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Competition in a state of flux

16.12.2021

Press release

  • The transition from copper to fibre-optic networks should be organised in a way that is consistent with competition.
  • Mobile radio frequencies should continue to be allocated by auction in future.
  • Over-regulation of interpersonal telecommunications services should be avoided.  

In its sector report published today, the Monopolies Commission sets out recommendations on how competition at the network and service levels can be expanded for the benefit of end-users. Competition is undergoing a transformation at several levels: at the network level, the fixed-line sector is set to migrate from copper to fibre-optic networks, whilst in the mobile sector, the allocation of frequencies will set a decisive course for competition. At the service level, the amendment to the Telecommunications Act (TKG) has created a new legal framework for so-called over-the-top (OTT) communication services such as WhatsApp or Threema, which are now included in the regulatory framework as interpersonal telecommunications services.  

Ensuring the migration process from copper to fibre-optic networks is in line with competition rules  

The decommissioning of the copper network and the switch to fibre-optic networks should be carried out in a manner consistent with competition. At the same time, planning certainty for market participants throughout the entire migration process is important. Both would be guaranteed if copper-based wholesale charges were kept stable in real terms until the end of the migration process. The Monopolies Commission views it as problematic that Deutsche Telekom AG has concluded long-term purchase agreements only with large wholesale customers. This permanently deprives fibre-optic network operators not participating in this so-called ‘commitment model’ of demand for network access, which in turn hinders their network expansion. 

The commitment model may slow down the migration process as a whole, thereby distorting competition to the detriment of smaller fibre-optic network operators.

Jürgen Kühling, Vorsitzender der Monopolkommission

The assessment of the competitive impact of these long-term access agreements should take this into account. In order to provide positive incentives in the migration process, comprehensive ex-ante price regulation may be waived for fibre-optic networks, provided that non-discrimination obligations are imposed.

Retain the auctioning of mobile radio frequencies  

Only a limited amount of spectrum is available for mobile communications. This should be allocated amongst mobile network operators in such a way as to ensure both high-quality mobile coverage and competition between mobile networks. The best way to ensure this is to continue auctioning mobile frequencies.

Care must also be taken to ensure that future spectrum allocation is carried out through a competitive process in the form of an auction.

Jürgen Kühling, Vorsitzender der Monopolkommission

The priority given to the auction procedure, which was removed in the most recent amendment to the Telecommunications Act, should therefore be reinstated in the Act. An extension of frequency allocations should only be considered if it is for the shortest possible period, with the aim of harmonising the timing of the allocation of all frequency blocks across the spectrum.  

Avoiding over-regulation of person-to-person telecommunications services  

To date, only end-users of the same communication service – such as WhatsApp, Signal, Threema and Wire – have been able to communicate with one another. The coalition parties now wish to enable cross-service communication by introducing an interoperability requirement. 

Such interoperability obligations should be rejected at present, as they would currently have more negative than positive effects on competition.

Jürgen Kühling, Vorsitzender der Monopolkommission

End users deliberately use several services in parallel and switch between them depending on their preferences. In the Monopolies Commission’s view, a symmetrical interoperability obligation that would also apply to smaller providers is disproportionate and harmful to competition, as it would deprive these providers of the opportunity to differentiate themselves from large providers through better features or higher data protection standards. An asymmetric interoperability obligation, which applies only to companies with significant market power, is only justified if a market failure is identified. No such situation is currently apparent.  

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