Plans by Deutsche Telekom (DT) to upgrade its German broadband network to reach speeds of up to 100 Mbps were approved this week by the European Commission (EC), contingent upon the commitment of German regulators to secure concessions that will enable rivals to gain access to the upgraded DT network. The proposed network upgrade involves a process, known as “vectoring,” which will enable DT to achieve high data transmission speeds through existing fiber network infrastructure. However, the process of tightly bundling network lines through vectoring effectively impedes competitive access to the upgraded network. As such, German market rival Vodafone has complained that DT’s plan is “fundamentally incompatible” with European Union competition rules.
Although German regulator BNetzA had previously consented to DT’s proposal on the condition that DT offer a virtual unbundled local access (VULA) product that would enable rivals to launch competitive services through the upgraded DT network, the EC objected on grounds that BNetzA’s decision placed certain restrictions on rivals that would discourage them from seeking network access. Under the revised plan drawn up by BNetzA and endorsed by the EC, DT must guarantee network access to an unlimited number of competitors in each local exchange area instead of to just one competitor as mandated previously by BNetzA. DT must also ensure the ability of rivals to offer service at the same speeds and quality provided by DT to its customers. By this fall, BNetzA must also submit plans to the EC on how it intends to facilitate competitive access to DT’s broadband gateways as an alternative to VULA. Asserting that, “as a result of our intervention, [BNetzA] has drawn a better balance between network upgrade[s] and high quality access for competitors,” EC Digital Economy and Society Commissioner Gunther Oettinger remarked that “the additional safeguards BNetzA now proposes . . . create incentives to invest in future-oriented networks for the gigabit society.”