EU's Reding asks Germany to drop plan favoring Deutsche Telekom

European Union Telecommunications Commissioner Viviane Reding said Germany should abandon a plan to pass regulations that would favor Deutsche Telekom AG and shield Europe's largest telephone company from competition. „All our European rules are made to open the market,” Reding said in an interview in Rome yesterday. „I hope the German Parliament, which is discussing the new proposal, will have the good sense to go back to normal, open-market policy.” Reding says she is concerned a German plan for regulating wholesale leased line markets on the basis of bandwidth may hurt competition. On October 4, the European Commission threatened to veto the new rules in a bid to expose the Bonn-based former monopoly to increased market pressures. Reding's appeal to German policy makers to abandon the proposed new regulations comes a few months before the country takes over the EU presidency on January 1. The plan fueled tension between Germany and EU regulators, who will delay proposals to curb the powers of telecom incumbents as they seek to prevent Germany from shaping the rules to favor Deutsche Telekom. The German proposal would designate Deutsche Telekom as having significant market power only in the lower bandwidths of two markets linked to voice and data transmission.

Reding said in the interview she is considering a proposal to create a European regulator to oversee the telecom industry and increase competition in the single market. „There can't be open markets and then a country like Germany moving in the opposite direction,” Reding said. „It's not good that businesses can't have the same opportunities in Germany” as they would have in other countries. The European authority „would be an umbrella for national regulators as the European Central Bank is for national banks,” the commissioner said. In August, the EU forced Germany to scale back protection for Deutsche Telekom in the broadband market. The commission ordered the company to share the high-speed Internet network with smaller rivals such as United Internet AG and Freenet.de AG that didn't share the startup costs of the infrastructure. (Bloomberg)