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Ruling favors AOL in German court

America Online's European division gets a permanent injunction against Deutsche Telekom over the German firm's Net access pricing practices.

A German court has granted America Online's European division a permanent injunction against German telecommunications firm Deutsche Telekom.

AOL Europe's suit alleged that Deutsche Telekom was leveraging its telecommunications monopoly to drive down per-minute charges from its Internet access provider T-Online. But today, a district court in Hamburg, Germany, ruled that T-Online's upcoming access plan would have to "unbundle" its Internet access charges from its local phone service charges, according to an AOL Europe spokeswoman. Deutsche Telekom is also barred from advertising the bundled price plan, she said.

"It's important that there is transparency so if there is a certain call rate available, it should be offered to other ISPs," said AOL Europe spokeswoman Maggie Gallant.

Deutsche Telekom in Germany could not be reached for comment. The firm's U.S. office declined comment.

Under pricing changes due to take effect on April 1, T-Online users would pay only 6 pfennigs per minute for the service--combining both per-minute charges for access to T-Online and the per-minute charge for the phone call to reach T-Online.

To connect to AOL or other online services in Germany, users have to pay 8 pfennigs per minute in phone charges alone. They also pay monthly or per-minute fees to AOL or another Internet service provider.

AOL's battle for German online subscribers has seen mixed results. While memberships continue to grow, AOL's current 800,000 member base in Germany pales in comparison to T-Online's 2.8 million.

"This is indicative of how bruising the fight is in Germany, where T-Online dwarfs everything else," said David Simons, managing director of Digital Video Investments.

Germany and other parts of Europe are seeing greater competition for eyeballs of late. Just yesterday, Yahoo teamed up with Germany's second-largest telecommunications service provider, Mannesmann Arcor, to bring the portal's services to 8.4 million German-speaking Internet users.

Simons noted that in contrast to the United States, national phone companies in Germany and France had the early advantage of being the first to market. And being first is difficult to beat, especially if the first ones are monopolies.

"Where AOL and other ISPs had an early lead to telephone companies for Internet service, the telcos in Europe were there from day one," said Simons. "They looked at the U.S. and said they didn't want that to happen."

Today's ruling is not the first time AOL Europe has taken legal action against Deutsche Telekom. The online service filed a complaint February 15 to the European Commission against Deutsche Telekom for anticompetitive behavior, according to Gallant. The commission is currently reviewing the complaint, Gallant added.

AOL Europe is a joint venture between AOL and Bertelsmann.

Reuters contributed to this report