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Deutsche Telecom opens up a little bit to competitors

Tuesday 3 April, 2007

Watchdog says D.Telekom to grant network access

FRANKFURT, April 3 (Reuters) – Deutsche Telekom (DTEGn.DE: Quote, Profile, Research) is set to suffer another blow as Germany’s telecoms regulator plans to obligate the former state monopoly to grant rivals access to its network cables.

The decision by Bundesnetzagentur, due to be published on Wednesday and seen by Reuters, will enable rivals to lay their own cables to reach customers using Deutsche Telekom infrastructure, as the incumbent operator rolls out its new super-fast broadband network. In areas where they can not lay cables, rivals will be granted access to Deutsche Telekom’s fibre-optic network.

Deutsche Telekom and Bundesnetzagentur declined to comment.

Currently, Deutsche Telekom charges rivals a monthly fee to use its copper wires from phone exchanges into homes and businesses.

Last week the regulator cut the monthly price the dominant phone carrier can charge competitors by 1.4 percent, while Deutsche Telekom had hoped for an increase, arguing it had to compensate for high staff costs.

M2 comment: it would be nice to know how much DT charges competitors. Cutting it 1.4% could be a little or a lot, depending on the scope. It still sounds like a regulated utility by arguing for justification of high staff costs.

Deutsche Telekom is struggling to fight a drain of customers switching to smaller, cheaper rivals. It issued a second profit warning within six months in January, due to competition and regulation.

The company, Europe’s largest telecoms group by sales, hopes to lure back customers with better service and new products on its new 3 billion-euro super-fast VDSL broadband network.It wants VDSL to be exempt from regulation, arguing it needs to negotiate access and prices with rivals on its own to recoup its investment.

Deutsche Telekom has threatened not to expand VDSL further should it fall under regulation.

But the telecoms watchdog has said unless the company can prove it is offering new products not accessible without the new network, VDSL will be subject to regulation.

Competitors have demanded access to the VDSL network from local exchanges, similar to renting the last mile. Alternatively they have said they could access Deutsche Telekom’s infrastructure into homes and install their own fibre-optic cables.

“If things work out that way, we will be satisfied,” said a spokesman for the Federal Association for Broadband Communication (Breko).

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