Ich bin ein Broadbander

The WSJ on Saturday covered efforts by Deutsche Telekom (DT) to seek deregulation of policies similar to UNE-P regulations here in the US.

Europe’s largest telecommunications company is investing €3 billion ($3.6 billion) to connect residential customers to the Internet at speeds up to 50 megabits per second — more than eight times as fast as its quickest offering so far and faster than any other connection available in German homes. The move is crucial for Deutsche Telekom’s ambitions of offering a “triple play” of services spanning telephone, Internet and television at a time when its traditional business of phone calls is being shaken by major technological upheavals.

It looks like they managed to get a copy of Verizon’s (VZ) and AT&T’s (T ) playbook…

The German incumbent is lobbying to be spared such interference, arguing that it is creating a new service and already faces mounting competition from cable, Internet and other telecom companies. It has threatened to scrap the spending plan and lay off more workers if regulators impose too many restrictions.

The German government supports the removal of UNE-P like rules and has increasingly distanced itself from regulating the telco sector. Why? Concern over a broadband gap! According to the OECD, France, Great Britain, and Germany all lag Japan, Korea, and the USA in broadband penetration, particularly in next gen technology deployments.

Another quote from the WSJ article:

The government argues that there are three steps in fostering competition: privatization, regulation and deregulation. “The third step is the one that needs the most courage,” says Joachim Wuermeling, Germany’s secretary of state for the economy. That stance, however, puts Berlin on a collision course with European Union regulators in Brussels who are responsible for setting the terms of industry competition across the Continent.

As it turns out Telefonica and France Telecom want the same deregulation, and the EU is concerned that allowing Germany to deregulate would be a precedent for the entire continent. All of these carriers are making deployment of next gen broadband networks contingent on a release of obligations to lease the new infrastructure to competitive carriers.

I do not understand the mechanics behind the EU and how it represents the interests of corporations and individuals in member states, but it seems ridiculous that a sovereign country no longer has control of how a company can operate within its own borders. Who are the EU regulators looking out for? Themselves?

Companies only invest risk capital when the potential returns warrant it, regardless of the wishes and magical wand waving of pundits and politicos in Brussels or Washington DC. Telcos will simply refuse to make new investments in technology if the upside rate of return is regulated by a government entity and the downside risk is left unlimited.

I am frustrated the hypocrisy of those who lament broadband availability and technology, but at the same time refuse to allow those who make the risk capital investment to reap the benefits- instead they advocate confiscatory policies like Net Neutrality, and UNE-P.

The good news is that these debates are taking place, as we may be lucky enough to see the same destructive UNE-P legislation that was removed in the USA eradicated from three of the largest states within Continental Europe.

Thanks to Om Malik for some good data (.pdf link, in German) on German broadband policy.