AOL complaints against DT lead to investigation

The European Commission has opened an investigation into Deutsche Telekom's (DT) business practices after Internet service provider (ISP) AOL complained the German telco is operating anti-competitively.

AOL Europe has alleged that DT used its dominant market position to give is own Internet business, T-Online, an unfair advantage and is stifling competition as a result.

The allegations include discriminatory pricing and provision of Internet related services, giving T-Online exclusive access to DT's customer database and using its nationwide billing structure to bundle the ISP's invoices illegally.

AOL believes that rival ISPs are being forced to devote larger resources to such things as billing and credit checking and so not being able to reduce charges.

DT has denied the allegations but has already had an injunction ruling against it after a court agreed there was evidence to show that the telecoms operator had been attempting to interfere with AOL's ISDN partners.

Robin Duke-Woolley, principal consultant at Schema, believes the battle is part of the deregulation process. "Deregulation has been quite a severe test for Deutsche Telekom. It is now learning how to operate in a deregulated market and pushing to find out where the barriers are. It's therefore a healthy situation if AOL is complaining," he said.

But AOL Europe's president and CEO Andreas Schmidt argues that there is a bigger implication - that ecommerce will not be able to grow in Europe if these business practices aren't addressed. "We must overhaul the outdated telecoms pricing structure which sustains artificially high call rates for consumers. Online customers are less willing to use the Internet and shop online as long as they continue to be charged by the minute," he claimed.