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GATEWAY TO THE INFORMATION SOCIETY:


A STRATEGY TO INCREASE EFFICIENY AND COMPETITIVENESS OF THE GERMAN TELECOMMUNICATIONS MARKET[1]  

 Nina N. Barmeier
Nina.barmeier@miis.edu
 

Masterís Project
Commercial Diplomacy
Monterey Institute of International Studies 

Advisors:
Professor Geza Feketekuty
Professor Bill Monning 

09 May 2001 

 

TABLE OF CONTENTS

ISSUE

EXECUTIVE SUMMARY

Structure of Document

I.INTRODUCTION

I.A. ROLE OF THE TELECOMMUNICATIONS SECTOR

 

II. BACKGROUND

II.A. MARKET SHARE: DEUTSCHE TELEKOM AND COMPETITORS

II.A.1.Fixed Line Network Communications

II.A.1.1.Comptetition in the Fixed Network Communications Market

II.A.1.1.a.Competition in the Local Market

II.A.1.2. Internet and Online Services

II.A.1.3. Digital Subscriber Line (DSL) Market

II.A.1.4. Broadband TV Cable Network

II.A.2 Mobile Communications

II.A.3. Data Communications and Information and Communications Systems

II.A.4 License Holders

II.B. PRICE DEVELOPMENT

II.B.1. No Reduction in Local Call Charges

II.B.2. High Internet Access Charges

II.B.3. Price Development in the DSL market

II.C. MARKET GROWTH

II.D. EMPLOYMENT DEVELOPMENT

II.E. OBSTACLES FACED BY THE COMPETITORS TO DEUTSCHE TELEKOM

II.E.1. Anti-competitive Practices of the Incumbent

II.E.1.1 Price Dumping and Cross-Subsidization

II.E.1.2 Local Loop Leased Line Charge

II.E.1.3. Interconnection and Unbundled Local Loop Problems

II.E.1.4. Lack of Information

II.E.2 Role Of Regulatory Authority

II.E.2.1. Lack of Efficiency and Authority

II.E.2.2. The Length of Procedures

II.E.2.3. Exorbitant Licensing Fee

II.E.3 The Role Of Federal Government

II.E.3.1. The Federal Government's Involvement in the Regulatory Decision

II.E.3.2. The Government's Stake in the Deutsche Telekom

II.F. HISTORY OF THE GERMAN TELECOMMUNICATIONS SECTOR

II.F.1. The Regulatory Framework

II.F.1.1. Regulatory Supervision

II.F.1.2. Licensing Requirements and Allocations of Frequencies

II.F.1.3. Special Requirements Applicable to Market-Dominant Providers

II.F.1.4. Price Control

II.F.1.5. Interconnection

II.F.2. Regulation in the European Union

II.F.3. International Obligations: GATS, BTA

II.G. MAIN STAKEHOLDERS

II.G.1. The Incumbent: Deutsche Telekom AG

II.G.1.1. Revenues per Business Area

II.G.1.2. Employees

II.G.1.2.a.Civil Servants

II.G.1.2.b. Non-Civil Servants

II.G.1.3. Deutsche Telekom Stock

II.G.2. The Federal Government

 

III. ANALYSIS SECTION

III.A.ECONOMIC ANALYSIS

III. A.1. Which Market and Structural Barriers are the New Market Entrants Facing?

III.A.1.1. Deutsche Telekom's Competitive Advantage in Controlling the Existing Network

III.A.1.2. Lack of incentives to Introduce Competition

III.A.1.3. Organizational Integration

III.A.2. What is the Economic Importance on the Interconnection and the Leased Line

Charges for the Unbundled Local Loop?

III.A.3. What would the Impact of More Competition in the Local Fixed Line Market

on the Various Stakeholders and the German Economy be?

III.A.3.1.Impact on Consumers

III.A.3.2. Impact on Deutsche Telekom

III.A.3.3. Impact on the German Economy

III.A.3.4. Impact on the Competitors

III.A.3.5. Impact on Employment

III.A.4. What would be the Impact of Lower Internet Access Charges on Demand?

III.B. COMMERCIAL ANALYSIS OF THE COMPETITIVE SITUATION

II.B.1 Are the Fees Deutsche Telekom charges for the Access to the Local Loop too high?

III.B.2. Does Deutsche Telekom engage in price squeezing techniques and cross-

subsidization?

III.B.3. Is there evidence for alleged backlogs in collocation space?

II.B.4. Is Deutsche Telekom Preventing the Creation of Alternative Cable Operators?

