German monopoly commission issues telecoms report, calls for flexible rules to incentivise investment

Tuesday 5 December 2017 | 14:38 CET | News

Germany should introduce more flexible regulations and make adjustments to help pave the way for the expansion of fibre-optic networks, said Germany’s Monopoly Commission, an independent advisory panel for the German government, in a special report on competition in the German telecoms market. 

Noting that the high costs of building out the network, weak demand for fibre connections and regulations are impeding private investment in Germany’s broadband infrastructure, the commission said it supports Germany’s Federal Network Agency, its national telecoms regulator, in its efforts to devise new regulations for FTTH/FTTB networks to incentivize investments in broadband internet. 

These measures could include phasing out cost-oriented access and tariff regulations in order to make risky investments more profitable and attract private investment, as well as encouraging firms to cooperate in constructing networks to reduce expenditures and increase the network’s use. 

Still, the commission cautioned the government should not completely do away with regulations for fibre, as this would create a situation where companies could form “strategic alliances” at the expense of competition. 

Public subsidies on the other hand should only be granted in areas where private investments are not being made in broadband networks, said the commission. These subsidies should not crowd out or devalue private investments and be complemented with “demand-side instruments” like vouchers for gigabit connections to promote household interest. Exclusive developments rights in the forms of concessions should also be avoided, as this would result in the monopolization of regional infrastructure and exclude private investment, they added. 

The commission also called for the remaining state-owned shares of Deutsche Telekom to be sold off. The sale of the German government’s 32-percent stake in Telekom would put an end to the government’s “problematic dual role” as a regulator and shareholder on the telecoms market. 

Industry support

Breko, Germany’s federal broadband association, welcomed the commission’s assessment and agreed with their conclusion that regulations need to be made more flexible to accommodate the “special circumstances” surrounding the expansion of fibre-optic networks, without being completely abolished. Breko has argued in the past in favor of cooperations between network operators and open access models to spur the expansion of broadband.

Breko said it likewise supports the commission’s recommendations to invest in gigabit-speed FTTH/FTTB connections in the future, rather than vectoring, and demand-side products like vouchers. 

For mobile, the commission called for the Federal Network Agency to make new frequencies available for 5G as soon as possible to help with the development of the new network. Network operators who are awarded frequencies in turn should be obliged to offer wholesale products to other providers on non-discriminatory conditions, they wrote. This is to ensure that providers without their own mobile network can still offer innovative 5G services and maintain fair competition on the market.

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