Deutsche Telekom wants to develop a faster DSL connection and says it needs protection from competitors to do so. But the EU warned Germany not to offer it.
The European Union has threatened Germany with legal sanctions over a proposal being considered to protect Deutsche Telekom from competition if it develops its new high-speed VDSL (very high data-rate digital subscriber line) network.
"If the text of the draft law remains as it stands, I will not hesitate to launch infringement proceedings against Germany," EU Information Society Commissioner Viviane Reding told reporters after a meeting with German Deputy Economics Minister Joachim Würmeling.
Calling the measure to exempt the network from the obligation to grant access to rivals "protectionist," EU officials said that it also goes against an EU push to open up national telecoms markets.
German officials have said they don't want to violate EU laws. But the European Commission said in a statement that German officials "have made clear that politically, the objective of the German government was to help Deutsche Telekom. If Germany goes this way, this could set a very negative precedent for other crucial sectors such as energy, where we need open markets and more competition in Europe."
Germans want a deal
The dispute began after Deutsche Telekom last month urged the German government to create legislation to protect its new high-speed telephone network from competitors, at least during the roll-out period.
The draft law of the new telecoms act would allow the network regulator to postpone policing the new VDSL services on condition that competition would be safeguarded "in the long term." In return, Deutsche Telekom promised to establish the VDSL in the 50 largest German cities.
Politicians of all political persuasions, including German Chancellor Angela Merkel, back the plan and have called for it to go forward.
Telekom threatening not to build network
The measure was introduced after the telecommunications giant threatened not to build its 3-billion-euro ($3.6 billion) VDSL network if it were forced to grant rivals access to it straight away.
Deutsche Telekom chairman Kai-Uwe Ricke told reporters last month that the government's current proposals for the legislative framework for next-generation telecom infrastructures were "a step in the right direction."
But they nevertheless lacked the clarity and commitment that Deutsche Telekom needed to roll out its planned VDSL network, he said.
"I am not talking about monopolist profits," Ricke said. "We simply want to be able to determine our own destiny in a new market. We need clear legal commitments regarding the long-term regulatory situation if we are to roll out this (VDSL) project."