On December 3, 2019, the Monopoly Commission published the eleventh edition of its biennial sector report on telecommunications markets.[1] The report observes that the state has to intervene increasingly in the telecommunications markets because investments of private telecommunication companies do not meet the political networks development targets in Germany. The Monopoly Commission advises that subsidies should be moderate and targeted to areas where development by private parties is insufficient in order to minimize crowding out of private investments.

With respect to the deployment of gigabit networks, the Monopoly Commission notes that developments are hampered by the lack of profitability in many places, bureaucratic hurdles and scarce engineering capacities. It advocates for the systematic removal of bureaucratic hurdles, the creation of an investment friendly regulatory framework and the imposition of non-discrimination obligations to reduce access regulation for fiber-optic networks. In particular, Deutsche Telekom as the still dominant provider should be obliged to grant competitors the same network access as it grants its own end-customer.

The Monopoly Commission cautions against the extension of subsidies for networks in areas where a fast infrastructure already exists to avoid a suppression of private investments. To direct funding into areas that need it most, minimum bandwidth thresholds should be established below which an area becomes eligible for funding.

With respect to mobile networks, the Monopoly Commission advocates for a continuation of auctions for spectrum. It takes a critical view of the Federal Government’s considerations to extend usage rights in return for deployment commitments or without an auction. The Monopoly Commission identifies voluntary infrastructure sharing as an instrument to facilitate private investments under certain conditions. It suggests to award subsidies for the development of mobile networks in currently unsupplied areas at local level or to organize reverse auctions (awarding subsidies to the companies with the lowest subsidy needs).

[1]              Monopoly Commission, “11th Sector Report on Competition in Telecommunications Markets: Governmental Restraint in Network Deployment”, December 2019, only available in German here. A Press Release in English is available here.