Court Forces Deutsche Telekom To Open Local Net

On Wednesday, Germany’s highest federal administrative court in the eastern city of Leipzig rejected a petition by Deutsche Telekom that would have hindered the resale of the company’s services and products to its competitors on the German market.

"The competition called for in the (federal) Telecommunications Law is not just limited to the (telecoms) providers who are providing these services with their own network structures; it also includes the so-called resellers," the court said in a press release."This requirement is valid regardless of whether a reseller accesses an alternative (network) or is able to build the services on its own," the court stated.

The appeal ruling stemmed from an earlier decision against Telekom in a complaint filed by Stuttgart-based Debitel, a competitor. Debitel had sought to resell bundled local calling services and data services like ISDN and DSL. Unable to reach an agreement with Deutsche Telekom for access to its network, Debitel took its case to federal telecommunications regulators. They ruled against Telekom, ordering the company to "remedy the abuse it has caused in its market-controlling position." Telekom sued to have the ruling overturned, but a Cologne administrative court ruled against the company.

Wednesday’s ruling requires Telekom to act as a network wholesaler to competitors, who can obtain its services at a discounted price and then resell them to customers. The ruling could also force competition within the telecommunications market in smaller or remote parts of the country, where progress in market liberalization has been slow.

Telekom loses a long battle

Executives at Deutsche Telekom said they regretted the court’s ruling and would review their legal options. "With this decision, innovation will be weakened," a company spokesman told German public television ARD. "Nor will it encourage greater competition on the market through a diversity of infrastructures." The company has been battling against the deregulation plans of the federal government’s telecommunications and post regulatory office for years. The authority has said Telekom must offer access to its networks to competitors and that they must be able to bill customers on their own.

In its case, Telekom expressed fears that the company would suffer from loss of business if the regulation were kept and that broader access to its expensive and vast network threatened to decrease the motivation of competitors to invest in their own network capacities – a move the company said could ultimately reduce overall network capacity.

Though deregulation of the telecommunications market officially occurred in 1998, two-thirds of all Germans can still only obtain telecommunications services through Deutsche Telekom. To keep investment costs down, most competitors have focused on the country’s major metropolises, like Cologne. The newer services also rely heavily on hi-tech ISDN or DSL connections, which althougth they are modern put the companiess at a disadvantage in the lower end of the market, as Telekom remains the sole provider of inexpensive analog connections.