German\'s Telecommunications Industry and Also

¶ … German's telecommunications industry and also focuses in on one particular company, DT. Before the Act of 1996 that was in place for telecommunications, DT had a monopoly occurring within their field. They made it difficult for other businesses to enter the market. Afterwards, the organization had to make it easy for them to enter, but this was not an easy set-up because of how much they dominated Germany in reaching out to others. Because of the new regulations, they chose to set forth a means in which to set prices for unbundled services through an application process. However, as time went on they had to change their retailing, wholesale and to do better at dealing with customer complaints. These were necessary changes that can impact the company impact it for the positive or negative.

b. Describe the market for telephony services prior to the enactment of the 1996 Telecommunication Act in Germany. Why is it unlikely that DT would face new competition in the market for retail fixed-line telecommunication services prior to 1996?

The telephone industry prior to the enactment of the 1996 Telecommunications Act in Germany is important. DT had a monopoly in place, which made it difficult for any industry to enter the market. They made the most revenue and dominated as much as possible. For example, any new entrant had to invest a plethora of money in order to develop their own network infrastructure as well as provide retail services in telecommunications. This made those who wanted to enter lose an immense amount of profit during this process.

DT would not face new competition because of them having so much influence over telecommunications. In fact, many of them would have to beg in order to get into the industry itself. This means that they would have to have extra funds leftover in order to have any kind of business, which could make it quite difficult for anyone wanting to make a difference in the community they serve on a regular basis.

c. In what forms could local-level wholesale access to DT's fixed-telephone network take? Describe the price structure for wholesale access to this network. Describe how wholesale DT's wholesale prices were regulated.

The forms that local-level wholesale access to DT's fixed-telephone network is worth mentioning in regard to the telecommunications industry; they do this as a means in which to do line sharing and the other is that of access to that of using a full bundle. This gives the other competitor access to local loops that are selected. In regards to the price structure, a monthly charge of EUR 135.49 in order to take over the existing line; however, since the regulatory authority took over, they made it at a monthly charge of EUR 10.56 with the possibility of this becoming less. With the regulatory control of the telecommunications industry, as of April 2003, they made the rate at EUR 11.80, and the one-off charges became EUR 81.12 and the basic connection at EUR 70.56 and for the takeover at 34.94 for discontinuing it or for a transfer at EU 50.71. These are regulated by the Telecommunications Act of 1996.

d. Describe the connection technologies available to retail consumers. What were DT's price structures for these connection technologies? How were retail prices in the market for telephony services regulated?

The connection technologies that are available are worth mentioning. These include those that is through an analogue connection. They also can access it through a means of a digital narrowband connection, such as ISDN. The price structure is as follows. One will have a subscription fee of EUR 10.93, and for the retail one-off charges for that of analogue and ISDN will remain at EUR 22.22 and the EUR at 44.45 for the connection to become serviceable. All of these are regulated by the Telecommunications Act of 1996. Every company has to go through the government in order to prevent a monopoly from occurring again and to allow opportunities for other businesses to enter the market as a means of making their own revenue as well.

e. Explain the concept of a "margin squeeze." Outline DT's argument for why its pricing practices do not constitute a margin squeeze. Outline the counter argument.

The concept of margin squeeze is important. When several competitors note that DT's charges are unreasonable, then this forces the company to change their prices for retail consumers that are considered quite far in regards to retail for other services that are similar. This can make it to where competitors can argue that they will not make a profit or have an opportunity to compete.

DT's argument outline: 1. Margin squeeze excessive wholesale prices or insufficient retail prices. 2. Solution-vary both wholesale and retail charges. 3. Currently, they can control retail charges.