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Deutsche Telekom Again Rejects Wholesale Flat Rate

[Berlin, GERMANY] Deutsche Telekom is rejecting the introduction of a wholesale flat rate as "not feasible". Hans-Willi Hefekauser, Deutsche Telekom manager responsible for the area of regulation, told the Associated Press on Sunday that, due to already existing technological bottlenecks, he believes a flat rate will only be possible through investments of several billion German marks. The wholesale flat rate, an all-inclusive price not based on the amount of time spent online, is being called for by competing Internet service providers so that they can offer their end customers a marketable flat rate.

The AfoD ("Angebot fur Online-Dienste", or tender for online services) is a charge that Internet service providers must pay to Deutsche Telekom for the use of the telephone lines. Even Telekom's own Internet subsidiary, T-Online, must pay this charge. The price has sunk to 1.5 pfennigs (US $0.02) per minute, and the ex-monopoly Telekom argues that this is a price reduction of 80 percent over the past two years.

Hefekauser referred to Internet access over the narrowband telephone network as a "technological dead end" in which investments would not be able to pay for themselves. Prospects lie instead in broadband DSL technology, which Telekom hopes to have expanded to the point of blanket coverage in one to one and half years. Hefekauser called for competitors to switch their Internet connections over to DSL so that they could be directed past the normal telephone network. Normal lines would still be used between the user's private residence and the switching center, but the DSL signal would be completely separated from normal telephone communication before reaching the switching equipment and connected to the Internet by way of high-speed data lines. It would therefore not matter how long a computer was connected to the Internet.

The run on the net sparked by the popularity of the Internet has caused a greater strain on telephone lines. The situation has become worse since June because of the introduction of flat rates. Flat-rate users often stay online longer, and in regions such as the Ruhr area it has become difficult to get any free telephone line at all early in the evening. If large numbers of Internet surfers occupy the lines for hours, access to the telephone network will eventually be blocked.

The upgrade to DSL has still been encountering problems. At the end of this year, 220 local networks should be equipped with the new technology, and at the end of 2001 almost all of Germany should have it. Delays have been caused by the fact that the producers of the required connection boxes have not been able to deliver the necessary number of boxes. Telekom is expecting around 500,000 DSL customers by the end of this year.