Last Mile

Deutsche Telekom legal victory could lead to higher prices for consumers

Telekom Glasfaser-Netz
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Deutsche Telekom will soon see a key legal victory that will unwind privatization-era protections for rivals, allowing it to retroactively collect fees from competitors. The impact on consumers of the long-awaited change remains unclear.

As the former state phone company, Deutsche Telekom continues to play a pivotal role in broadband service in Europe’s biggest economy — it still controls the last piece of cable to consumers in 75 percent of Germany’s households. Legislation requires Telekom to lease space on those cables to rivals such as United Internet and 1und1 to keep competition robust.

Germany’s telecommunications regulator, the Bundesnetzagentur, sets the fees those rivals pay Telekom, though they are often disputed. The disputes are then settled by a court but only the competitors can collect retroactively if a judge rules that the fees were exorbitant. Should Telekom sue for higher fees and win, a ‘90s-era law prevents the firm from collecting the fees retroactively from competitors.

“We knew that sooner or later this would happen,” admits the employee of one of Deutsche Telekom’s competitors. The law was designed to protect small upstarts from a behemoth Telekom as Germany sold off its once-controlling stake in the company.

A ‘limit’ to investment

Following the wishes of the Constitutional Court, which ruled on the issue in 2016, a change to the Telecommunications Act is required by the now-expired deadline of July 31, 2018. A draft proposal still seeks to protect companies with less than €100 million ($116 million) in annual sales but opens all others to retroactive payments to Telekom.

Deutsche Telekom naturally welcomes the change: “This finally creates legal certainty,” a spokesman said. Competitors see it differently. “The provisions that competitors will have to set aside under the amendment will tie up considerable funds and limit the investment and competitive opportunities of competitors,” said Jürgen Grützner, managing director of the Association of Telekom’s Competitors (VATM).

Mr. Grützner’s organization as well as Vodafone, United Internet and Telekom refused to estimate the cost of the rule change, making it impossible to gauge the impact to consumers.

Stephan Scheuer is co-head of Handelsblatt’s feature and people desk. To contact the author: scheuer@handelsblatt.com 

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