Main opponent Deutsche Telekom: VATM celebrates 25 years of telecom liberalization

Main opponent Deutsche Telekom: VATM celebrates 25 years of telecom liberalization

The Association of Alternative Telecommunications and Value-Added Services Providers (VATM) is celebrating “25 years of liberalization,” and with it its own birthday. With the end of the telecommunications monopoly, the association was created to represent the interests of the competitors of the Bundespost spin-off Deutsche Telekom. The celebration took place on Wednesday in Berlin’s Future Museum Futurium celebrated on Wednesday. The dispute, which has been going on for 25 years, continued at the ceremony.

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“More competition, more quality” were the political goals when the telecommunications market was liberalized, said association president David Zimmer. It is significant that at that time it was only possible to abolish a ministry – the then postal ministry. (Note: In fact, several ministries were abolished in the history of the Federal Republic of Germany.) The goal of the many, once small companies would have been fair conditions – for this an association was needed. Even 25 years later, the main opponent in this market is Deutsche Telekom, said Zimmer. Their CEO Tim Höttges was asked to take part in a panel discussion, but was unable to take part.

“Would politicians dare to do that again? Of course not.” The impulse came from the EU Commission, recalled Andreas Mundt, President of the Federal Cartel Office. It is good that regulation has become established in the telecommunications market – in the energy sector it took much longer. The Telecommunications Act created a strong regulator: the Regulatory Authority for Post and Telecommunications, renamed the Federal Network Agency (BNetzA) in 2005.

Step backwards E-Plus takeover

From a competition perspective, one of the setbacks in telecommunications liberalization was the takeover of E-Plus by Telefónica. “One goes out, but at the same time they say: ‘This is only possible under the condition that a fourth comes back in,’ which was absurd, says Mundt. Today you can see how difficult it is to bring a fourth provider onto the market. Mundt is alluding to the difficulties surrounding 1und1’s entry into the market as a mobile network operator. In addition, there is currently a “mess of regulation”, especially from Brussels. The authorities would have to digest that first.

A current challenge is open access, said Wilhelm Eschweiler, Vice President of the Federal Network Agency. The devil is in the details. The migration from copper to fiber optic networks is also a challenge. Andreas Mundt announced that this topic would play a stronger role for the Federal Cartel Office in terms of competition law.

Providers want greater intervention from regulators again

Jan Budden, CEO of Deutsche GigaNetz, took no prisoners: According to his own calculations, there are only 2.5 million activated fiber optic connections, and only 500,000 new connections are added every year. “We are sitting on 140 billion euros in debt.” And the general conditions are currently bad. The expansion is a completely wasteful landscape, Telekom has no interest in fiber optic expansion, says Budden. He calls for large, contiguous development areas. Budden fears that investors will leave the country, especially since there are much more interesting investment opportunities than fiber optics in Germany. 6.4 million German households have a fiber optic connection, of which 3.4 million are activated, Federal Network Agency Vice President Eschweiler contradicted the head of Deutsche GigaNetz.

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For Deutsche-Glasfibro boss Andreas Pfisterer, the benchmark for investments is not Germany, but Europe or other markets. “It’s no use saying that we’re doing pretty well for our standards,” he said, addressing politicians. “We not only have to build networks, we also have to utilize them to capacity,” added 1&1 Versatel CEO Sören Trebst. There is a lack of a target image for the fiber optic market. Regulatory requirements that provide planning security are important. “It’s probably the case that they’ve found themselves in a perfect storm in the fiber optic market,” admitted Andreas Mundt in view of rising interest rates, a lack of skilled workers and the effects of the war in Ukraine. But the problems cannot automatically be solved with regulation. The head of the Federal Cartel Office said that it might be possible to make further adjustments to the service provider obligation.

Superstructure: Hardly applicable under competition law

There is currently a lot of expectation from the regulatory authority in the industry. For months there has been intense discussion about the topic of superstructure, i.e. when several companies build parallel connection networks. Pfisterer complained that only Deutsche Telekom could economically afford this type of competition. The BNetzA set up a monitoring center for this purpose a few weeks ago. There are currently 250 submissions on the hot topic of superstructure, reported Federal Network Agency Vice President Eschweiler. 60 percent of these come from companies, five percent from citizens and 35 from local authorities. A third of the complaints from companies are from Deutsche Telekom. “First of all, it’s about bringing a bit of rationality into the debate,” he called on the industry to be patient. “We do anything but close our eyes.”

The President of the Federal Cartel Office warned against only focusing on multiple relocations that actually took place: “You don’t have to build over anything – it’s enough if you announce it,” he explains the mechanism. The Federal Cartel Office has no investigations of its own. Competition law can hardly address such behavior. The State Secretary in the Federal Ministry for Digital and Transport, Stefan Schnorr, announced a study on multiple expansion that should be available at the end of the month. Schnorr trusts the responsible authorities: “If there is really abusive behavior, the Federal Network Agency and the Federal Cartel Office can take action.” However, the possibility of infrastructure competition is standardized under European law. To this day he is waiting for someone from the group of complaining companies to present him with a proposal for a standard in the Telecommunications Act that complies with European law

Differences also emerged elsewhere, both between companies in the industry and with authorities. Mundt, for example, publicly wondered about the lack of cooperation agreements between providers: “We are waiting for it as the Federal Cartel Office. If that plays a role, we will be there immediately, but we need practice.” He does not understand why market participants have not yet agreed on a common open access standard. Federal Network Agency Vice President Eschweiler announced that this work had progressed and was confident that a decision would be made in the foreseeable future.

256 days per mast: the German Pact should fix it

Telefónica Germany CEO Markus Haas called for Germany-wide approval for the mobile phone expansion: “An application for a mobile phone antenna still takes 256 days on average,” he calculated, “even though it will be approved anyway.” He is looking with hope at the federal government’s initiative for the so-called “Germany Pact”, but so far it is “too little, too late”. Whether the federal government and the states responsible for construction law can come to an agreement will only become clear during the discussions between the Federal Chancellor and the Conference of Prime Ministers.

State Secretary Schnorr underlined the success story of liberalization with more choice, lower prices and higher data rates. Never before have people communicated as much as they do today; However, he has doubts about whether communication has improved, says Schnorr.

However, a side aspect of VATM’s history was largely left out that evening: ringtones, frogs and savings subscriptions were kindly not mentioned on the birthday. The VATM fought for a long time for this, from today’s perspective, idiosyncratic business model with value-added service numbers.

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