Page 3: The future: Europe's Champions League

Contents

To understand why this dispute is being fought so bitterly, it is helpful to take a look at the market situation. So far, the xDSL business has been a profit generator for Deutsche Telekom. But the copper network will no longer be able to keep up with the next speed step. Even if it has already been refinanced: as soon as a relevant proportion of customers have switched to fiber optic connections, it is hardly worth operating a parallel copper network.

In Germany, even in many large cities, the real fiber optic roll-out rate is poor. Just under 70 percent of households are still connected to the network via a copper connection controlled by Telekom. Deutsche Telekom CEO Timotheus Höttges wants to maintain his market share and take it to the fiber optic infrastructure. However, of the almost 20 million "homes passed" that have been connected with fiber optics according to the German Broadband Association (Breko), only just under 40 percent are from Telekom. This is why Deutsche Telekom is pushing ahead with its own expansion.

Unlike its competitors, Telekom can pre-finance this from current revenues. This is because the many customers on the depreciated DSL infrastructure enable Telekom to migrate gradually. While competitors have to win customers quickly in order to be able to operate their business model, Tim Höttges has time. And most of today's applications can also manage with existing capacities.

Don't forget to switch off

Competitors are therefore demanding a clear timetable for when and how the old copper access network of the Bundespost is to be switched off completely. The Beko accuses politicians and regulators of playing for time, "which reinforces our suspicion that the interests of Deutsche Telekom are being deliberately protected here – a company in which the federal government still holds more than 30 percent of the shares." The Ministry of Digital Affairs predictably thinks little of such accusations. "In the case of anti-competitive behavior, there is already a legal basis that allows the competition authorities to intervene," says a spokesperson. Double expansion is not problematic per se and most cases would be settled on the market.

In addition, competitors are demanding that Telekom and its subsidiaries must submit their expansion plans to the Federal Network Agency. The other providers hope that this will provide them with evidence should Telekom deliberately thwart the expansion plans of its competitors. However, there is currently no such obligation – and, if there were, it would probably have to be created for all market players.

EU plans could reorganize the playing field

In any case, the legal key does not lie with Digital Minister Volker Wissing (now independent) in Berlin or Chief Regulator Klaus Müller in Bonn. The telecommunications market is already essentially regulated under European law. A good 25 years after liberalization, there are strong tendencies in Brussels to revise the telecommunications market framework as a whole.

The "Digital Networks Act", which was still being considered under Thierry Breton, is intended to make the telecommunications market truly European: with cross-border offers and cross-border regulation. This should also strengthen the position of European champions vis-à-vis providers from the rest of the world, who do not have to be telecommunications companies themselves.

Commission President Ursula von der Leyen recently confirmed that a legislative proposal is to be made in this area. The so-called Draghi Report recommends no longer using the markets of the nation states as a basis for assessing monopolies, but those of the entire EU, which is sharply criticized by some experts.

The result could be a significant consolidation of the telecommunications market in the EU. Deutsche Telekom believes, perhaps rightly, that it can and must play in a European Champions League of telecom giants. Market observers assume that the war chest must be filled for this: After all, it's all about who comes out on top in the end.

At the same time, there is an entirely different option for providers driven by financial investors: if monopolies are measured against the European market instead of the national market in the future, their providers could be bought from the market at high prices – by Telekom, for example, which would then no longer have to deal with the federal German spectacles.

However, whether this would actually have positive effects for EU consumers is another matter entirely. And until that happens, some streets in Kleinblittersdorf in Saarland will be opened up and then closed, opened up and then closed again.

(vbr)