EU worried about the German coalition plans in relation to telecommunications

The new German government will no doubt bring some change to how the German economy has been working so far. Some of the proposed changes have already caused considerable concerns in the European Commission. One of these changes is the proposed plans of the new coalition to avoid regulating Deutsche Telekom’s expansion of its broadband network. The coalition agreement has stressed that the Deutsche Telekom’s high speed optical fibre network will be exempted from regulation. The reason for such a move is to attract the much needed investment to the German economy by providing planning reliability to the investors. Generally such exemptions are prohibited by the EU law, however, not in all circumstances. The general idea of the regulatory framework in the area of electronic communications is that there needs to be no regulation as long as there is sufficient competition in any given market. The wording of the coalition agreement leaves space for a similar interpretation concerning high speed optical fibre network. Deutsche Telekom has unveiled plans to invest three billion Euros until 2007 to roll out a high-speed optical fibre network in Germany. It would transmit data up to 20 times faster than current offerings. On the one hand, the argument made by the Deutsche Telekom is that in order for this investment to become profitable this market needs to be exempted from regulation and from the requirement to offer its lines for rivals. On the other hand, the competitors claim that the infrastructure used by DT for its expansion is the one which was built up during the time when DT was a monopolist, and therefore it cannot be seen as an exclusive property of DT. Furthermore, it is claimed that if the high speed optical fibre is exempted from the regulation most of investors who have been investing in the current market for providing internet will loose out. This would send wrong signals to those investors and they might leave the German market altogether.