EC slams Germany, Greece, Portugal on telecom law

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By Paul Meller

(IDG) -- The European Commission is taking legal action against Germany, Greece and Portugal for failing to ensure that competitors are offered shared access to the local loop of the telecommunications network in those European Union countries.

In a statement issued late Thursday, the EC said it is opening infringement procedures against the countries for breaking European laws regarding competition in the local loop. The EC has the power to fine member states that break European law.

The Commission said that in Germany neither shared access nor wholesale access to the incumbent's DSL (Digital Subscriber Lines) service were offered.

Virtually all DSL lines in Germany are currently held by Deutsche Telekom AG, the former state-run operator, leading to a monopoly situation in this market, the Commission said.

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In Portugal the reference offer for shared access to the local loop does not include tariffs for the service, and therefore cannot be regarded as a full offer, while in Greece an offer for shared access has not yet been published, the Commission said.

"Today's decision is only a first step in order to ensure effective implementation of the Regulation on unbundled access in all fifteen Member States," said the EC commissioner for enterprise and the information society, Erkki Liikanen. "If there are further problems, additional legal action could be taken in due course."

In Germany, Deutsche Telekom already has 1.2 million customers for its high-speed Internet access service. While a significant number of local loops have been fully unbundled in Germany, the great majority are used not for the provision of high-speed access but rather for voice telephony, the Commission said.

"The first-mover advantage that this represents is very worrying in terms of the risk of foreclosure of competition in broadband access," the Commission warned, citing figures provided by the German Monopoly Commission (Monopolkommission). The figures show that the Deutsche Telekom's monopoly of high speed Internet access in Germany rose from 99 percent at the end of last year to 100 percent this month.

"This is leading to a new monopoly situation in this market," the Commission said.

The regulation on unbundling of the local loop, adopted a year ago by the European Parliament and the Council, was designed to bring more competition to the provision of local broadband access.

One of the options under the regulation is for new entrants to offer DSL services for broadband access over the local telephone network while the incumbent continues to provide voice services over the same connection ('shared access').

Implementation of the regulation on local-loop unbundling to permit high-speed Internet access has so far been disappointing, the Commission concluded in its recent seventh annual report on telecom liberalization.

European heads of state gave the initial impetus to the EU law on the local loop. At the Lisbon European summit in 2000 they agreed to introduce greater competition in local access networks to foster the use of the Internet in Europe. They called for the regulation on unbundling of the local loop by the beginning of January 2001.