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I.
BACKGROUND I.A.
MARKET SHARE:
DEUTSCHE TELEKOM AND COMPETITORS
Three
years after the liberalization of the telecommunications sector,
competition has stagnated. The market share of the competitors in terms
of turnover was only around 13.4 percent at the end of 2000, hardly up
from the 12.7 percent market share in 1999. Deutsche Telekom continues
to be the market-dominant firm in all main telecommunications services.
In the fixed network market, the firm has a market share of almost 99
percent in local calls and nearly 80 percent in domestic long distance
and international calls combined. In the newly emerging DSL market,
Deutsche Telekom already dominates with a market share of more than 90
percent. The company’s wholly owned subsidiary, T-Online, is the
largest Internet service provider in the German market, with a market
share of approximately 70 percent. In mobile telephony, the firms’
subsidiary T-Mobil is the market leader, with a 40 percent market share.
I.A.1.
Fixed Line Network Communications
Until
January 1, 1998, Deutsche Telekom had a legal monopoly on the provision
of domestic and international public fixed-line voice telephony service.
Although the regulatory structure allows for an unlimited number of
market entrants, competitors have not been able to gain a significant
market share in certain sectors of the fixed-line market. I.A.1.1.
Competition in the Fixed Network Communications Market
In
the overall fixed network communications market, which includes
domestic, long-distance and international calls, competitors were able
to seize a market share of 22 percent. Out of the 290 billion call
minutes generated in the year 2000, the competitors generated 65 billion
minutes per day. As shown in Figure 2, Deutsche Telekom generated the
remaining 225 billion minutes per day, corresponding to a market share
of 78 percent. The competitors where able to increase their market share
in the fixed network by 28 percent in the year 2000 from the previous
year. Figure
2:
Total volume of call minutes in the fixed network 1997-2000 (in
billion):
Source:
Telecom Market Watch 2000, RegTP. The
focus of the competitors in the fixed-line market was on long-distance
and international calls. In the battle for customers in the long
distance and international market, which has been fiercely waged on the
basis of price, Deutsche Telekom competitors have been able to gain a
certain market share. The biggest share of the services offered by the
competitors was domestic long distance, followed by Internet
connections, and international calls. Although competition in the long
distance market has increased rapidly, there is still a lack of
competition in several major long distance markets, such as long
distance calls to the US. Figure 3 gives an overview of the different
services offered by the competitors. Figure
3: Type
of fixed network service offered by competitors in the first half 2000
Source:
Telecom Market Watch 2000, RegTP. Although
many German customers can now choose service providers, they mostly do
so either through call-by-call selection, which means selecting a
carrier every time they make a long distance or international call, by
dialing the carrier’s prefix before the telephone number, or through
preselection, which means selecting one long-distance carrier to handle
all their long distance and international calls. The 65 billion call
minutes the competitors generated in the first half of 2000 were chiefly
reached by call-by-call services, followed by preselection.[1]
Only a fraction of 13 percent were generated by direct calls. As
illustrated in Figure 4, the form of utilization in mid-2000 remained
unchanged from the year 1999 regarding direct calls. Preselection gained
about nine percent over call-by-call services. Figure
4: Form
of utilization and customer service of the competitors (in the first
half of 2000 and 1999).
Source:
Telecom Market Watch 2000, RegTP. I.A.1.1.a.
Competition in the Local Market In
the local network, the competitors’ market share remains completely
insignificant. As shown in Figure 1, by mid-2000, competitors were only
able to generate local traffic of 4 million minutes/day, which is equal
to a market share of 1.1 percent, nearly unchanged from the 0.6 percent
market share recorded in 1999. Deutsche Telekom, on the other hand,
succeeded in generating 364 million minutes of local traffic per day.
With a control of over 98.5 percent of the end-users, Deutsche Telekom
remains the de facto
monopolist in the local market. According to a recent market study by
Dialog Consulting on behalf of the German Competitive Carriers’
Association (“VATM”), no significant growth of the competitors
market share in the local network is expected in the foreseeable future.
[2]
Figure
1: Market
development in the local fixed network, 1999 and 2000.
Source:
Telecom Market Watch 2000, RegTP. Footnotes: [1]
Call-by-call phone calls are listed on Deutsche Telekom’s phone bill
to the customer, albeit separately. Preselection customers receive two
bills: one from Deutsche Telekom for the phone lines, for local calls
and any calls to special numbers, and a second bill from the
preselected company. In direct services, the competitor offers full
service, i.e. the phone line and all aspects of the connections. A
customer who has fully changed to a competitive provider only receives
one bill from that provider and all the telephone connection run via
this company. |
