Brussels, 08/05/2002 (Agence Europe) - The European Commission has decided to launch an investigation into German teelcoms operator Deutsche Telekom AG (DT) suspected unfair pricing for access to its local loop. The Commission sees this as abuse of a dominant position and has sent Deutsche Telekom AG (DT) a statement of objections, the first stage in the investigation it has just launched.
Last year, the EU-Regulation on local loop unbundling came in force to force Member States' former telephone monopolies, like DT, to unbundle the local loop, key to the spread of electronic communications services and thus for the success of the New Economy since new entrants on the telecommunications markets need access on fair and non-discriminatory terms to the local loop (so-called "local loop unbundling") in order to be able to offer retail services to end-customers. In Germany, DT offers local loop access at two different levels. Besides the retail subscriptions to end customers, DT also offers unbundled access to the local loop to competitors, which allows them direct access to end-users. DT is thus active on the upstream market for wholesale local loop access to competitors and on the downstream market for retail access services to end-customers, where it holds a dominant position.
After a detailed assessment of the situation, the Commission feels that DT is abusing its dominant position by through unfair pricing practices amounting to a margin squeeze between its wholesale and retail tariffs. A margin squeeze is deemed to exist because of an insufficient spread between DT's tariffs for retail subscriptions and wholesale local loop access. The Commission has received several complaints against DT by new entrants on the German telecommunications market, such as Mannesmann Arcor and fifteen or so local and regional carriers, alleging such a margin squeeze for access to the local network and thereby a block on new jobs. Consumers are the main victims in that this restricts choice of service suppliers and limits price competition. DT now has two months to justify its behaviour. Amelia Torres, spokesperson for Commissioner Monti said that Deutsche Telekom has to review its charges and could not use prices to repel new entrants, adding that it would be premature at this stage to talk of fines. Deutsche Telekom has said that these accusations are "unjustified" and that the prices in question had been approved by the German telecoms regulator.