Gigabit networks: Investors reject funding programs

Last week, Wissing’s officials invited the industry to an initial exchange of views. With the help of infrastructure and pension funds, companies are now investing more than ten billion euros a year in their networks, and yet it takes time for every house in the country to be connected – too long for many mayors.

Now there is growing concern that the uncoordinated expansion of recent years could continue instead of rolling out the fiber optic network like a carpet across the country. Jürgen Grützner, Managing Director of the Association of Providers of Telecommunications and Value-Added Services (VATM), formulates what the industry wants: “It’s no longer about promising everyone everything, but about explaining who’s turn will be and when.”

Minister Wissing had already stated that state funding was only necessary “where the backlog is greatest and where the operators see no economic viability in the expansion”. He meant the so-called white spots on the map, areas where there are still no connections with at least 50 megabits per second in the download.

Worry about uncontrolled conveyor waves

But the companies are worried about an uncontrolled wave of funding. This is made possible by a new regulation by the EU Commission, which the old federal government pushed through. According to this, from 2023 the state may provide funding wherever there are no internet offers of at least 200 megabits for downloading or uploading – i.e. de facto no fiber optic connection. Only 17.7 percent of all households can use this.

Municipalities could soon start funding procedures if companies do not want to lay fiber optics in the near future. So far, they have had to indicate whether they want to build in the potential development area in the next three years. If nobody registers, then the municipalities write out. “This principle makes sense where there are still white spots,” said Grützner, but not in areas that have already been developed.

When it comes to fiber optic expansion, it is right to expand according to demand and then gradually open up neighboring locations. The investing funds are interested in long-term and stable returns. Rural areas are attractive.

Not only the VATM, but also the Federal Association of Broadband Communication (Breko) and its member companies have developed ideas to invest 40 to 50 billion euros directly in the expansion over the next five to six years. For comparison: According to Breko, the entire industry has invested around 175 billion euros since 1998 to maintain the copper network and expand fiber optic networks.

“We don’t need more government funding, but rather the framework conditions that allow private investments to be made in the fiber optic network as quickly as possible,” said Breko Managing Director Sven Knapp. “We want to connect a large proportion of households to the fiber optic network by 2030.”

Limit state-sponsored expansion

VATM like Breko are trying to limit state-sponsored expansion. For example, areas between 200 and 500 addresses could generally be classified as economically interesting and therefore not eligible for funding for at least three years. At the same time, the companies would indicate where they want to build nationwide in the next twelve months. After that, they could voluntarily state their plans on a regular basis.

If areas crystallize where nothing is happening, then the state steps in. VATM managing director Grützner expects “one to three percent of the connections” that the companies can only open up with subsidies.

However, just collecting the data takes time. However, Breko argues that the previous procedures have taken too much time. According to the VATM, the expansion with funding takes two to three years longer than on one’s own account. In the future there could be “vouchers” for homeowners as a possible funding instrument instead of the funding process. The industry has been calling for this for a long time, and the idea can also be found in the coalition agreement.

While construction capacity was last seen as the bottleneck, this no longer seems to be the problem. Felix Pakleppa, General Manager of the Central Association of the German Construction Industry, says: “We assume that all orders that come onto the market will also be implemented.” He does not believe that the expansion of the broadband network will fail due to a lack of capacity.

However, the construction industry calls for “high-quality broadband expansion” instead of relying on “shallow laying processes” (trenching) to save time. In underground cable line construction, the industry turns over around three billion euros a year and has significantly increased capacities, as Tim-Oliver Müller, General Manager of the German Construction Industry Association, explained.

The areas also included water and gas pipes through to the electric charging infrastructure. He therefore called for “an overall concept, especially for broadband and electric charging infrastructure” in order to use synergies.

The Internet industry considers the nationwide fiber optic supply to be “one of the basic requirements for keeping Germany competitive as a digital location in an international comparison”, as Oliver Süme from the Eco association calls it. He calls for “a simple, fast and unbureaucratic procedure”. This is the only way that “Germany can catch up with the leaders in digitization”.

More: Fiber optic disaster – How bad politics and sluggish companies endanger Germany’s digital future.