Telecoms giant plans to abolish flat rate services

Germany has expressed concern over plans by telecoms giant Deutsche Telekom to abolish flat rate DSL internet services in favour of contracts with fixed data limits.

The company plans to limit new customer data traffic to 75 gigabytes per month, after which the connect speed will drop significantly – similar to the structure of mobile data plans.

Telekom said the rapid rise in data consumption by users required huge investment in data infrastructure which “cannot be financed by ever-lower prices” in the internet market.

However the federal government, which controls almost one third of Telekom shares, told the company it was “concerned” at the plan, particularly a proposal to exclude Telekom’s own internet services from the data tariff.

Internet activists are concerned this would give Telekom’s own film streaming service, for instance, a commercial advantage over other operators such as iTunes or LoveFilm.

Berlin has indicated this might be a breach of competition law and undermine official government policy of "net neutrality", by which telecoms companies do not distinguish between online traffic, even for data-heavy services like YouTube.

In a letter to Telekom chief executive Rene Obermann, federal finance minister Philip Rösler urged the company to examine its plans closely, "in particular the different treatment of (Telekom) and other services under the aspect of net neutrality".

"The company is clearly flying a kite, but the benefits for consumers are not apparent," said federal consumer affairs minister Ilse Aigner to Spiegel Online.

“Telekom has to be careful not to overshoot its target. To limit flat rates is not consumer-friendly.”

Telekom defended the move yesterday, saying that the average German household had a data usage of 15-20 GB monthly and would not be affected by the change.

As well as the basic 75GB package, the company plans to offer three other packages up to 400 GB monthly.

With a growing use of film streaming and download services, German internet analysts forecast data traffic will quadruple by 2016, by which time Telekom plans to have the new limits in place.

The former state monopoly remains a major player in the German telecoms sector, with 45 per cent of the internet market. Several internet service provider competitors were quick to promise consumers they would not follow Telekom’s move while others remained conspicuously silent.

The plan triggered an online storm yesterday.

"Telekom wants to charge customers as extra service for what they already had included in their tariff and cut out competitors," said Markus Bekedahk, of the Digitale Gesellschaft web watchdog, to the Tageszeitung daily.