Telecommunications Sector Reform in Germany

Telecommunications Sector Reform in Germany had been adopted to achieve network readiness and higher Internet penetration rates.

Reasons Behind the Telecommunications Sector Reform:

(1)Innovation was dependent fully on government subsidies, so technology was changing.

(2)Due to the improved ratio of cost and benefit and introduction of digitalization several new technologies were penetrating the market, which increase the competition in the telecom sector.

(3)International trade markets were spreading and the capital flows increased significantly, therefore for foreign investment competition between the countries were growing largely.

(4) International agreements, for example GATT, WTO, and regional integration, for example, the European Union, also advanced Germany towards the telecommunication reform.

Reform Process:

The first telecommunication reform process in Germany started with two licenses for the wireless materials. The first one was the ‘Use it or lose it’ policy applicable for spectrum which could prevent hoarding. Another was the Spectrum Trading to allow the operators to resell the spectrum segments to the other companies.

The German government abolished all sorts of restrictions on the foreign ownerships. In 2001, the German government started the regulation of pricing in the telecoms sector and stated that the price cap regulation would be applicable only to standard tariffs. The optional tariff regulation was determined by an actual price approval. However, the tariffs for universal services were set at an affordable price while the other tariffs remained .

The German government also introduced some regulation to stop the misuses of dominant position in the telecom sector which in turn promoted competition.

Effects of Reform:

Through telecommunication reform the network readiness had been achieved in Germany and the use of network commodities were also increased. Therefore, consumer convenience increased and new businesses were emerging which was a good sign for the German economy.