The German government agreed minor amendments to the country’s telecoms bill on Tuesday evening, paving the way for a “regulatory holiday” for incumbent carrier Deutsche Telekom (DT) while threatening to stifle competition in the broadband market.

The amendments appear to hinge on the definition of new markets, proposing that regulation be reduced on those companies that invest in new infrastructure and at the same time offer new products.

DT, which is in the midst of rolling out a Eur3bn high speed VDSL network, has asked the government that the network be exempt from competition for two to three years, so it can establish itself and recoup the investment cost. Germany, which believes that regulation will stifle innovation and investment in the telecoms market, favours the proposal.

But the incumbent’s request has rubbed Viviane Reding, EU Commissioner for Information Society and Media, up the wrong way and the EU has threatened to take the country to court if DT is protected from regulation.

However, Tuesday’s amendments offer a loophole to the bill that could be interpreted to give DT its desired regulatory holiday if it rolls out new products, such as IPTV, along with its infrastructure.

According to the legislation, the deployment of a new product constitutes a “new market” and as such may be exempt from regulation. New infrastructure on its own does not constitute a new market.

A spokesman for Breko, the industry association representing almost all of DT’s fixed line rivals in Germany said the move was a “disaster for rival players” and would allow the incumbent operator to avoid competition.

The changes to the bill will be discussed by the country’s telecom regulator, Bundesnetzagentur (BNetzA), next week, but Breko holds out little hope that the amendments will be rejected.

“Our only hope now is to lobby the European ministers,” the spokesman said. “But that may not help. It could take four or five years for the case to be decided upon, by which time Deutsche Telekom’s network will be open anyway,” he said.

Deutsche Telekom and BNetzA did not reply to our requests for comment.