EU Telecom Report Says Deregulation Is Working

BRUSSELS -(Dow Jones)- Eight years after deregulating Europe's telecom markets, a European Commission report published Monday offered a mixed message on competition.

The report finds competition is working to cut prices for customers and offer them new services, but that incumbents such as Deutsche Telekom retain too strong a grip on markets.

This control is particularly strong over fixed line and mobile markets, the report says and "stresses the need to cut the cost of using a mobile phone abroad."

The main problem case seems to be Germany, where the E.U. is concerned Deutsche Telekom retains too strong a grip over the market.

Information Society and Media Commissioner Viviane Reding said at a press conference she wrote Friday to the German government expressing concerns about a draft telecommunications law it plans to adopt in April.

In addition, she indicated concerns about Deutsche Telekom's proposed EUR3 billion network. The former German state-owned telephone company plans to roll out a high-speed optical fiber network that will transmit data up to 20 times faster than current offerings. The plan is to provide Germany's 50 largest cities high-speed broadband lines by 2007.

The German government originally agreed with Deutsche Telekom's argument that it could only make a decent profit from the network if it was entirely exempt from regulation and from any requirement to offer its lines to rivals. The Commission, however, called the arrangement unfair.

Although the two sides agreed in December the network would be regulated and competitors would be given access to the new network, the extent of the regulation hasn't been determined. In particular, there is still a question over whether the markets such as "triple-play" services for TV, internet and web-telephones would stay exempt from regulation.

Reding said discussions would continue with the German government.

"The German regulator is very aware of the problem," she added, saying the regulator realized that "Germany must not fall back to old times."

New data published by the Commission Monday showed Germany lagging in the key area of broadband connections. Only 11.5% of Germans have broadband connections compared with rates of up to 18% in Belgium, the Netherlands and Nordic countries such as Finland, Sweden and Denmark.

In related but separate criticisms, the Commission criticized continuing high roaming mobile phone prices. The Commission said it would propose regulation on the issue before the summer.

High prices for mobile phone calls to fixed lines, were also highlighted as a problem. On Monday, the Commission said the charges were eight-to-ten-times the level of calls between fixed lines.

High prices for mobile SMS messages, are a further point of concern. Reding said she may need to open a formal investigation.

"Some markets are not open enough to competition," Reding said, without naming which ones. She said some incumbents remain dominant and there was a need to open up more.

Despite all these damning criticisms, Commissioner Reding insisted the report painted an overall positive picture. An influx of new players has helped the price of traditional fixed-line voice calls to fall by 1.6% a year over the last eight years across E.U. countries.

At the same time, the averaged penetration of mobile phone services reached 92.8% in October, 2005, the Commission said. In addition, 24.5 million mobile customers had used an E.U.-imposed rule allowing them to keep their mobile numbers when they switch mobile phone operators.

"This report highlights that the opening up of the market after eight years of deregulation is a success story," Reding said. "It is a good example for energy and transport markets to follow."

The overall telecom market in the E.U. was growing by EUR7 billion a year she insisted. It was creating jobs, despite widespread press reports of incumbents conducting layoffs. In Germany, Redins noted 221,000 were employed in the telecom sector in 1998 - compared with 225,000 in 2005. "There is overall growth," she concluded.

T-Mobile: Faster 3G Service Broadly Available In Summer 2006

BERLIN -(Dow Jones)- T-Mobile, Thursday said that its high-speed third-generation wireless services will become broadly available in Germany as of summer 2006.

The service uses HSDPA technology - which speeds-up third-generation networks to speeds above the average home fixed-line broadband Internet speed - and will become available in spring 2006 in some areas in Germany.

"High-speed (3G) will also be available from summer 2006 in areas where T-Mobile Germany already offers (3G) coverage," T-Mobile said in a statement. T-Mobile has almost countrywide 3G coverage.

The company also said that it is pressing ahead with the development of HSDPA-capable hardware. Together with computer-maker Fujitsu Siemens, partly owned by German engineering firm Siemens, T-Mobile said it expects to offer the first HSDPA-enabled laptop computer in the second quarter of 2006.

In a separate statement, T-Mobile said it will launch a cheaper flat-rate tariff for mobile data transmission that will cost EUR35 a month and EUR1 for each day of use.

Company Web site: http://www.t-mobile.de