Sunday, February 25, 2007

European Commission Opposes "Regulatory Holiday" for DT

The European Commission sent a letter of formal notice to Germany after repeated warnings not to adopt legislation that could grant Deutsche Telekom a 'regulatory holiday' in spite of its dominant position on the German broadband market. The European Commission said it is giving Germany 15 days to reply, and then it intends to refer the case to the European Court of Justice.

Specifically, the European Commission is objecting to a German telecom law that just entered into force that effectively exempts Deutsche Telekom's new VDSL network from competition, as had been requested by the German incumbent operator. DT is still partly owned by the German State.

"The German decision to grant Deutsche Telekom a 'regulatory holiday' is bound to lead to numerous legal disputes at EU and national level," said Commissioner Viviane Reding. "This is the worst possible signal for investment, as now neither the incumbent nor new market entrants will have legal certainty in Germany. Efficient implementation of EU telecom rules would clearly have been the better way to promote both competition and investment."