Germany appears determined to pass a new telecommunications law that critics say would give Deutsche Telekom a monopoly over broadband connections. The EU has threatened legal action.
The bone of contention: high-speed connections
Shortly after Germany's cabinet agreed on the new telecommunications law on Wednesday, Viviane Reding, the European Union commissioner for information society and media warned that she would not accept the legislation.
"We cannot afford to create new monopolies out of short-term political opportunism," Reding said. "Should the German parliament follow the proposal of the government, I am determined to open an infringement procedure against Germany."
If passed by the Bundestag, the legislation would exempt Deutsche Telekom's planned €3 billion ($3.9 billion) broadband network from price regulation. Competitors would not be allowed to use the network for years.
"We remain convinced that the new version (of the law) complies with European regulations," a spokesman for the German economics ministry said.
Deutsche Telekom has argued that it can't build the fiber optics network without assurances that the investment will be worthwhile for the company. The new network is supposed to offer high-speed connections of up to 50 megabits per second in 50 German cities.
Not smiling now: Viviane Reding
A spokesman for Deutsche Telekom said that Reding's view of the German market was "screwy," Reuters reported. He added that when it comes to broadband range, there's more competition in Germany than anywhere else in Europe.
Reding said Germany has far fewer broadband connections per capita than many other EU countries for which reason the government should encourage more competition.
Deutsche Telekom competitors have also been critical of the new law. The national broadband communication association Breko said the expansion of the fiber optics network was an attempt to quell competition on the broadband market. The Association of Telecommunications and Value-Added Service Providers (VATM) said the government was allowing Deutsche Telekom to establish a new monopoly.