European Commission (EC) said Wed. it suspected Germany’s Deutsch...
European Commission (EC) said Wed. it suspected Germany’s Deutsche Telekom was charging anticompetitive rates for access to its local network. In statement of objection, EC contended that DT had abused its dominant market position through unfair pricing for local…
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loop access. For retail local loop access, DT has more than 98% market share, even 4 years after Germany opened that market to competition, EC said. Commission said it believed DT abused its dominant market position in way that amounted to “a margin squeeze between its wholesale and retail tariffs.” “After 4 years of complete liberalization of the telecommunications markets in Europe, competition has come to a critical stage,” EC Competition Comr. Mario Monti said. “This is particularly acute in the local loop where many very promising new entrants have already been forced to give up their business.” EC said it considered DT to hold dominant market position for wholesale and retail local loop access. Alternatives such as fiber networks, wireless local loop, satellites, power lines and upgraded cable TV networks “are not yet sufficiently developed and cannot be considered as equivalent to DT’s local loop network,” EC said. Competitors such as Mannesmann Arcor complained to EC, saying there was insufficient spread between DT’s tariffs for retail subscriptions and wholesale local loop access. EC said DT could have averted “margin squeeze” situation by cutting wholesale access fees, increasing retail subscription fees or both. “In general, it is the Commission’s position that vertically integrated operators like DT must indeed fix their retail prices at a level sufficiently above the wholesale prices so as to allow new entrants to compete,” EC said. DT has 2 months to provide arguments rebutting EC’s preliminary analysis. Arguments also can be presented at oral hearing. Commission said it wouldn’t adopt final position until after those steps were completed. In Dec. 2001, EC began infringement proceedings against Germany, Greece and Portugal for failing to implement provisions of European Union regulation on local loop unbundling. EC said DT recently adopted tariff changes for both wholesale and retail service that were “step in the right direction” but it said they were “far from being sufficient in order to rebalance the local loop access tariffs.”