The liberalized telecommunications market describes the market for telecommunications services and digital goods. Free competition arises on the individual network levels. The first level are network services, the second infrastructure management, the third network infrastructures and on the fourth level the resources that can be set up on the basis of the network infrastructure and infrastructure management.
This is regulated by telecommunications law (also: TK law ). Telecommunications law is the area of law that provides a legal framework for all types of telecommunications . In Germany , Austria and Switzerland it is mainly characterized by the liberalization of the telecommunications market. The aim of the European Commission was to promote competition through the liberalization of the telecommunications markets of the member states of the European Union and thus to promote a comprehensive range of affordable telecommunications products and services. In Germany, the Telecommunications Act forms the legal basis.
Harmonization and liberalization efforts of the European Union
The basis of the harmonization and liberalization efforts of the European Union is the Green Paper on the Development of the Common Market for Telecommunication Services and Equipment.
Phasing out monopolistic bottlenecks
The central economic competitive phenomenon is the phasing-out of monopolistic bottlenecks, which best describes the change in the telecommunications market. The ability to offer internet in addition to voice telephony and to implement this using non-wired technologies has reduced the market entry costs for newcomers considerably. Inefficient monopolies are dismantled through technical innovations and the range of goods and services in an economy is enlarged and cheaper, which means that employment can at least be maintained and economic growth generated.
Situation in the member states
The situation in Germany is shown in the broadband atlas.
Competition in the landline and internet market
The figure shows the telecommunications industry's external sales in billions of euros. The period under review runs from 1998 to 2016. The sales of the telecommunications market are divided into three classes: fixed network, mobile communications and broadband cable. The figure shows that the market grew strongly after liberalization in 1998. The phasing out of the monopoly bottleneck of Deutsche Telekom took place through the innovation of mobile communications. This made competition in the telecommunications market possible.
Competition in the mobile communications market
The German mobile communications market is regulated by the Federal Network Agency . In Germany, nine licenses for digital cellular mobile communications have been issued since January 2006, four of which are for the GSM and UMTS networks of the mobile communications network operators active in Germany. The license from Mobilcom AG was returned to the Federal Network Agency at the end of 2003, the UMTS license from Quam was withdrawn from the operator (after the operator ceased its business activities) due to the failure to meet the expansion and utilization criteria.
Broadband strategy of the German federal government
After the global financial crisis in 2008/2009, Germany adopted the economic stimulus package II to alleviate a recession. On the price index for telecommunications services, the recession can be recognized by the stagnation of prices. The economic stimulus package II contains various resolutions, including Resolution 6: The Federal Government's Broadband Strategy. This includes the following goals. Massive expansion of broadband networks and support in setting up wired and radio-supported high-performance networks. Particularly unserved areas in rural areas should be covered by the end of 2010. By 2014 at the latest, it should be available for 75 percent of households and by 2018 for all households in Germany connections with transmission rates of at least 50 megabits per second. The Federal Government presented the implementation of these objectives with a broadband strategy in February 2009.
The broadband strategy of the federal government aims to ensure nationwide coverage of all households with a download speed of 50 Mbit / s. This is necessary in order to continue to create a basis for economic growth and to guarantee public supply through a comprehensive range of digital goods and services. The goal of nationwide coverage can be justified politically with the principle of federalism anchored in the Basic Law and the equal living conditions to be guaranteed in the federal states. With the broadband strategy, the German federal government is following the requirements of the European Commission through the four-pillar strategy. This includes legal support for investments in the broadband network or technology. The two other pillars are a policy to support the award of frequencies and financial subsidies for network operators and municipalities. The exchange between the federal government and the federal states regarding network expansion is checked and evaluated by the federal broadband office.
The situation in Austria is shown in the broadband atlas of the Ministry of Transport.
