Fixed network: Competitors criticize Telekom’s pricing policy

Telekom’s competitors warn that the former monopolist is expanding its market position to the detriment of the competition. The Association of Providers of Telecommunications and Value-Added Services (VATM) warns that Telekom’s strong position in the copper network is also having an impact on fiber-optic expansion, and in particular criticizes Telekom’s “aggressive pricing policy”. The regulator is required here, said VATM managing director Frederic Ufer on Thursday in Cologne.

The VATM refers to a “negative development” in the fixed network market for “customers, the economy and the expansion goals of the federal government”. In the past two years, Telekom has gained market share not only with fiber optic connections, but also with DSL connections. This is the result of a survey by the research institute Dialog Consult on behalf of VATM.

Accordingly, Telekom was able to increase its share of DSL connections from a good 53 percent in 2019 to almost 56 percent now. According to the author of the study, telecommunications expert Peter Winzer from Rhein-Main University, this is directly attributable to Deutsche Telekom’s “aggressive pricing policy”.

“This means not only a cementing of Telekom’s position, but even an expansion of the market dominance of the ex-monopolist and represents a special case in an EU comparison, since in most EU TC markets the ex-monopolist – with functioning competition – are constantly losing market share,” said Winzer when presenting his study.

Competitors who buy connection lines or other access products from Telekom for telephone or Internet connections must factor these costs into their retail prices. The Bundesnetzagentur, as the price regulator, ensures that Telekom gives the competition a little breathing room.

The VATM is now warning that Telekom should use a strategic pricing policy to minimize the competitors’ margins in order to start the fiber optic era from a stronger position in the copper network. It is also easier to take your own customers into your own fiber optic network. In addition, Telekom’s fiber optic infrastructure is not strictly regulated and hardly any competitors offer their own connections based on Telekom access.

“Everything is connected to everything else,” said VATM boss Ufer and called on the regulator to improve the market analysis. “Regulation of Telekom’s copper network must be viewed holistically by the Federal Network Agency with its effects on fiber optic expansion.” Otherwise the dynamics of FTTH expansion would be slowed down.


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