Deutsche Telekom hits back at German regulator

In accordance with an EU directive, RegTP ordered Deutsche Telekom to offer a flat-rate wholesale internet access from 1 February 2001. But Deutsche Telekom says it will take "massive action" against the regulator, claiming it doesn't want to carry a financial risk in order that competitors can enter the market.

A Deutsche Telekom spokesman said: "Our objection is that it is not for us to take the entrepreneurial risk of others. They [T-Online's rivals] must convince the market that their ISP service is best. That is not for us to do, and they have now gone to the regulator rather than taking a risk on the market.

The outburst was prompted by a RegTP statement that the telco is currently acting illegally. "Deutsche Telekom must discontinue unlawful discounts and unlawful discrimination in its current metered wholesale rates. Per minute metered charging will still be allowed, but the distinction between peak and off peak times must be discontinued, spelling the end of Deutsche Telekom's volume discounts," the statement reads.

However, the Deutsche Telekon spokesman claimed the end of bulk discount rates would create unfair market conditions, and the telco would not be able to compete with rivals BT and France Telecom.

"Our market value would be higher if we had fair market conditions and this move by RegTP comes in the direction of devaluing Deutsche Telekom," he said.

One analyst came down on the side of the regulator though. Tony Lavender, analyst at Ovum, said: "Everything Deutsche Telekom has said smacks of a monopoly. The EU interconnect directive says that incumbents have to consider reasonable requests. In the UK, flat rate was considered and Oftel mandated it. This is the way telecoms is going."

He added: "By giving other providers flat-rate, the level of traffic for Deutsche Telekom will grow very fast as rivals want to rent its network. The telco will then be forced to make major emergency investments."