Commission examines German regulation
By Manon Malhère | Tuesday 05 June 2012
On 4 June, the European Commission decided to open an in-depth investigation into a legislative plan of the German telecoms regulator (BNetzA) to set price levels which the incumbent German telecoms operator, Deutsche Telecom (DT), can charge competitor operators for access to “very high bandwidth leased lines”. The Commission has serious doubts if BNetzA’s legislative proposal is compatible with EU telecoms rules. Neelie Kroes, the commissioner for the Digital Agenda, said: “EU telecoms rules are there to ensure adequate competition in the market so it can provide continually improving services to consumers. Where competition is already delivering, we should avoid imposing additional rules that deter investment and hinder the introduction of competitive services”.
The legislative proposal was notified to the Commission in May this year. It includes a price control (wholesale prices) for access to terminating segments of leased lines with a bandwidth of over 155 megabits per second (Mbps). This type of line is used to provide solid telecoms systems for banks or hospitals.
Yet the Commission notes that BNetzA’s second (2011) cycle of analysis on the wholesale market for terminating segments of lines (the review was also passed on to the Commission) states that while Deutsche Telekom has a significant power on the market of terminating segments of leased lines of between 2 Mbps and 155 Mbps, for lines with a bandwidth of over 155 Mbps, the market is “prospectively competitive and, thus, no longer susceptible to ex ante regulation”.
Thus, with its legislative proposal, BNetzA is essentially proposing to regulate a market notified as being competitive and is not laying down any obligation for the part of the market considered to be non-competitive.
The Commission therefore has doubts as to the compatibility of this legislative proposal with several rules defined in Directives 2002/21/EC and 2002/19/EC, modified in 2009. Namely: 1. the principle laying down that the national authorities are not authorised to regulate markets that are competitive; 2. that if a significant power on the market is noticed, relevant regulation must be proportionate and appropriate; and 3. the principle laying down that the authorities should impose mandatory regulation when a market is not competitive.
Under Article 7a of Framework Directive 2009/140/EC on telecoms, the Commission can open a three-month investigation to discuss, in close cooperation with the Body of European Regulators for Electronic Communications (BEREC) and BNetzA, how to amend BNetzA’s proposal in order to make it compliant with EU law. During that period the implementation of the proposal is suspended.