Some 78.6% of premises have access to gigabit connectivity mostly thanks to altnets but they want a more certain regulatory and political environment to protect their investment
A new study by DIALOG CONSULT and the VATM found that by mid 2024, 45.9 million households in Germany will have access to Gigabit connectivity via fibre optic and/or hybrid fibre-coaxial (HFC) networks.
This equates to 78.6% of homes and buildings, and is an increase of more than 2 million premises passed since the end of 2023. Fourth-fifths (80%) of the increase is due to alternative network providers or altnets that compete against the former incumbent, Deutsche Telekom (which uses the Telekom Deutschland brand within Germany).
Further, altnets have a fibre take-up rate of 35.1% versus the Telekom Deutschland’s adoption rate of just 13% “despite its great marketing strength”.
The report says this is due to the former incumbent’s strategy of squeezing as much profit as it can out of the sunk cost of its copper local loop using vector technology to boost transmission speeds instead of prioritising fibre build-out and take-up.
Note that the VATM represents more than 160 telecoms and multimedia companies active in the German market, all of which compete against the former monopoly, Deutsche Telekom.
Altnets supply and meet 90% of demand
Now 35.9 million out of 45.7 million households and small- and medium-sized enterprises (SMEs) have access to gigabit connectivity. As in previous years, the increase over the last 12 months is around 2 percentage points, so there is still a way to go, but where gigabit connectivity is available, it is proving popular.
In the first half of 2024, the volume of data generated via gigabit-capable connections grew by 7% per connection per month, averaging out at 435 gigabytes. “We certainly see a gigabit effect: high capacity connections are very popular with customers despite higher prices,” says Walter. More than half of the altnets’ customers opt for bandwidths of 250Mbps or higher. More than 42% of SMEs request bandwidth of at least 500 Mbps.
Overall, more than 90% of the homes with an activated Gigabit connection source the service from a competitor to Telekom Deutschland, with cable/HFC networks increasingly building or converting to FTTB/H connections.
The fibre ratio in the first half of 2024 increased by 1.1% to 17.7% compared to the previous year, with the proportion of altnets accounting for 70.4% share of this, and in rural areas, they account for more than 72%.
Fibre last except to undermine rivals?
Despite their success, altnets face some serious challenges. Study leader Andreas Walter notes [translated from the German], “Deutsche Telekom has thrown in the towel regarding investment displacement, [preferring] a more lucrative continuation of copper DSL…Therefore, it mainly focuses on passing properties and connects much fewer customers. This has a significant impact on the expansion of fibre optic networks, on digitalisation and our business locations.”
Dr. Frederic Ufer, Managing Director at VTAM, elaborates, “Even Deutsche Telekom’s latest expansion activities would be inconceivable without the investment emanating from the competitors…the Federal Network Agency [the telecom regulator] must look more at Deutsche Telekom’s regulation because its fibre network shows a fatal trend towards re-monopolisation.
“The overall picture shows that Deutsche Telekom is expanding its market share via faster DSL by 100,000 connections and thus is financing a dominant, strategic superstructure through cherry picking.”
In other words, Deutsche Telekom’s rivals need the commitment from politicians, regulators and behemoth itself that it will not choose to build and market infrastructure and services in areas that already have access to gigabit connectivity to undermine its smaller rivals.
The report concludes that to remain in the fast lane for gigabit expansion and to strengthen competition, the country needs clear rules for Deutsche Telekom’s migration from copper to glass, rather than deregulating the former monopoly.
The full results of the gigabit study 2024 are available HERE in German.