How Telekom uses its market power in fiber optic expansion

Berlin Shortly before Pentecost, association representatives and managers from telecommunications companies met in Bonn for the “David versus Goliath” duel. Not in the corporate headquarters of the industry giant Deutsche Telekom, but on neutral ground, in the second seat of the Federal Ministry for Digital Affairs and Transport. The serious allegation of the competitors: Telekom is obstructing fiber optic expansion in Germany.

The industry meeting with representatives of the Federal Cartel Office, the Monopolies Commission and the Federal Network Agency dealt with the viability of infrastructure competition. According to this, every company can lay fiber optics where it seems to make economic sense.

The number of customers ultimately decides whether the investment is worthwhile. No wonder a competitor gets in the way – especially when the most powerful company shows up and wants to build something to offer its long-time copper cable customers. Coincidence or tactic to oust an unwelcome competitor?

In Germany, a nationwide fiber optic network is to be created in no time at all. By 2025, three times as many households and companies should be connected to the Turbo Internet with fiber optics than today, at least 50 percent. By 2030, the entire population should be able to download or send data over the internet at 1000 megabits per second or more. The federal government has written these ambitious goals into its gigabit strategy.

The industry wants to invest ten billion euros a year. According to its own statements, Telekom alone plans to connect three million households to the fiber optic network in 2023, despite the mountain of debt. In the near future, Minister Volker Wissing (FDP) intends to declare the expansion of fiber optics an “overriding public interest” by law and thus speed it up again. Speed, speed, speed is the motto.

However, the associations of Telekom competitors are sounding the alarm. In a letter to the minister at the end of March, municipal utilities and fiber optic companies accused Telekom of slowing down competitors “massively through strategic maneuvers”.

fiber optic expansion

Telekom’s competitors accuse the industry giant of obstructing the expansion of the fiber optic network.

(Photo: dpa)

Wherever the competition announces or is building its own fiber optic network, Telekom shows up and invests – if there is a chance of nipping the competition in the bud. The associations complained that “more than half of the postcode regions” were affected by the tactics.

Experts complain about Telekom’s market power

The threat of a double expansion or the actual double expansion tie up the already scarce resources in civil engineering and planning as well as with the approval authorities, according to the accusation. They also led to cost increases for Telekom’s competitors. This prevents a rapid expansion in the area.

In addition, the associations criticized the fact that Telekom only selectively expands the network in particularly lucrative areas or announces this. As a result, “investment and expansion plans by competitor companies for the supply of entire communities would become unprofitable in the context of a mixed calculation.”

For the meeting in Bonn, the Federal Ministry had asked the Scientific Institute for Infrastructure and Communication Services (WIK) to examine it. The presentation is available to the Handelsblatt. The researchers examined 96 cases in which a community was overbuilt.

>> Read here: Fiber optic expansion: Bavaria receives the most funding from the federal government

The result, although not representative, confirms the concerns of the competitors. Accordingly, it is “only in a few cases profitable for both companies” if a network is built over by another operator.

Above all, the expansion does not pay off when the dominant company appears as a competitor, which is usually Telekom. The group already supplies potential fiber optic customers with their copper cables and can entice them with a simple contract change.

This market power is particularly large and problematic in small communities with up to 20,000 inhabitants – and thus in rural areas that are poorly developed anyway. There are then delays in the expansion.

If the strategic double expansion of the market-dominant company Telekom is not stopped, the gigabit targets of the federal government for 2030 are in danger. Andrea Huber, Managing Director of the broadband association Anga

Telekom points out that other companies are also competing on the Internet. From the point of view of the WIK researchers, however, this is usually not a problem. The dual expansion is good for competition if the second provider still has to compete for customers and there is a chance that “every network operator will achieve its critical market share”. The lower the market share of the strongest company, the more competitors have the opportunity to operate their own network economically.

Competitors are demanding rules for Telekom when it comes to fiber optic expansion

For Telekom’s competitors, one thing is certain: politicians must regulate the group. “If individual companies endanger fast access to the fiber optic network, targeted countermeasures are needed in the interests of the common good,” said Sven Knapp, head of the capital city office of the Federal Association of Broadband Communication (Breko).

Andrea Huber, Managing Director of the broadband association Anga, said: “If the strategic double expansion of the dominant company Telekom is not stopped, the gigabit targets of the federal government for 2030 are in danger.” .

Volker Wissing

The Federal Transport Minister has set himself ambitious goals for fiber optic expansion.

(Photo: IMAGO/NurPhoto)

Telekom considers political intervention to be “wrong”, as a spokesman explained. The competitors wanted to “make an ‘elephant’ out of a ‘superstructure mouse'” in order to secure their “regional or local monopolies”. This is “bad for quality, price and speed of expansion” and contradicts the principle of infrastructure competition.

>> Read here: Vodafone and Altice join forces for fiber optic expansion in Germany

Incidentally, Telekom is also being overbuilt. The expansion of Telekom is only taking place to “one to two percent in areas where there is already a different fiber optic infrastructure”.

The partially privatized group is sure of the support of the Digital Ministry. Its State Secretary, Stefan Schnorr, called for “objectivity” one day after the meeting. If there are problems, help competition law, he explained at a trade fair in Cologne. At most, he sees problems in “two percent” of cases. He considers regulation “simply nonsensical”.

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