Competition in the fixed line and mobile communications market
European telecommunications and network markets
Overview of legal regulations for telecommunications markets
Responsibility for telecommunications law in Germany was transferred to the Federal Ministry of Transport and Digital Infrastructure by organizational decree of the Federal Chancellor of December 17, 2013 from the division of the Federal Ministry for Economic Affairs and Energy , including the relevant technical supervision by the Federal Network Agency for Electricity, Gas, Telecommunications, Post and railways (Federal Network Agency, formerly Regulatory Authority for Telecommunications and Post, RegTP). This transfer of responsibility includes their European and international references as well as the matters of principle and planning.
Article 73, Paragraph 1, No. 7 of the Basic Law has exclusive legislative competence for the federal government in the field of post and telecommunications.
On this basis, the following laws were passed by the federal government:
Austrian telecommunications law is recorded in the Telecommunications Act 2003. The above-mentioned guidelines of the European Commission were implemented by the TKG 2003. These include framework guidelines, approval guidelines, universal service guidelines, access guidelines, and privacy guidelines.
At the same time as Germany, Switzerland pushed ahead with the liberalization of the telecommunications market. The reorganization of the Swiss telecommunications market came into force in several ordinances from January 1, 1998. From then on, telecommunication services such as telephony via lines or mobile radio, data services, private networks and city networks could be offered in competition.
Liberalization of the telecommunications market
History of the liberalization of the telecommunications market
The following section is based on Gersdorf (2008). The European Commission derives its authority to regulate the telecommunications sector from its competition law competences from Articles 81–86 of the EC Treaty. The following liberalization steps therefore followed from 1988 in order to enable competition in the telecommunications market, with the aim of a larger selection of products and services in order to promote economic growth. First, the terminal equipment market was liberalized by the Terminal Equipment Directive. This means the abolition of the monopoly rights of the distribution of terminal equipment, such as telephone or fax machines. Two years later, in 1990, the state monopoly was limited to telephone services and the operation of the networks. According to Art. 2 (1) of the Services Directive, the member states guarantee the “elimination of special and exclusive rights in the provision of telecommunications services with the exception of voice telephony”. Article 4 (1) of the Services Directive, on the other hand, implies that the member states are entitled to maintain the network monopoly; Because according to this provision, the member states “which maintain the granting of special or exclusive rights for the construction and use of public networks” are obliged to guarantee equal access to the network. In 1995, the Cable Directive opened cable television networks to all telecommunications services with the exception of voice telephony. By the competition directive 96/19 / EG29 the member states were finally obliged to abolish the remaining monopoly rights for the provision of the voice telephony service and for the provision of telecommunications networks as well as for the telephone directories and information services on January 1st, 1998.
Theoretical background and constitutional basis
In order to enable competition, so-called asymmetrical regulation applies to the telecommunications market. This means that new competitors are to be supported through special rules for dominant companies. A dominant company (typically the former natural monopoly) is obliged to “allow competitors in this market non-discriminatory access to its internally used and to its services offered on the market, insofar as they are essential, under the conditions that are necessary for the Use of these services for the provision of other telecommunications services "(§ 33 TKG 1996). With the entry into force of the Telecommunications Act 1996, Deutsche Telekom lost its monopoly on the telecommunications market. The first steps towards liberalization were the abolition of the network monopoly of Deutsche Telekom in 1996 and the monopoly for voice telephony services in 1998. Since then, end users have been able to make calls through other private providers using the call-by-call or preselection method. These were the first steps towards opening up the market in Germany. In the following years the TKG was revised in several amendments. The changes in the TKG 2004 are based on the implementation of the European TKG guidelines package 2002. After another amendment in the area of customer protection took place in February 2007, the last changes to the TKG were made in 2012. In view of the lively competition, the opening of the market is considered successful (in contrast to the liberalization of the electricity market in 1998). The market is shaped by a few large companies - one of which is Deutsche Telekom - but there are now a large number of providers who are in competition with them. Telecommunications prices have therefore fallen sharply since liberalization, which is an indicator of functioning competition. In order to guarantee this competition, there is the Federal Network Agency, which acts as the German regulatory authority . It checks whether companies require regulation in the relevant markets and selects the appropriate regulatory instruments.
