The European Court of Justice (ECJ) has ruled that Section 9a of the German Telecommunications Act (TKG), which grants incumbent telco Deutsche Telekom (DT) a ‘regulatory holiday’ for investment in ‘new markets’, infringes EU law. The European Commission (EC) has argued that this provision restricts the discretion of the national regulator, the Federal Network Agency (FNA), to impose ‘remedies’ and other measures on the incumbent. In the past, DT has argued that the scale of its investment in its VDSL infrastructure, and that fact that it constituted a new market, meant that the fibre-optic network should be exempt from competition and the obligation to lease channels to rival providers for three years. This was backed by the German government, but the EC disagreed, stating: ‘We insist that the development of the VDSL market in Germany follows the EU rules and that the dominant player will not be given a head start in a monopoly.’ In December 2006 an amendment to the TKG was passed by parliament exempting DT from having to open up its last mile VDSL connections to rivals on the grounds that the VDSL infrastructure constituted a ‘new market’. The law took effect in February 2007 leading the EC’s Information and Media Commissioner, Viviane Reding, to file a complaint with the ECJ.
The ECJ’s judgement overrules the FNA’s attempt to allow DT to ban competitors from having access to its high speed broadband network, meaning that the incumbent must now open up the infrastructure to its rivals. ‘This judgment is an important precedent for telecoms regulation across Europe,’ the commission said in a statement, adding: ‘The judgment will help the EC and national regulatory authorities to promote, independently of political pressure, effective competition on the telecoms markets.’