EU challenges new German law protecting telecom company

The European Commission started legal action against Germany on Monday over a newly-adopted law shielding Deutsche Telekom from competition in the broadband market.

The European Union's executive arm said it sent Germany a letter of formal notice after repeated warnings not to adopt the legislation in question were ignored.

Under the so-called fast-track infringement proceedings, Germany will have only 15 days, instead of the usual two months, to reply to the letter.

"I regret that Germany has chosen to ignore the Commission's concerns about this new telecom law despite several clear warnings from the Commission," said EU Telecom Commissioner Viviane Reding, adding that the Commission intends to refer the case to the European Court of Justice as soon as possible.

The European Commission charged that the German new telecommunication law, which entered into force on Saturday, would effectively exempt Deutsche Telekom from competition for a fast internet access network that the company is building.

Deutsche Telekom, which is 32 percent owned by the German government, is planning to establish a high-speed fiber optical network covering 50 largest cities by 2007. The cost was expected to be as high as three billion euros.

Under an arrangement with the government, Deutsche Telekom would be allowed by the new legislation to enjoy de facto monopoly over the network during the first years of operation to help recoup its investment costs.

The German law would jeopardize the competitive position of Deutsche Telekom's existing competitors and make it much harder for new competitors to enter German markets, the Commission said.

According to the Commission, Deutsche Telekom already enjoyed a dominant position on the German broadband market, which controls access to two-thirds of the country's total lines.

Source: Xinhua