The European Commission and Germany are set for a legal showdown in the courts in the summer after the German state last week rejected Commission charges that changes to its telecom law breeches European law by allowing the German incumbent, Deutsche Telekom AG to take a ‘regulatory holiday’ for its new VDSL network.
When Deutsche Telekom first announced plans back in late 2005 to build a high speed network connecting 50 major German cities by 2008/2009, rivals of the German carrier immediately protested, as DT had reached an agreement with the then new German government that the telecommunications act would changed to exempt parts of the network from regulation.
DT argued that this law change would allow it to recover its costs of building the network, but rivals said that it would effectively bar them from the new network, and was a blatant way of protecting the German carrier from competition.
The EU telecom commissioner Viviane Reding was quick to condemn the plan and repeatedly warned the German government that it risked been taking to court over the matter, but the German government and DT contested Reding’s position, and in 2007 Germany amended the telecom act.
The case is now expected to reach the courts in June.