The European Commission said Wednesday it would send Germany a final warning before it would sue over a law allowing Deutsche Telekom AG to keep rivals off its high-speed broadband network.
The EU's executive arm has long threatened to take Berlin to the European Court of Justice as the country prepared and adopted a law that gave Deutsche Telekom a de facto monopoly on a glass-fiber DSL internet network it built to allow it recoup the cost without sharing the infrastructure with rivals.
EU spokesman Martin Selmayr said Germany had one month to make changes to the law before the telecoms regulators would decide to launch court action in June.
The final warning letter _ called a reasoned opinion _ will be sent in the next few days, he said.
EU Telecom Commissioner Viviane Reding said in February that the German law was an attempt to stifle competition in a crucial sector of the economy.
But Germany's Economy Ministry countered at the time that the new law creates "a balance between the necessary strengthening of competition and the concerns of companies that are willing to invest."
Rulings from the EU's highest court could force Germany to change the law or eventually risk fines.
The former German state-owned telephone company plans to roll out a high-speed optical fiber network that will transmit data up to 20 times faster than current offerings.
The plan is to provide Germany's 50 largest cities high-speed broadband lines by 2007. Berlin had agreed with Deutsche Telekom's argument that it could only make a decent profit on the network if it was exempt from any requirement to offer its lines to rivals.
However, the Commission points to Deutsche Telekom's heavy share of the German market as already giving it a major advantage over other companies. It controls more than 9 million telephone lines out of the country's 12.9 million connections.