Digital Agenda – Commission puts on hold German telecoms regulator’s plans to regulate high bandwidth leased lines

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The European Commission has put on hold, pending further investigations, plans of the German telecoms regulator (BNetzA) to set price levels for dedicated secure lines of ultra-fast broadband lines that are rented out to competitors- so-called “very high bandwidth leased lines”, which the incumbent German telecoms operator, Deutsche Telecom (DT), can charge alternative operators.

This type of line is mainly used by operators to provide businesses such as banks, insurance companies or hospitals with robust telecoms systems linking different locations. The Commission has serious doubts if BNetzA’s proposal to impose cost-oriented prices for access to leased lines with a bandwidth of above 155 Mbps is compatible with EU telecoms rules, and has requested more information justifying the proposal.

Neelie Kroes, European Commission Vice President, said: “EU telecoms rules are there to ensure adequate competition in the market so it can provide continually-improving services to consumers. Where competition is already delivering, we should avoid imposing additional rules that deter investment and hinder the introduction of competitive services.”

The EU telecoms rules require a national regulatory authority to impose proportionate remedies based on the nature of the specific problem identified. This means that regulators must not regulate in markets which are already competitive.

The Commission has issued this letter of serious doubts because further justification is needed from the German regulator that the proposed price regulation is both appropriate and proportionate. The Commission questions, in particular, the need for continued regulation given that the BNetzA itself notified the Commission at the end of 2011 that the market for very high bandwidth leased lines in Germany is now competitive. The Commission has therefore suspended BNetzA’s plans and begun a 3 month investigation.

The Commission’s decision to start an in-depth investigation begins a “second phase” procedure under Article 7a of the EU Telecoms Directive. BNetzA has now has three months to work with the Commission and the body of European telecoms regulators (BEREC) on a solution to this case so that the proposal is compliant with EU law. Meanwhile implementation of BNetzA’s proposal is suspended. Here to read more.

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