Since January 1998, with the termination of Deutsche Telekom's monopoly in the fixed voice market, Germany has been experiencing cut-throat competition in telecommunications.

The anticipated slow growth in competition and controlled price reductions by the "establishment", the three network operators Arcor, o.tel.o and VIAG Interkom, was blasted by the surprise success of the flexible and aggressive Call by Call suppliers such as MobilCom, Tele2 and TelDaFax.

The subsequent price collapse and the tactics of Deutsche Telekom AG, itself to become a price leader, have completely changed the Rules of the Game. At the same time, many of the decisions made by the Regulator did not support the new challengers in the market, so that the Business and Marketing Plans of many of the hopeful new market entrants required a thorough overhaul.

The consumers - private households as well as businesses - are happy about the lower telephone costs, but are widely confused on the best procedure. So far, Deutsche Telekom has been able to defend its monopoly in local telephony. New technologies such as DSL have also so far benefited mainly Deutsche Telekom.

In the mobile market,the entry of VIAG Interkom in mid 1998 as fourth mobile network (E2) led to a similar collapse in prices in cellular telephony, with increased pressure on margins for all suppliers, both network operators and service providers.

The mobile telecommunications market has grown much faster than forecast, with over 56 million users estimated in Germany at the end of 2001. But the pressure on prices and margins is facing all suppliers in the market with new challenges on their marketing. The first attempts by D1 and E-Plus to raise prices again were unsuccessful;more attempts will probably follow, The billions required to win the UMTS licences, to build the new networks and to market the new services profitably imply an additional- challenge for the four network operators, despite the withdrawal from the market of the new UMTS licencees Quam and MobilCom.

The sensible and - for many business users, desirable - convergence between fixed and mobile networks is currently being made more difficult by the splitting of the responsibilities into different business units by several major players. This offers chances for service providers with creative offers.

Many of these companies have now withdrawn from the fixed network market including such originally respected companies such as TelDaFax and Callino, the market has consolidated at a low price level.