Regulation of the telecommunications market
The starting point for any regulation in the telecommunications sector is Sections 9 to 15 TKG, which regulate the so-called market regulation procedure. This procedure is divided into the market definition and the market analysis. By issuing a regulation order in accordance with Section 13 TKG, the previous procedure is linked to access regulation and rate regulation.
The Federal Network Agency uses the market definition to locate potential markets that may be subject to regulation. As already mentioned, there are multilevel European legal requirements (Art. 15 Framework Directive) according to which the markets in need of regulation are selected. On the one hand, there are requirements for the factual and spatial delimitation of the markets. With regard to the product market definition , the aim is to ensure the interchangeability of the products on the demand side as well as the flexibility of the offer to switch. The hypothetical monopoly test can be used to determine whether these criteria are met. The test investigates how consumers and competitors would react to a small but significant price increase for a certain product. The alternative products then belong to the same product market. However, this test can only make a clear statement as long as the customers justify their purchase decision in the price. For this reason, the EU Commission recommends a summary of all products that are used for the same end purpose for further market definition. For the geographic market definition, the EU Commission refers to the constant case law of the ECJ . This stipulates that a market is an area “in which the companies are involved in supply and demand for the relevant products and the competitive conditions are the same or sufficiently homogeneous and can be distinguished from neighboring areas in which significantly different There are competitive conditions. ”For the telecommunications sector, the area covered by a network as well as existing legal and administrative instruments (license areas or frequency areas) must be included. Furthermore, the Federal Network Agency must take into account further criteria for defining the market. These can be defined using a so-called three-criteria test. Accordingly, markets require regulation if there are significant and persistent barriers to entry and there is no prospect of effective competition. Furthermore, this market failure cannot be averted by applying general competition law. As a further point, the EU Commission has issued a market recommendation, which the national regulatory authorities, i.e. the Federal Network Agency in Germany, must follow. The EU Commission has therefore already defined a market in advance. It differentiates between end customer markets and wholesale markets.
Following the market definition, the Federal Network Agency carries out a market analysis. The aim of this is to identify companies on the previously defined market that is in need of regulation and that has considerable market power . According to Section 11 (1) sentence 3 TKG, a company has considerable market power when it assumes a position equivalent to control, either alone or together with others. It is assumed that there is considerable market power if the economically strong position of a company allows it to behave independently of the other market participants. With a market share of over 50%, however, according to the established case law of the ECJ, there is always considerable market power, except in special exceptional cases. According to Section 12 (1) TKG, the Federal Network Agency has to carry out a national consultation through which interested parties have the opportunity to comment on the results according to Sections 10, 11 TKG. The Federal Network Agency has also gem. § 12 para. 2 TKG to carry out a community-wide consolidation process if the results according to §§ 10, 11 TKG have an impact on trade between the member states.
Section 13 of the TKG deals with the regulatory order. This represents a combination of the previous steps with the others of the second part of the TKG. It defines the regulatory instruments. The Federal Network Agency has the possibility through this regulation, as an administrative act, to impose obligations on the market participants. Addressees can be both companies with significant market power and companies without significant market power. As an example of the latter, section 18 TKG could be cited, which can oblige operators of public telecommunications networks without significant market power to interconnect with other networks. On the one hand, the other obligations according to § 13 TKG and the subsequent rate regulation according to § 38 TKG are not the subject of a regulatory order. The special supervision of abuse according to Sections 42, 43 TKG is also not part of this.
The emergence of competition can only develop freely if the end users are enabled to use the services of all providers. However, even today, Deutsche Telekom AG almost exclusively owns the rights to end-user connections in the fixed-line network. Furthermore, the construction of a double infrastructure does not make sense for reasons of cost. Nevertheless, telephone service providers must have access to the networks in order to be able to provide their services to customers. For this reason, network operators can be obliged by the Federal Network Agency to interconnect with other networks. The Federal Network Agency can also oblige operators of public telecommunications networks with considerable market power to grant other market participants non-discriminatory access to their networks in accordance with Sections 19 and 21 TKG.
