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.

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