EC-Deutsche Telekom In Dispute Over High-Speed Internet Network Exclusion

February 28, 2007

The European Commission began legal proceedings against Germany over a new law that allows Deutsche Telekom to prevent competitors from accessing the high-speed network that it is building to deliver on-demand movies and other services to German consumers.

European media and telecom commissioner, Viviane Reding sent a letter to the German government charging that the new law, which was enacted last Friday, amounts to an illegal "regulatory holiday." She gave Germany 15 days to respond under an accelerated procedure, but a spokesman said that he expected the case to end up in the European Court of Justice as soon as this spring.

The German Economy and Technology Ministry claims that the law-which came about via negotiations between Chancellor Angela Merkel and coalition partners, provided a holiday from regulation, as the EC agrees. The main bone of contention for the German government is that the law statisfies meets EU regulations because state protection is occasionally allowed in cases where a new service is being developed.

With those perspectives guiding this dispute, some analysts claim that what could tilt matters one way or another is a court decision that the new network and its much faster downloads, are creating a new service.