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November 24, 2005 7:26 pm

Brussels urged to delay new network rules

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The German telecoms regulator has called upon Viviane Reding, the European telecoms commissioner, to hold off from regulation of a new generation of high-speed fibre-optic networks in Europe.

In an interview with the Financial Times, Matthias Kurth warned that moving towards a regulatory regime now could hamper the development of new markets for new internet services such as high definition television.

?Commissioner Reding has herself talked about emerging markets in telecoms and the possibility of a regulatory moratorium,? said Mr Kurth, head of the
Bundesnetzagentur.

?It would be wrong for me to play the fortune-teller by defining a still unknown market,? he said, referring to the first stages of regulation. ?It could raise the obstacles for market growth exponentially.?

The two regulators have been at loggerheads since Ms Reding said two weeks ago that she had grave doubts about Mr Kurth?s proposal not to scrutinise planned ultra-fast digital subscriber line (VSDL) networks for the time being. The outcome could affect plans by Deutsche Telekom, the EU?s largest operator, to invest ?3bn ($3.5bn) in a German VDSL network, provided the government allows regulatory exemption for some years.

Rival companies are angry about Berlin?s stance, arguing it will allow DT to set excessive access prices or even to bar access to its network. They also fear it could be a precedent for other countries.

Mr Kurth said his dispute with the Commission ?has little to do? with the government?s promise to exempt the proposed network from regulation. His laissez-faire approach was based upon the wish to let a market develop.

?The key question is whether a new market for services like HDTV will develop, not whether there?s infrastructure for VDSL,? he said. ?We can only answer questions about unfair competition when the market comes into existence.?

Mr Kurth said he would reach an agreement with the Commission mid-January. He suggested he was flexible about the length of any moratorium, noting that
Brussels already planned to review current work in 2006.

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