The Monopolies Commission also opposes the suspension of regulation of wholesale services as a means of encouraging infrastructure investment by the incumbent operator. To date, it has been competition, above all, that has driven market participants to invest in broadband networks. If the intensity of competition were to be reduced through regulation, this would tend to be at the expense of infrastructure investment. This is particularly so because the majority of broadband investment in Germany is currently being carried out by alternative network operators.
The roll-out of broadband networks in Germany must continue to be market-driven and, above all, funded by private investment. A universal broadband service should not be an option, even in the future. Arguments against this include the distortion of competition, the negative impact on investment incentives and the high costs involved. Where the roll-out of high-performance broadband networks is not commercially viable, government support programmes may be introduced in accordance with the European Union’s state aid rules.
From a regulatory perspective, and due to potential conflicts of interest arising from the simultaneous role of owner and regulator, it is imperative that the Federal Government divest its direct and indirect holdings in Deutsche Telekom AG. The proceeds from privatisation could, not least, be used to finance support programmes for broadband expansion.
The Monopolies Commission takes a largely positive view of the work carried out by the Federal Network Agency in the telecommunications sector. With its decision to allow the use of vectoring technology, the Agency has paved the way for rapid, nationwide and largely legally secure network expansion, and has prevented a technology monopoly by Deutsche Telekom on the so-called ‘last mile’ – a scenario that had initially been feared.
With regard to the forthcoming spectrum allocation process in the mobile communications sector, the Monopolies Commission welcomes the Federal Network Agency’s plan to include all foreseeable available spectrum in the process. The decision on the allocation of frequencies should be deferred until there is clarity regarding the outcome of the merger control proceedings in the O2/E-Plus case. In any event, care must be taken to ensure that the allocation process does not block market entry opportunities for new providers. An auction of the frequencies is only warranted if there is genuine scarcity. Consideration must be given to the risk that market entry could be prevented by strategic bidding behaviour.
The Monopolies Commission is, in some respects, critical of the initiatives to amend the European regulatory framework for telecommunications markets.
- The introduction of a standardised virtual access product to the fixed network (bitstream) would weaken infrastructure-based competition in Germany. Access products vary according to national circumstances, as the infrastructure and competitive landscape differ across Member States. In Germany, physical network access via the unbundled local loop dominates. The Monopolkommission opposes a regulatory-driven transition to service-based competition.
- With the extension of the European Commission’s rights of participation in the allocation of mobile radio frequencies, further powers currently held by national regulatory authorities are to be centralised at European level. This would make frequency allocation procedures more time-consuming and subject to additional bureaucracy.
- With regard to the amendments to the Roaming Regulation that have already been adopted and those that are planned, the European Commission’s core objective is not the introduction of competition in the roaming markets, but the rapid and complete abolition of roaming charges. The Monopolies Commission takes a rather critical view of this due to the potential impact on market structures in the mobile telecoms sector.
- The planned revision of the so-called Market Recommendation is to be viewed positively. The Monopolies Commission sees no need to include further markets in the regulation, but supports the exclusion of the retail market for subscriber lines.
In the wake of the debate on the throttling of internet connection speeds, the Monopolies Commission has once again addressed the issue of net neutrality. It reiterates its position that a strict interpretation of net neutrality cannot be justified. Rather, net neutrality in a broader sense should be advocated, whereby price and quality differentiation is permitted, provided that this is based on objective criteria and is not applied in a discriminatory manner. The preservation of a freely accessible, best-effort internet should be ensured through dynamically adjustable minimum requirements. The adoption of a net neutrality regulation at this stage is not advisable.
