Internet Intentions

Speedy Surfing for All

Fast internet dpa
Fiber-optic networks will form the backbone of the nationwide speedy service.
  • Why it matters

    Why it matters

    Germany’s government is ready to co-fund the expansion of broadband with its states in a move to ensure consumers are no longer burdened by slow, patchy Internet service.

  • Facts

    Facts

    • The Internet broadband project is to be financed by the auction of radio frequencies.
    • The end goal is to enable all households to have fast Internet connection speeds by 2018.
    • The federal government’s main priority is to use the auction proceeds to build a fiber-optic network.
  • Audio

    Audio

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Germany’s federal government and states have been wrangling for months over how to accelerate the construction of high-speed Internet in the country. According to a draft of the 2015 budget set for adoption in Germany’s parliament this week, it looks like the end is in sight.

Both parties will split the money from auctioning off the 700 megaherz and the 1.5 gigaherz radio frequencies and use it to expand the high-speed network.

The auction is to take place in the second quarter of 2015, providing the federal government and states can reach agreement with the chancellor.

“Without an equal split there can be no agreement,” the states’ negotiators had repeatedly emphasized, and had broken off talks with the federal government.

The federal coalition government’s plan is to enable all households to have a fast Internet service with speeds of 50 megabits a second by 2018. Not all Germans household have speeds of even 2 megabits a second at their disposal today.

Mobile broadband is set to provide widespread access to fast Internet service.

“In principle, the states are in agreement with the division of the proceeds,” said Jacqueline Kraege, the lead negotiator of the states governed by the Social Democrat Party (SPD).

Now it is all about “arranging how the funds will be used and the modalities of the transfer of auction proceeds to the federal government and the states,” said Ms. Kraege.

Up to now these frequencies were used by the broadcasting corporations for their digital television service (DVB-T). The broadcasters would have to convert to the new digital standard, DVB-T2 earlier than they had planned.

That costs a lot of money – also for DVB-T users, who would  have to buy new receiver units. Some states want to see that subsidized. Theaters and concert halls using the frequency for radio microphones are also faced with costs, and will also want compensation.

A source involved in the negotiations said auction proceeds would possibly be paid out in installments over a number of years. For the states’ part, they have to clarify how to divide up the money between themselves and whether they use the proceeds solely for broadband expansion or also use it for the expansion of public Wi-Fi networks.

Mobile providers like Vodafone have little interest in spending a lot of money on frequencies and upgrading the radio network if the money they pay winds up with land-line operators such as Telekom in the form of subsidies.

The state presidents and Chancellor Angela Merkel are due to make a decision on the auction at a conference on December 11.  “This presupposes that the federal government and states are in agreement about specific and still-unresolved matters relating to the conversion process,” said Ms. Kraege.

How much money finally flows into the coffers depends on details. Mobile comms providers like Vodafone have little interest in spending a lot of money on frequencies and upgrading the radio network – especially if the money they pay winds up with land-line operators such as Telekom in the form of subsidies.

For the federal government, however, it is not primarily about delivering fast mobile Internet. The government wants to use proceeds to finance the expansion of the glass fiber network to guarantee fast transmission speeds, even with high numbers of users.

Some states are already paying subsidies. In Bavaria, for example, Telekom is receiving more than 70 percent of the subsidies. In other states such as Thuringia and Saxony-Anhalt, in former East Germany, Telekom is almost the only bidder at invitations to tender – and demanding a lot of money for expansion work.

The government and states are also in discussions about “coverage requirements.” According to a draft paper, mobile communication providers will have to reach at least 98 percent of households, and 100 percent of motorways and intercity trains within three years after being awarded the frequencies.

Regardless of the amount of simultaneous users, a speed of 10 megabits a second has to be guaranteed. Mobile communication providers like Telefonica are loath to pay until they can actually access the networks. That will not be the case until 2017 at the earliest. But then the funding programs would possibly be starting too late for the government to achieve its broadband objective.

 

Daniel Delhaes reports on the telecoms and Internet sectors from the Berlin bureau.  To contact the author: delhaes@handelsblatt.com.

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