Brussels, 17/05/2005 (Agence Europe) - The European Commission has vetoed a decision by the German regulator, RegTP ('Regulierungsbehörde für Telekommunikation und Post'), not to regulate ex ante telephone call termination services provided by alternative network operators. RegTP intended to regulate ex ante termination charges of Deutsche Telecom but not those of the alternative network operators (ANO). Operators need to buy call termination services from each other whenever their customers make a call to a different network, and the charge is generally passed on to the consumer placing the call. In a press statement Competition Commissioner Neelie Kroes explained that "The Commission is not convinced that the markets for call termination on alternative fixed networks in Germany are competitive in practice”. She added that “Effective regulation can lead to lower prices for consumers and create legal certainty for market players."
Commission and RegTP analyses diverge on the question of ANO market power and their ability of these operators to keep prices high for these services. According to German regulator ANOs were not in a position to raise prices and in compliance with the Electronic Communications Framework Directive 2002/21/EC) it is not necessary to regulate ex ante telephone call termination services. RegTP claimed that ANOs were not in a position to raise prices above the competitive level as Deutsche Telekom could exert sufficient pressure on ANOs when negotiating call termination charges.
The Commission (which according to the same directive can call on the national authority to revise its terms) considers that Deutsche Telecom is obliged to buy termination services from each of the ANOs, which significantly weakens its buyer power. The Commission believes that RegTP has in practice regulated the termination rates of certain ANOs in Germany by means of ad hoc dispute settlements which have not included an assessment of the ANOs' market power. It considers that such intervention is no substitute for ex ante regulation based on proper market analysis. In a press release the Commission points out that each ANO's 100% market share on the relevant market - in essence its control over a network and a service for which no substitute exists - creates a strong presumption of significant market power. Other European regulators that have analysed equivalent markets on this basis have found that the ANOs in their respective countries had significant market power. RegTP has in the Commission's view not provided sufficient evidence to rebut the presumption of significant market power. This is the 4th Commission veto calling on a national telecommunications regulatory authority to revise its decisions forthwith.