European Commission chief media regulator Viviane Reding warned the German government that its plan to exempt Deutsche Telekom's new fibre-optic broadband network from regulation violates EU laws, Focus Magazinereported.
"Such an exception violates EU laws," Ms Reding wrote in a letter to Economy Minister Michael Glos.
Deutsche Telekom plans to invest €3 billion in the new high-speed network, which will be available in major metropolitan areas next year.
The German government granted Deutsche Telekom the right to a high-speed Internet network monopoly in the project's initial years.
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The company has said it cannot build the new network if forced to grant rivals access to it straight away.