III.C.INSTITUTIONAL ANALYSIS

III.C.1. Does the Regulator have enough authority to restrict Deutsche Telekom in

abusing its market-dominant position?

III.C.2. Does the regulatory body lack an understanding of the economic significance of

certain practices of the incumbent?

III.C.3. Is there a certain bias in the regulator's decision-making towards Deutsche Telekom?

III.C.4. Are the licensing fees charged by the regulatory authority too high?

III.D. LEGAL ANALYSIS

III.D.1. Can Deutsche Telekom's below cost pricing be legally challenged?

III.D.2. Can Deutsche Telekom be challenged for not segregating its accounting system?

III.D.3. Can Deutsche Telekom be challenged on the interconnection conditions it offers

competitors?

III.D.4. Are there legal provisions to challenge the rate for the leased line?

III.D.5 Are there legal provisions ensuring the independence of the regulatory body?

III.D.6. Are there any legal provisions requiring the complete divestment of Deutsche

Telekom from its legacy cable network?

III.D.7. Are there any legal requirements regarding the amount of the licensing fees?

III.E. POLICY ISSUE ANALYSIS

III.E.1. Is there not sufficient competition in the telecommunications market already?

III.E.2. Should the Government Engage in the Protection of Jobs at Deutsche Telekom?

III.E.3. Should the Government Engage in the Protection of Deutsche Telekom to

Provide Universal Services?

III.E.4. Should the Government divest itself from its holding in Deutsche Telekom?

III.E.5. Why does Germany need a cable network for telephony services?

III.F. POLITICAL ANALYSIS

III.F.1. Deutsche Telekom AG (DTAG)

III.F.2. The German Federal Government

III.F.3. Ministry of Economics and Technology

III.F.4. Ministry of Finance

III.F.5. The Independent Regulator

III.F.6. Federal Cartel Office

III.F.7. Monopolies Commission

III.F.8. Parliamentary Groups

III.F.8.1. Social Democratic Party

III.F.8.2. Christian Democratic Party

III.F.8.3. Alliance 90/The Greens

III. F.8.4. Liberal Democratic Party

III.F.8.5. Democratic Socialist Party

III.F.9. Consumer organizations

III.F.10. Labor Unions

III.F.11. European and International Stakeholders

III.F.11.1. EU Commission

III.F.11.2. United States Trade Representative

III.F.11.3. Foreign telecommunications forms and associations

III.F.12. German Public Opinion Analysis

III.F.12.1. Demand for Cheaper and Unmetered Internet Access

III.F.12.2. Customer Service at Deutsche Telekom

III.F.12.3. High Demand for Alternative Operators

III.F.12.4. Stock Market Disappointment

 

IV. RECOMMENDATIONS

IV.A. Cooperation and Transparency at Deutsche Telekom

IV.B.   Government Divestment of Deutsche Telekom

IV.C.  Creation of Alternative Operators: Broadband TV Cable Network

IV.D. Stricter Legal Enforcement by the Regulator

IV.E. Reevaluation of the Wholesale Leased Line Charges

IV.F. Reassessment of the Licensing Fees

 

V. COMPREHENSIVE STRATEGY PAPER

V.A. Coalition Building Strategy

V.B. Domestic Strategy

V.C. European Strategy

V.D. International Strategy

V.E. Domestic Political Strategy

V.E.1. Labor Unions

V.E.2. Chancellor Schroeder

V.E.3. Ministry of Economics

V.E.4. Ministry of Finance

V.E.5. Ministry of Labor and Social Affairs

V.E.6. Federal Cabinet

V.E.7. Bundestag

V.F.  International Political Stretegy

V.G   Negotiation Strategy

V.G.1. Unions

V.G.2.  Deutsch Telekom

V.G.3.  Chancellor Schroeder

V.G.4.  Financy Ministry.  

V.H.  Public Relations Strategy

 

 

Operational Document I: Sample White Paper

Operational Document II: Sample Letter to Potential Coalition and Campaign Members

Operational Document III: Sample Open Letter to Chancellor Schroeder

Operational Document IV: Sample Op-ed Piece

Annex I: Estimated First Year Budget for the Coalition and Campaign

Annex II: Distribution of Seats in the German Bundestag

Annex III: Legislative Process

Annex IV: Glossary of Terms

 

Bibliography and Consulted Sources



[1] This project has been researched and prepared by Nina Barmeier and it is required for the Master of Arts in Commercial Diplomacy (MACD) offered by the Monterey Institute of International Studies (MIIS).

 

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