Bonn/Berlin, 21.07.2022 The German Broadband Association (BREKO) comments on today’s publication of the regulatory order of the Federal Network Agency (BNetzA) on the future regulation of access at fixed locations (Market 1), which was released yesterday by the EU Commission:

“The German Broadband Association notes with regret that the European Commission has criticized but ultimately approved the regulatory order for Market 1 despite considerable concerns on the part of the Federal Cartel Office and the industry. With the regulatory means chosen by the BNetzA, it is calling into question its self-declared goal of supporting and accelerating the expansion of fiber optics through stable, transparent and competitive framework conditions.

In the BREKO’s view, one of the critical points is the planned expansion of the existing obligation to provide access to empty ducts as a result of the regulatory order. Access to empty ducts can be used for the superstructure of existing fiber optic networks, which could jeopardize investment security for expanding companies and thus slow down rather than accelerate fiber optic expansion. In addition, sufficient access to empty ducts has been regulated in the Act to Facilitate the Expansion of Digital High-Speed Networks (DigiNetz Act) since 2016.

BREKO agrees with the EU Commission’s criticism of Deutsche Telekom’s scope for price-setting, which has already been criticized by the Federal Cartel Office, and which is caused by the BNetzA’s control of abuse limited to the ‘flagship’ products (100 Mbit/s). The EU Commission rightly demands that not only Deutsche Telekom’s most important product, but also other active products with other bandwidths should be reviewed.

It is also unacceptable for the BNetzA to rely on Deutsche Telekom’s so-called commitment model for access to copper networks and fiber optic wholesale products on a bitstream basis. These access and fee agreements between Deutsche Telekom and the largest wholesale customers, which only represent a part of the market and a specific business model, have already been criticized by the Federal Cartel Office as foreclosing the market. The vast majority of Telekom’s bitstream customers effectively have no access to the commitment model, are thus restricted to individual purchase and are therefore at a considerable structural disadvantage. BREKO shares the Bundeskartellamt’s concerns here.

If the commitment model is not corrected by regulation, the FTTH bitstream market will in future be dominated by Telekom in a similar way to the VDSL bitstream market. In our view, the commitment model is a lever for a transfer of market power that can hardly be corrected retrospectively.

In this context, a comprehensive migration concept for the switch from copper to future-proof fiber optic networks that reflects the interests of all companies involved in the market is also missing. In BREKO’s view, this would be another urgently needed cornerstone of fair market regulation. It is incomprehensible why neither the BNetzA nor the EU Commission have implemented or considered these important instruments.

Another essential component of fair, future-oriented and successful regulation of fiber-optic networks, in the view of BREKO, is not sufficiently taken into account in the regulatory order that has now been approved: The principle of “Equivalence of Input” (EoI), through which service providers who purchase wholesale services from a network operator can access the same systems, processes and resources as the network operator itself, is not taken into account in the present regulatory order. Without a consistent and comprehensive implementation of this principle, it is to be feared that wholesale customers will be structurally disadvantaged by Telekom.

BREKO will continue to play a constructive role in all the follow-up procedures now required and demanded by the EU Commission in the interests of fiber optic expansion.