November 4, 2023, 8:15 am | Read time: 4 minutes
Curiously, if you add up the announcements from network operators, they plan to connect 52 million households in Germany with fiber optics. That’s 20 percent more than actually exist. Yet not every household will get a fiber connection. Behind the scenes, a battle for market share is raging. Deutsche Telekom is in the crossfire of criticism.
The expansion of fiber optics is in full swing. According to a market analysis by the consulting firm EY, 700 companies, network operators, municipal utilities, and special-purpose associations are working to lay fiber to homes and apartments (Fiber to the Home, FTTH). In the process, companies often get in each other’s way.
Overview
The FTTH expansion is primarily taking place where DSL, VDSL, or cable internet provide only low bandwidths or are not available at all. From Deutsche Telekom’s perspective, this is an attack on their customers, whom the former monopoly supplies with internet access via the copper network. Everywhere DSL customers switch to fiber optics, Telekom loses paying customers. Therefore, the telecommunications giant is also building fiber optic networks–both independently and in partnerships, such as through the joint ventures GlasfaserPlus or Glasfaser Nordwest.
The Allegation: Telekom only wants to disrupt competitors’ business
However, things are not always so cooperative. Telekom is accused of strategic overbuilding. Just as competitors build fiber connections where Telekom already has DSL connections, Telekom, in turn, overbuilds the competitors’ fiber networks with its own. The allegation is that Telekom is doing this overbuilding solely to undermine competitors’ business.
Many companies that build fiber networks at their own expense calculate with a specific number of customers to make the construction and operation of such a network profitable. They also assume that Telekom will use their networks to offer products such as MagentaTV. However, the calculation often doesn’t work out if Telekom builds a second fiber network in the same location and does not use the competitor’s network.
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Telekom criticizes excessive prices for network access
Telekom responds that it is solely their decision to build networks where they deem it economically sensible. From the former monopoly’s perspective, the fees demanded for sharing fiber networks are often too high. Moreover, many offers for such sharing, known in industry jargon as Open Access, are inadequate.
According to Telekom, there is a lack of service offerings from network operators or coordinated processes running in the background. For example, what happens to the customer’s router when they switch providers? Does the router remain with the previous provider, does it change ownership, or does it need to be replaced?
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Telekom accused of “economic madness”
A fierce dispute has erupted. Nelson Kilius described Telekom’s overbuilding as “economic madness” at the ANGA COM trade fair. Kilius is the spokesperson for the management of M-net. The telecommunications subsidiary of Munich’s municipal utilities is currently experiencing Telekom’s fiber expansion in the Bavarian capital. “If there is already an FTTB/H network, then please build elsewhere,” he urged Telekom.
The Federal Ministry for Digital and Transport (BMDV) now has 96 cases where Telekom is alleged to have engaged in strategic overbuilding. According to expert estimates, this corresponds to about 10 percent of the current fiber optic network construction projects.
“No one needs two fiber optic networks in a community,” says Soeren Wendler, co-founder of Deutsche GigaNetz. “You don’t have two water or electricity connections in a house either.” The overbuilding complicates, increases the cost of, and prolongs the fiber optic expansion, Wendler criticizes.
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Construction capacities for fiber optic networks are scarce
The consumers are the ones who suffer. While some households receive two fiber optic connections due to overbuilding, other areas lack construction capacities, and residents have to continue waiting for fiber optics. Meanwhile, in other places, streets and sidewalks are torn up twice for two fiber optic networks.
Moreover, the mere announcement of a second network’s construction can cause confusion in municipalities that have already entered into a partnership with another network operator. The expected need for clarification and discussions stalls expansion plans. Sometimes network operators withdraw from partnerships because their economic viability is threatened. In the end, citizens have to wait even longer for their fiber optic connection.
However, it is unlikely that politics will intervene in this dispute. “We have no evidence of anti-competitive fiber overbuilding,” said BMDV State Secretary Stefan Schnorr at ANGA COM.