German Network Charges Dominated By Deutsche Telekom

Federal telecom regulators in Bonn, Germany, have set the rate that Deutsche Telekom can charge its
competitors for local network connections to consumers.

The rate will be DEM 25.40 per month (US$14.70). It will be valid through
March 21, 2001. This rate determines the amount of competition possible in
local telecom networks.

While there is a competition on long distance calling rates, Deutsche
Telekom’s 46 million connections make it by far the biggest network for
local calls. The rental price for local network connections was
provisionally set at DEM 20.65 (US$12). Deutsche Telekom had asked the
regulators to set it at DEM 37.30 (US$21.60).

Mannesmann Arcor, another major German
telco, said that the new prices would benefit ISDN clients but exclude 90
per cent of private households.

“The figure now decided on will protect the monopoly position of Deutsche
Telekom in local networks,” said Harald Stoeber, Arcor’s board chairman.
“The consumer will be paying the bill.”

o.tel.o chief Thomas Geitner also
regretted the regulators decision.

“The losers in this decision are the consumers. This price means that the
competitive advantage of Deutsche Telekom will remain in the local
networks,” he said.

Even more serious than the monthly rental, however, are one-off rates
varying from DEM 191.64 (US$111) to DEM 337.17 (US$195) for changing or
establishing new connections for subscribers. Deutsche Telekom also charges
the competition DEM 107.70 (US$62.3) for each cancellation.

The German Association for Post and Telecommunications, (Deutsche Verband
fuer Post und Telekommunikation) said that it now expected Deutsche Telekom
to drastically reduce its basic rates for analog telephone connections.

According to the provisions of the telecommunications law, Deutsche Telekom
is not permitted to charge its competitors higher prices than those charged
to its own clients.

The association stated that this means it should charge its own clients a
basic rate of DEM 28 (US$16.2) for analog connections.

A Telekom spokesman said that the organization was not prepared to enter
into speculation about these charges. The association stated that it would
be making a complaint about the decision to the European Commission, as it
was impossible for competition to flourish with a fixed price for
approximately 80 percent of domestic calls.

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