Broadband Internet

Deutsche Telekom, Rivals Clash Over Access

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  • Why it matters

    Why it matters

    Changing the framework for Germany’s Internet infrastructure amid pressure from the former telecommunications monopolist could have a grave impact on the competition.

  • Facts

    Facts

    • Telekom wants to be able to prevent its competitors having their own infrastructure at important network nodes.
    • The operator has advanced technology to provide high-speed Internet via copper wires.
    • The German government wants the entire country to have access to high-speed Internet by 2018.
  • Audio

    Audio

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If the broadband market in Germany were a sports competition, everyone would know they’re in for some rivalry. The rules would be clear to the referee and athletes alike, with penalties awaiting those who broke them.

Providing broadband Internet to Germans, of course, isn’t a sport but a business. And though there are rules, they appear to be debatable, threatening to obscure the actual aim of ensuring as many people have access to high-speed Internet as possible.

Representatives of the German telecommunications industry have met with the federal network agency to discuss a petition from Deutsche Telekom, Germany’s former telecommunications monopolist, about expanding broadband service. Telekom doesn’t want competitors to have their own infrastructure at important network nodes. The reason is that the operator wants to use its own technology for providing high-speed  Internet via old copper wires. Around six million people would benefit as a result, the carrier argues.

Rivals warn of a new monopoly arising at the expense of both competition and consumers.

The federal government wants all of Germany to have access to high-speed Internet by 2018. That is a worthy and important objective – given that Europe’s largest economy still lags behind several European countries. And if Germany’s politicians and enterprises are serious about establishing a digital platform for  manufacturing, know as Industry 4.0, they need extensive high-speed Internet coverage.

For a while, it appeared as if telecommunication service providers understood the expansion of high-speed Internet as something of a social responsibility.

But it’s not the German government but telecommunication service providers that are expanding the nation’s broadband network. And of the €10 billion ($10.5 billion) considered necessary for investment by Alexander Dobrindt, the minister in charge of the digital infrastructure, €8 billion is expected to come from industry or possibly even more. The government hopes to pocket at least €1 billion from auctioning wireless frequencies and use that money for broadband expansion.

For a while, it appeared as if telecommunication service providers understood the expansion of high-speed Internet as something of a social responsibility. They entered into a network alliance, with company executives having their pictures taken alongside Mr. Dobrindt.

But appearances are deceptive. While altruism may well be a way for companies to create positive PR, they still need to earn money to invest in infrastructure. If they’re uncertain about making profits to recoup high investments, they won’t invest.

That, warn Telekom’s competitors, is exactly what will happen if the operator’s new petition goes through. They claim they will lose access to profitable regions needed to compensate for network expansion in less lucrative areas. And they worry that Deutsche Telekom’s wishes usually meet with receptive ears in Berlin and Brussels.

 

009 Deutsche Telekom WTB

 

The debate shows the potentially damaging consequences for broadband expansion in Germany: Difficult to access regions will be receive high-speed Internet, if at all, as a matter of low priority. And some small survice providers in rural areas have said they could be forced out of business if Telekom had its way.

 

It should come as no surprise that Deutsche Telekom is keen to secure as much market share, revenues and profits as possible – and that includes using its excellent contacts to politicians. And the same applies to its rivals.

But politicians should be aware of Telekom flexing its muscles. The operator’s promise to help them fulfill their broadband promise while paying the government a nice dividend too boot should be no excuse for putting the federal network agency under pressure. If it only takes a certain amount of lobbying to change the rules, then there won’t be much more willingness to invest. And Germany needs high-speed Internet – fast.

Ina Karabasz is reporter for Handelsblatt’s Live online service. To contact the author: karabasz@handelsblatt.com

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