EC raids Orange, Deutsche Telekom, Telefonica over antitrust concerns

Regulators from the European Commission raided the offices of major telecoms operators this week over suspicions that the operators are abusing their market positions and throttling services provided by suppliers of content that uses large amounts of data.

According to the Financial Times, the Commission estimates that about 100 million Europeans have suffered restrictions on their internet usage in recent years.

Reuters reported that three of the operators affected by the raids are Orange, Deutsche Telekom and Telefonica.

Little detail has so far been provided by the Commission, which confirmed that on July 9 it "initiated unannounced inspections at the premises of a number of telecommunications companies active in the provision of Internet connectivity in several Member States."

The statement alluded to the fact that the raids relate to the interconnection deals that operators form with one another to carry Internet traffic: "Internet players interconnect with each other through a combination of wholesale services to cover all possible Internet destinations. Internet connectivity allows market players (e.g. content providers) to connect to the Internet so as to be able to provide their services or products at the retail level. This service is crucial for the functioning of the Internet and for end users' ability to reach Internet content with the necessary quality of service, irrespective of the location of the provider."

Deutsche Telekom confirmed that its offices had been raided as part of an investigation into "potential abuse of an alleged dominant market position" in the context of the interconnection of Internet backbone grids, Bloomberg reported. There is no such abuse, it said. The operator said it was "astonished" that more searches had been carried out after previous accusations of market abuse had proved to be groundless.

The German operator said it was working closely with the officials to clarify the situation.

The Financial Times said Orange and Telefonica also confirmed that raids had taken place and said that they are cooperating with the authorities.

Reuters reported that U.S.-based Cogent Communications has previously raised concerns over the quality of interconnections that degraded the service to Cogent's customers, and has filed complaints to the EC.

Cogent CEO Dave Schaeffer told Reuters that Cogent's concerns only related to operators that it felt were abusing their market positions. "We have good relationships with many operators in Europe, including Telenor, KPN and Belgacom," he said.

The raids come at a time when relations between the EC and operators are already strained over proposals to cut mobile roaming charges that would have a direct impact on operator revenues. The roaming proposals form part of EU plans to create a single market for telecoms. Another key target would be to introduce net neutrality across Europe to prohibit the throttling of data services on mobile and fixed networks.

For more:
- see this Reuters article
- see this Financial Times article (sub. req.)
- see this Bloomberg article

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