British telecom firm Vodafone threw down the gauntlet to Deutsche Telekom over high-speed internet connections on Monday, promising to spend €2 billion ($2.4 billion) to provide 13.7 million German homes and businesses with gigabit-speed connections in the next four years.
The announcement comes in the midst of campaigning for the German parliamentary election September 24. The parlous state of Germany’s internet, with much slower connections than the rest of Western Europe, has become an issue in the election campaign.
“I am excited to announce this transformational investment plan for Germany, which will bring gigabit broadband services to millions of consumers and businesses,” Hannes Ametsreiter, CEO of Vodafone Germany, said in a statement.
“This transformational investment plan for Germany will bring gigabit broadband services to millions of consumers and businesses.”
Vodafone said it would invest €1.4-1.6 billion for connections to around 100,000 customers in German business parks in cooperation with Deutsche Glasfaser, a local provider of fiber-optic cable connections for businesses. It said it would begin by connecting 19 industrial and commercial parks in Düsseldorf by 2018.
It also said it planned to reach 1 million consumer households in rural areas by building fiber-optic networks in cooperation with municipalities, which will build the network infrastructure to connect from the exchange to the homes, the so-called “last mile” which is considered the most expensive part of a gigabit information network.
Handelsblatt reported last week that Deutsche Telekom, which has about two-thirds of the internet business in Germany, mostly on slow DSL connections, was balking at building a country-wide fiber-optic network unless the government agreed to free it from competition rules.
Vodafone currently has 6.3 million fixed broadband customers in Germany, so most of the 13.7 million fiber-optic customers will be in addition to its current business. Vodafone said it expects the fiber-optic buildout to increase revenues in Germany by 1-2 percent.
In addition, Vodafone said it is upgrading its existing cable network in Germany to increase data speeds from 500 megabits to 1 gigabit. The company has 12 million cable subscribers in Germany.
According to the OECD, an economic research organization based in Paris, just 1.8 percent of German internet customers are on fiber-optic cable, behind 30 other developed countries.
Many German politicians have blamed Deutsche Telekom’s partial state ownership for the slow adoption of high-speed internet in the country.