Fast Internet: Warning about new monopolies

In an unprecedented move, several European telecommunications companies and industry associations are warning against a relaxation of oversight of the former state monopolies. The issue is the expansion and competition of high-speed fixed-line internet. The recently sent out letters are addressed to the EU Commission, which wants to change the rules for communications networks, which is actually intended to reduce bureaucracy.

In the 1990s, state-owned telecom giants across Europe were privatized and placed under regulatory control to ensure fair competition with new private rivals such as 1&1, Freenet, and Vodafone. Brussels now wants to reduce this control.

The open letters point out that the former monopolists still maintain control over the fixed-line infrastructure (lines, masts, and underground pipes). This applies especially to rural areas. The situation is currently particularly explosive in this country because the transition from decades-old copper lines to superfast fiber optic cables is gaining momentum.

"In Germany, too, we must now make the right decisions to strengthen competition instead of slowing it down," said Marcel de Groot, Vodafone's Germany boss, to the RedaktionsNetzwerk Deutschland (RND). "Now it's not about regulating less, but regulating properly. So that the transition to fast gigabit internet can succeed everywhere."

Frederic Ufer, Managing Director of the industry association VATM, describes the Commission's plans as "anti-industry and anti-competitive." Brussels is planning a "Digital Networks Act." The main criticism of VATM and others is that the Commission wants to roll back so-called ex-ante regulation for "companies with significant market power." The reason: Alternative providers are often dependent on leasing lines from the former monopolists. The conditions for this have so far been precisely defined in advance (ex ante) by national authorities.

The Commission now intends to place greater emphasis on the ex post principle: the supervisory authority should ultimately withdraw to the role of an arbitrator who intervenes when both parties cannot reach an agreement on lease matters. There is a fear in the industry that the former monopolists could systematically oppose each other to block rivals' fiber optic projects.

A relaxation of the rules, according to Ufer, would "open the door for Deutsche Telekom to further expand its dominant market position in Germany and abuse it at the expense of competition." The VATM head and his colleagues warn that a renewed laxity could also lead to a "massive loss of confidence among investors" and jeopardize fiber optic expansion projects. In plain language: Especially in rural areas, this scenario would result in slower internet and higher prices for consumers.

VATM and the broadband association Anga, along with their 350 member companies, have simultaneously launched a joint initiative to advance digitalization. "The fact is: Without the commitment of competitors, the race to catch up in digital infrastructure expansion will not be won," said Ufer and Anga CEO Philipp Müller.