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January 5, 2006 5:30 pm

Berlin seeks curbs on Brussels

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The German government has warned that EU telecoms regulation is in danger of becoming heavy handed and has called upon its European partners to restrict Brussels?s broad powers in the area.

The demand, summed up in a position paper to the European Commission, is another twist in a long-simmering row between Berlin and Brussels about rules on access and prices in national telecoms markets.

?Bureaucratic practices must be avoided [and] policy options of member states should not be inadmissibly curtailed,? Germany?s economics ministry argued in a submission for a review of EU telecoms rules due to be published in May.

EU states have been bound by pan-European rules on telecoms competition since 2002, but the German government recently called this regime into question by pledging to grant Deutsche Telekom special treatment in one area.

Before taking office, chancellor Angela Merkel angered the Commission by bowing to demands from the former monopoly to exempt ultra-fast internet lines from regulation so it could recoup its ?3bn ($3.6bn) investment.

At the same time, Germany?s telecoms watchdog asked Brussels to exclude these very high data-rate digital subscriber lines (VDSL) from regulation in Germany as no networks and thus no markets yet existed to police.

But telecoms commissioner Viviane Reding said Matthias Kurth, her German counterpart, should regulate at least parts of these networks if services mirrored those on existing internet lines.

The Commission fears that not having to grant rivals access to new networks even for a short while could give big players like Deutsche Telekom dominance in new markets for services like high-definition TV via the internet.

In the paper, Berlin describes as ?problematic? the fact that Brussels sees ?the main goal of regulation as the abolition of market dominance?. Indeed, it argues ?temporary monopolies are vital elements of dynamic [markets]?.

All 25 member states have been invited to submit their views and any changes after the consultation process are likely to take four or five years to win approval in all the national parliaments.

But government and industry officials in Germany said the direction of the debate now starting could have an impact on German legislation required to exempt Telekom?s VDSL investment.

Government officials already count at least four other EU members as allies in its attempt to shift regulatory responsibility from Brussels back to national regulators.

Should this drive for ?subsidiarity? make headway, Chancellor Merkel and Michael Glos, her economics minister, could face less political resistance this spring when amending German law to accommodate DT, officials said.

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