler in Frankfurt am Main, referring to Telekom's financial strength as a global player, among other things. “How do you want to delineate this regionally?” asked Wendler.

He fears that Telekom could force price dumping in cities like Munich or Cologne, for example, on both copper and fiber optic networks. “Then the question also arises as to what instruments the BNetzA would have to prevent something like this,” Wendler questioned. He also sees dangers for the migration from copper to fiber optic networks if no dominant company were active in cities due to regulation. So far, legislators and regulators assume that its copper networks are to be switched off in a rule-based process.

(mma)