The European Commission has reached a settlement with Deutsche Telekom AG over its anticompetitive practices in the market for cheap high-speed Internet services in Germany.
The Commission said in a statement that the company has agreed to stop selling high-speed access at a price so low that it leaves no margin for profit for competitors.
The cheapest way for a competitor to be able to offer the equivalent of broadband access to consumers is to rent shared access to the copper wires leading to people’s homes and offices from the phone company that owns them: in this case Deutsche Telekom.
According to European Commission estimates, shared access costs the competitor just under EUR5 (US$6.22) per subscription. This is less than half the price of gaining full access to the local loop, which would cost around EUR10 per subscription.
Deutsche Telekom promised the Commission that it will offer shared access for free to competitors for the rest of this year in order to try to redress the balance of competition, the Commission said.
“In spite of a 2001 E.U. (European Union) obligation to provide competitors shared access to its local loops, only a few competitors found it profitable to make use of shared access,” said Competition Commissioner Mario Monti.
He added that Deutsche Telekom, meanwhile, has become “a quasi-monopolist for broadband access at retail level. None of the new entrants has been able to reach any significant market position. This is due to DT’s anticompetitive tariff structure.”
The commissioner said he has accepted the tariff reductions proposed by Deutsche Telekom.