EC fines Deutsche Telekom 12.6 million euros

The European Commission decided Wednesday to fine Deutsche Telekom AG (DT) 12.6 million euros (US$14.8 million) for failing to unbundle the local telecommunications loop in Germany.

The Commission said that DT has been charging unfair prices for the provision of access to its fixed telecommunication network, thereby maintaining an almost total monopoly of 95 per cent market share.

“Many new entrants have tried to compete with the incumbent operator,” Competition Commissioner Mario Monti said in a statement, adding that “none of them has been able to reach significant market share.”

“This is clearly harmful to consumers because competition between operators is the best means to bring the overall prices down,” Monti said.

The Commission has found that there is an insufficient spread between DT’s local loop access prices and the end prices charged to subscribers, giving no scope to new entrants to compete with DT.

The Commission found that between 1998 and 2001 DT charged competitors more for unbundled access at the wholesale level than it was charging its own subscribers. From 2002, prices for wholesale access were lower than retail subscription prices, but the Commission found that the spread was still not sufficient.

DT’s most recent reduction in costs to competitors, which came into effect on May 1 this year, still did not allow enough of a margin, the Commission found.

Further sanctions will be levied if the company fails to reduce its prices sufficiently within two months. The Commission did not specify an acceptable price.

A Commission spokesman said he was confident that DT would respond.