Deutsche Telekom (DT), the incumbent telecom operator in Germany, plans to replace the country's present network infrastructure, which is mostly still based on copper, with fibre-optic cables. These could be used for VDSL (Very High Speed Digital Subscriber Line), a technology allowing for internet data to be transmitted up to eight times as fast as with the present ADSL standard.
Such high speeds will be needed for applications such as High-Definition TV (HDTV) via internet, Voice-over-IP (VoIP) and applications hosted on service providers' websites. The bandwidth would even be sufficient for such applications to be used at the same time.
In order to ensure DT's return for the €3 billion investment, Germany's Economic Affairs Minister Michael Glos exempted the fibre-optic network from competition rules that oblige the network operator to guarantee its competitors access at fair conditions. Glos argued that this 'regulatory holiday' was justified because fibre-optic constituted an emerging market for which softer rules apply. The fact that the German government holds a 32% share in Deutsche Telekom may also have played a role.
Information Society Commissioner Viviane Reding, however, does not agree with this argument and has threatened repeatedly to take Germany to Court. VDSL, Reding said, was not a completely new product but merely one for which a market - namely internet access - already existed in a faster and thus more competitive form.
In spite of a December 2004 Commission ruling and several rulings of the German regulator along similar lines, DT continued to roll out VDSL throughout Germany. Currently the technology is available in 12 cities and DT plans to extend it to 50 cities before the end of 2007. At present, DT holds a monopoly for VDSL internet access.
To be announced on 27 June 2007, Reding will finally be taking Germany to Court. DT has threatened, in return, to stop further rollout of VDSL if return on its investment is threatened.
