There is a legal dust up in Germany over the Local Loop Unbundling charges, not for this year or next, but for the fees charged back in 2001. It seems petty, but largely innocuous. But it is important to understand that these types of cases have a way of totally unlocking markets.
Telecom Paper says that the Administrative Court in Cologne has ordered a new calculation method for the LLU fees focussing on historic actual costs made by Deutsche Telekom to expand and enhance its DSL network.
It was back in around 2003/4 when Ofcom forced a study of REAL costs at British Telecom, after years of taking BT at its word, and found that the wholesale and interconnection cost had actually been fabricated to ensure that no LLU unbundling could occur, because it was simply not profitable. By getting BT to agree that it had been charging too much, the broadband capability in the UK went from its maximum 500 Kbps to what it is today, as fast as 20Mbps, at prices about half of what they were prior to the decision.
The pricing falls came as LLU unbundling went from a few tens of thousands to multiple millions, as rivals entered the market and brought real competition, emulating markets like France and Scandinavia.
The whole issue at hand is the model. If your model is that you can charge a piece of every cost, including your profit margin, your marketing costs, your R&D and everything, you end up loading that onto rivals who want to connect to your access network, and they cannot make money.
So if the German court recalculates monthly LLU fees from 1999-2001 and 2001-2003 and uses a new model to do it, then the entire German LLU market may suddenly have a target to lobby for the introduction of the same model today.
Deutsche Telekom has already convinced the local regulator to allow it to increase (not decrease) fees for LLU, and has put in for a huge 23% increase. When actually the adoption of a new model would see those fees crash, as they have crashed everywhere else in Europe. While the regulator may not allow such a large increase, any increase at all is contrary to the actual direction in which costs are heading, and an increase risks more complaints to the European Commission and intervention. Let’s hope that the court does the Commission’s job for it and insists on a model that will open up the German market.