Overbuilding fiber optics prevents expansion of the network

November 4th, 2023, 9:15 a.m. |
Reading time: 4 minutes

Curious: If you add up the network operators’ announcements, they want to connect 52 million households in Germany with fiber optics. That’s 20 percent more than there really is. And yet not every household gets a fiber optic connection. A battle for market share is raging in the background. 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 busy laying fiber optics into houses and apartments (Fiber to the Home, FTTH). The companies get in each other’s way time and time again

FTTH expansion is primarily taking place where DSL, VDSL or cable internet only provide low bandwidths or are not available at all. From Deutsche Telekom’s perspective, this is an attack on its customers, whom the ex-monopolist supplies with Internet access via the copper network. Wherever DSL customers switch to fiber optics, Telekom loses paying customers. That’s why the telecommunications giant is also building fiber optic networks – both on its own initiative and in partnerships, for example through the joint ventures GlasfaserPlus or Glasfaser Nordwest.

The accusation: Telekom only wants to disrupt the business of its competitors

But things are not quite so cooperative everywhere. Telekom is accused of a strategic overstructure. Just as competitors build fiber optic connections where Telekom’s DSL connections already exist, Telekom in turn is building over the competition’s fiber optic networks with its own fiber optic networks. The accusation is that Telekom is only building this superstructure to torpedo its competitors’ business.

Many companies that build fiber optic networks at their own expense calculate with a specific number of customers with which the construction and operation of such a network is worthwhile. They also assume that Telekom will use their networks to offer products such as MagentaTV. Most of the time, the calculation doesn’t add up if Telekom builds a second fiber optic network in the same location and doesn’t use the competitor’s network.

Also read: How can tenants get fiber to their home?

Telekom criticizes excessive prices for network access

Telekom replies that it is solely its decision to build networks where it believes it makes economic sense. From the ex-monopolist’s point of view, the fees charged for shared use of fiber optic networks are often too high. In addition, many offers for such shared use, known in technical jargon as open access, are inadequate.

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According to Telekom, for example, there is a lack of services from network operators or coordinated processes that run in the background. For example, what happens to the customer’s router if they change providers? Will the router remain with the previous provider, will it change hands, or will it need to be replaced?

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Telekom is accused of “economic madness”.

Meanwhile, a heated argument has broken out. At the ANGA COM trade fair, Nelson Kilius described Telekom’s superstructure as “economic madness”. Kilius is spokesman for the management of M-net. The telecommunications subsidiary of the Münchener Stadtwerke is currently experiencing how Telekom is expanding fiber optics in the Bavarian capital. “If there is already an FTTB/H network, please build it somewhere else,” he urged Telekom.

The Federal Ministry for Digital and Transport (BMDV) has now received 96 cases in which Telekom is supposed to operate a strategic superstructure. According to expert estimates, this would correspond to around 10 percent of the currently ongoing construction projects for fiber optic networks.

“Nobody needs two fiber optic networks in a municipality,” says Soeren Wendler, co-founder of Deutsche GigaNetz. “You also don’t have two water or electricity connections in the house.” Wendler criticizes that the superstructure complicates, increases the cost and lengthens the expansion of fiber optics.

Also read: Cable, DSL or fiber optic – find the right Internet connection

Construction capacity for fiber optic networks is scarce

Consumers are the ones who suffer. While households in some places receive two fiber optic connections as a result of the superstructure, in other places there is a lack of construction capacity and citizens have to continue to wait for the fiber optic connection. In contrast, elsewhere roads and sidewalks are being torn up twice for two fiber optic networks.

In addition, the announcement of the construction of a second network can cause confusion for municipalities if they have already concluded a cooperation with another network operator. The expected need for clarification and discussion is stalling expansion plans. In some cases, network operators then withdraw from collaborations because their economic viability is threatened. In the end, citizens will have to wait even longer for their fiber optic connection.

However, it is unlikely that politicians will intervene in this dispute. “We have no evidence at all of anti-competitive fiber optic superstructure,” said BMDV State Secretary Stefan Schnorr at ANGA COM.