Integrated Internet

A Laggard in Europe, Deutsche Telekom to Sell Bundled Plans

Deutsche Telekom Germany Chief Niek Jan van Damme at the IFA fair in Berlin on 5 Sept 2014. Source DPA Rainer Jensen
The Deutsche Telekom Germany chief, Niek Jan van Damme, hopes a new bundled package of landline, wireless, Internet and TV will attract 3 million new customers.
  • Why it matters

    Why it matters

    Deutsche Telekom hopes to get a leg up on the competition by introducing a single flat rate for landline, cellular, high-speed Internet and Internet TV.

  • Facts

    Facts

    • The “Magenta 1” pricing package was presented last week at a trade fair in Berlin.
    • Deutsche Telekom hopes to attract 3 million new customers by 2018.
    • Telecom operators in other European countries introduced similar bundled plans as long as five years ago.
  • Audio

    Audio

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Deutsche Telekom is finally planning to sell a flat rate for landline, cellular, high-speed Internet and Internet TV. So-called bundled services have been commonplace in France, Britain, the United States and other countries for years.

Deutsche Telekom unveiled its “Magenta 1” package last Friday at the International Consumer Electronics Fair in Berlin.

“We want to tie up an all-round carefree package,” Deutsche Telekom Chief Executive Niek Jan van Damme told Handelsblatt. The operator hopes to attract 3 million new customers by 2018.

Although a laggard in the rest of the world, Deutsche Telekom is the first in Germany to integrate its landline and cellular networks. The merging of landline and wireless is necessary because data traffic from video has exploded, as has the number of people using cellphones to access the Internet.

Deutsche Telekom wants to get a jump on the competition. Vodafone Germany, the No. 2 operator after Deutsche Telekom, is pursuing a similar set of rate packages, but has been diverted for months with integrating Kabel Deutschland, the cable TV operator it purchased last year.

O2 and E-Plus, two German mobile networks owned by Spain’s Telefonica, must first manage a merger and combine networks.

The advantage for Deutsche Telekom: Whoever buys a bundled package is less likely to change providers.

Deutsche Telekom plans to bring a so-called hybrid router into stores in time for Christmas sales.

Theoretically, Deutsche Telekom can sell its customers other services, such as higher data allowances or a second or third SIM card because its bundled clients will not go to a discounter.

“If we deliver the promised quality, the customers will stay,” Mr. Van Damme said.

Wolfgang Bock, an analyst with the Boston Consulting Group, said “correctly applied, the convergence can increase sales per customer as well as increase the usage of services.”

A telecommunications expert, Roman Friedrich, said the former monopoly has an advantage over its German rivals because it owns both a landline and a cell network.

Wireless operators are having to play catch up. Vodafone recently spent about €20 billion ($26 billion) to buy cable network providers in Germany and Spain.

Deutsche Telekom has been aggressively marketing the new bundled tariffs. With “Magenta 1,” there are only three flat rate options that vary according to data volume and speed.

The price starts at €50 ($65). Whoever wants additional services such as extra SIM cards or more data can buy them separately.

Mr. Van Damme is putting an emphasis on selling to families.

Deutsche Telekom’s new package should help to keep competitors such as Vodafone, O2 E-Plus and Unitymedia in check. The company will bring a so-called hybrid router into stores in time for Christmas. The device uses the data capacities from landline and the new cellular generation LTE to reach a speed of up to 150 megabytes per second.

This article was translated by Anna Park Kim. Vinny Kuntz also contributed to the story. To contact the author: wocher@handelsblatt.com

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