According to Section 27 (1) TKG, the aim of rate regulation is to prevent abusive exploitation, hindrance or discrimination against end users or competitors through price policy measures by companies with considerable market power. Whether and to what extent the Federal Network Agency intervenes in this area depends on the one hand on the type of service (end customer service or access service) and on the other on the company's respective market position (significant market power or no significant market power). Ex-ante regulation (Sections 30 - 37 TKG) as well as ex-post regulation (Section 38 TKG) can take place.
Problems with the liberalization of the telecommunications market
TKG amendment 2004
Due to several European directives - including the data protection directive for electronic communications - the Telecommunications Act was comprehensively reformed in 2004. According to TKG, technical equipment must now be kept available for monitoring when a telecommunications system is operated. This regulation was mainly criticized because this high investment z. B. required by many e-mail providers. Another criticism of proportionality arose when a report in 2012 reported that 37.3 million e-mails had been intercepted.
Law to facilitate the expansion of digital high-speed networks (DigiNetzG)
In mid-2014, Directive 2014/61 / EU of the European Parliament and of the Council on measures to reduce the costs of expanding high-speed networks for electronic communications came into force. The requirements of the cost reduction directive are to be implemented in national law by January 1, 2016, in accordance with its Article 13 sentence 1. The aim of the cost reduction guideline and the DigiNetzG is to reduce the costs of setting up and expanding digital high-speed networks. In July 2016, broadband connections with a download speed of at least 50 Mbit / s were available in 70% of German households. The Federal Association of Broadband Communication (Breko) criticizes the DigiNetz law. Additional broadband expansion in areas with existing high-speed networks would generate no economic benefit. Breko, on the other hand, proposes the technologies FTTB ( fiber-to-the-building, -business, or -basement ) and FTTH ( fiber-to-the-home ): to be promoted, as these are best suited under current technological conditions in order to be able to use and offer future services and offers. The Federal Government is striving to limit the possibilities introduced with the DigiNetzG for laying fiber optics in publicly financed construction work and to include a reason for refusal for laying in the TKG in the event that the construction work is triggered by a subsidized broadband expansion.
Measures and solutions
Netzallianz Digitales Deutschland
The Network Alliance Digital Germany is one of the federal ministry of transport and digital infrastructure initiated forum representing the Ministry itself and the Federal Network Agency belong to large German telecommunications companies and organizations in the telecommunications industry. It is intended to discuss investments over the next few years and possible accompanying measures.
The main working document of the Netzallianz is its course book, in which measures are named, on which the participants have agreed and which the members have set themselves the task of regularly reviewing and supplementing. The measures recorded in the course book include the standardization and greater transparency in publicly funded tenders for broadband expansion, the better use of synergies by promoting in-house cabling in residential construction or renovations, as well as securing a reliable regulatory regime. The main discussion in public was that the operation of special classes of data traffic (in addition to conventional transmission paths) should not be restricted in the future either. This decision has often been interpreted as a violation of the principle of net neutrality . The reason for the violation of network neutrality or the abolition of flat rate offers is the decline in earnings of the network operators due to the recent growth of the cable network operators. Deutsche Telekom is therefore holding back its own investments in the network infrastructure. This is one of the reasons behind government funding for the broadband network.
Supporters from the public or private sector must be found for the respective stages of the value chain. Municipalities, municipal companies, special-purpose associations and private companies take on tasks in one, two or all three stages of the value chain. In regions in which neither the public sector nor the private market can or want to implement solutions, so-called bottom-up approaches can alternatively be implemented. Citizens and local companies join forces in various organizational forms in order to organize expansion and / or operation independently.
Synergies with the banking sector
Mobile bank account
The challenges for the banking sector are increasing due to the spread of smartphones and the cost pressure in the banking business. The banking sector is forced to drive innovation through the phase of low interest rates. One example is a cooperation with a telecommunications company to merge similar business processes. One example is opening an account and managing a cell phone tariff in one app. Mobile banking must be differentiated from the familiar online banking. The term mobile banking means the exclusive use of banking transactions on the smartphone.
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