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German Web Providers Get Flat Rate

November 16, 2000

FRANKFURT, Germany (AP) _ Internet use via telephone lines should get a whole lot cheaper in Germany beginning next month.

Under a ruling Thursday by government regulators, Deutsche Telekom AG must give competing Internet service providers flat-rate access to its lines.

The new rules, to take effect in February, allow companies such as AOL Europe to pay one fee for unlimited local access _ as is the norm in the United States _ instead of paying for each incremental minute.

The shift could well spur e-commerce in Europe’s biggest economy, which has lagged about two years behind the United States in embracing online commerce.

Germany’s telephone market is deregulated. But Deutsche Telekom still owns 97 percent of the so-called ``last mile,″ the actual wire that connects main trunk lines with people’s houses. Therefore, people have few options but to use Deutsche Telekom when accessing the Internet from home.

About 30 percent of the German population goes online, compared with 34 percent of the Dutch, 68 percent of Swedes and 37 percent of Britons.

Currently, Internet service providers in Germany offer flat rate service but must pay Deutsche Telekom by the minute for line use. Typical rates for local calls in Germany range from about a penny a minute up to 21 cents per minute. Those rates will already be reduced beginning Dec. 15 according to Thursday’s ruling.

Independent service providers say the per-minute system puts them at a disadvantage against Deutsche Telekom’s Internet division, T-Online.

Competitors say T-Online, though it must also pay for per-minute usage, gets getting preferential treatment from its parent company including advertising flyers that are shipped with every local telephone bill.

``It would cost us millions for that kind of advertising,″ AOL Europe spokesman Jens Nordlohne said.

Deutsche Telekom argued against the decision, saying cheap rates for Web surfing would put congest its telecommunications network.

The carrier says that by not offering flat rates for accessing the Web over narrowband lines, it wants to encourage customers to sign up for newer, broadband lines that carry more data.

``This decision is pushing massive investment in the completely wrong direction _ into narrowband, instead of broadband,″ Deutsche Telekom spokesman Hans Ehnert said. ``It puts all the risk on Deutsche Telekom.″

Ehnert said his company was considering a legal challenge to Thursday’s ruling.

Germany lags behind Scandinavia and Britain in the percent of the population using the Internet.

Deutsche Telekom’s competitors charge the company’s expensive phone rates discourage people from logging on and embracing the Internet as enthusiastically as some other European countries.

Nordlohne said the ruling stipulates no details about what time period the new flat rate will cover or its price. That is still for Deutsche Telekom to decide.

``The ruling is a first good step for Germany and for spreading the Internet in Germany,″ Nordlohne said. ``But there is still a lot left to be seen.″

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