Political representation of interests.
The political sector and regulatory authorities influence the development and availability of the network infrastructure, technologies and services. Not only does this directly impact the competitiveness of telecommunications companies, it also impacts business in general, which relies on having a fast network infrastructure as well as state-of-the-art telecommunications services. In addition to economic factors, networks and services are of considerable importance for maintaining a sense of community in society. That is why we engage in active, ongoing dialog with interested stakeholders from politics and the general public.
Many governments, parliaments, authorities and non-governmental organizations worldwide consider Deutsche Telekom to be a valued dialog partner when it comes to ICT and innovation. As a company seated in Germany, we are in particularly high demand with institutions located in Germany. We have also set up offices in Brussels to ensure constant dialog with the institutions of the European Union as well as associations and other community organizations. We engage in active dialog with similar institutions in countries in which Deutsche Telekom is active, particularly in the European markets and in the United States.
Our partners from parliaments, governments and non-profit organizations need to uphold their independence and integrity. This principle is codified in Telekom's Guiding Principles. For example, they prohibit donations to political institutions in Germany as well as non-transparent attempts to exercise influence. Instead, these guidelines recommend basing our political communication on facts, expertise, credibility and integrity. In the interest of credibility, Deutsche Telekom is also registered in the public Transparency Register for lobbyists in Brussels, where all required information is documented. This is the basis for recipients to perceive information provided by Telekom as authentic and trustworthy, so that it can be assimilated in opinion-building processes in the political arena and society.
Investment incentive needed for broadband networks.
Fast broadband networks have become a central infrastructure feature as well as a factor for site selection and success in all business sectors. Germany needs a high-performance, reliable and secure broadband infrastructure, ideally with nationwide coverage.
Building the next generation access networks (NGA) requires joint efforts of politics and business. In view of the ambitious broadband goals at both the national and European level, the main purpose of telecommunications and regulatory policies needs to be improving planning security and, in particular, the financial power of companies willing to invest in the market as well as maximizing the potential for economically viable network expansion by the private sector.
Forward-thinking regulatory policies actively support investment in modern broadband networks and prevent unnecessary financial burdens and red tape for the network providers investing in networks. The successful liberalization of the telecommunications market has created self-sustaining, functional infrastructure competition in Germany. We now need to continue to strengthen the investment power and competitive edge of the German and European telecommunications industries.
As the result of many years of regulatory policy that has focused exclusively on price reduction, the industry is lacking the funds needed to realize the investment being demanded by the political sphere. Industry investments are generally stagnating when what we need is significant expansion.
Regulated charges need to reflect cost and price trends and create effective incentives to invest in new networks. Regulated companies need price flexibility, particularly for next generation networks (NGA) that are set up under competitive conditions. This is the only way to guarantee competitiveness and full capacity utilization and, therefore, economic efficiency.
Updating regulatory policies remains an important step. In view of the fact that the competitive landscape, the technologies and demand are all highly dynamic, market regulatory policies need to be reviewed, modified and, in some cases, reduced. The new German Telecommunications Act (TKG) includes the gradual reduction of regulation in competitive environments. From the perspective of the market, a consistent application of the new law is now key. The same goes for enabling collaboration and risk sharing models that encourage broadband expansion and improve profitability. Regulatory measures need to be based on proven market failure to keep them from unnecessarily limiting innovative rate plans and products. Open access needs to be embraced as a basic principle so that competition and the ability to choose are guaranteed for consumers in connection with all network expansion projects.
Regulatory policy needs to be rebalanced along the entire digital value chain. In view of the fact that the online and telecommunications market are converging rapidly and in light of the growing market power of a few global Internet players, sector-specific regulation of telecommunications is creating more and more of an imbalance. The same laws and regulations that apply to telecommunications companies also need to apply to Internet companies providing the same services. The objective here needs to be creating equal competitive conditions and enabling fair distribution of the financial burden involved in broadband expansion.
Deutsche Telekom has been making a considerable contribution to this area for years by investing heavily in the infrastructure for fixed-line and mobile Internet. The company has invested in broadband coverage in Germany for many years and is committed to closing coverage gaps.
Protecting the open Internet.
The topic of net neutrality continues to draw political attention. EU Commissioner Neelie Kroes, who is responsible for the European ICT sector, presented a draft regulation to standardize the legal framework to the EU Parliament in September 2013. This "EU telecoms package" would also impose net neutrality rules. The draft regulation includes rules on traffic control and transparency and defines special services providing for guaranteed quality of data transfer.
Deutsche Telekom remains committed to preserving an open Internet. Content and services will continue to be available online in accordance with the best effort principle, meaning they will be available to the extent permitted by the available resources. Deutsche Telekom continues to expand and optimize its infrastructure so that we are able to cope with rapidly increasing amounts of data traffic and constantly upgrade our network. This is the only way for us to meet our customers' increasing demands and live up to the requirements of online content and application providers to provide their services in high quality in the future as well. However, telecommunication networks cannot be operated without an effective network management system.
That is why Deutsche Telekom is developing business models based on the "best effort" Internet principle that online businesses can use to offer innovative services that pose specific demands on transmission quality and quality of service. This will include managing the rapidly growing volumes of different types of data streams in the net. Content will in no way be controlled. Deutsche Telekom supports the freedom of the Internet and does not influence user or provider content in any way. Telekom will continue to take a non-discriminatory approach to marketing services with different quality-of-service levels in competition with other network operators. This gives consumers greater choice and guarantees a high quality level.
One of Deutsche Telekom's aims is to become the most highly regarded service company in the industry. That is why we gave high priority to consumer-related topics in 2013 as well. We further strengthened internal functions dealing with consumer relations in order to improve exchange between Deutsche Telekom's product and service development areas and our external stakeholders from politics and the general public.
Central topics in legislation and in stakeholder dialog as well as efforts to create voluntary regulations for the industry beyond legal provisions included:
- Maintaining consumer data privacy, for example in the online advertising business
- Improving comprehensive, cross-technology protection of minors at both the national and EU level, particularly by establishing comprehensive, Group wide minimum standards in the EU
- Improving customer service standards and customer protection in the telecommunications sector, for example when switching providers for fixed-line and mobile services
- Encouraging improved transparency toward our customers and in collaboration with the entire industry
Deutsche Telekom once again made progress in 2013 in regard to switching fixed-line providers - both internally as well as in collaboration with other German service providers. The goal is to make it easier for consumers to switch providers without any service interruptions. New switch-over processes, which apply to all mobile network providers, were successfully established throughout the entire market in 2013. These processes now enable number portability from customers' current mobile communications contracts. In all these areas, Telekom stands for a constructive and solution-oriented approach that is geared to both the consumers' interests and the interests of our company.
In terms of improved transparency for customers, Telekom in Germany took the initiative in 2013 and began rethinking its rate plans and customer communications activities as well as moving in new directions (see More transparency on costs and services). Telekom's objective in this area is to improve transparency and simplify its products and communication, giving customers a clearer picture of what they can expect from their fixed-line and mobile communications rate plans. During the reporting period, Telekom also collaborated intensively with the entire industry to improve transparency for customers in Germany. An extremely comprehensive set of measures was proposed to the German Federal Network Agency in this context in September 2013. Among other things, these measures would enable a comparison of actual bandwidths across all technologies in the fixed-line network for the first time.