Patchwork of Networks Smothered by a Blanket of Regulation and Red Tape Makes Progress Slow
This year Connected Germany was held in Munich on the 5th and 6thof November, a month earlier than last year’s fateful event which was severely impacted by unprecedented snow and ice.
Although the title of this event is written in English almost all presentations and discussions were in German so this will be one of the few articles aiming to give the non- German speakers an insight and a flavour as to what was discussed and presented.
Unlike Connected Britain which was purely focused on fibre access, at Connected Germany there were two main themes, day 1 fibre access and day 2 mobile with a focus on MPN. Fibre is a common strand throughout as backhaul from mobile sites to the core increasingly via fibre.
With the Federal government being committed to creating 100% fibre connectivity across Germany by 2030 there are still billions of € available from the state. Having said that, we already know that this is an unrealistic goal, simply by the fact that 30% of the country is covered by woodlands and forests as well as countless national conservation areas where fibre would be misplaced.
Despite Germany being the largest economy within the EU as far as digital is concerned it suffers with fragmentation and over-regulation, leading to projects taking too long, costing 4 times more to deliver than in comparable countries and not providing adequate returns to investors.
To give you some idea related to fragmentation, you have 16 federal states and you have roughly 900 communities including cities and towns each with their own regulatory framework. There are also roughly 300 fibre operators often regionally focused who will also have their own processes and business models, not conducive to scalable operations.
One thing to remember is that German authorities are quite profusive regulators leading to over regulation. As a fibre operator, you are faced with various institutions that need to authorise building works including the EU, the municipalities, town and city councils, the environmental departments, the appropriate ministries and building authorities, not to mention landlords. To highlight what impact this can have, in one case at the conference in a panel discussion it was highlighted it took 10 years to obtain the permission to build a RAN site in a national reserve, despite the request being urgent. Beyond the time lag, authorities can have overlapping and conflicting requirements leaving the operators in the middle to find a consensus on a case by case basis, none of which leads to efficiency or a rapid deployment.
One of the speakers Nelson Killius, CEO of M-net summarised the situation in Germany quite well from a City Operator perspective regarding his wish list:
- Fixation on homes-passed needs to end as a meaningful measure, which unfortunately most national grant schemes use as their main metric.
- Real Open Access -meaning the assets of others are commercially made available to other parties upstream and downstream.
- Fibre over build to be stopped, and not allowed until each household has coverage.
- Accelerate and consequently switch off copper.
One of the unique historical idiosyncrasies in Germany is that unlike in other countries, the incumbent telecoms provider Deutsche Telekom invested in ISDN and subsequently VDSL, which can provide in excess of 200 mbit download to most properties which is much higher throughput on copper than in other countries, making the jump and performance gain to fibre less appealing. Another interesting aspect which dampens the enthusiasm to switching off copper is that Deutsche Telekom makes more profit on a copper connection than fibre.
Speaking to one of my friends over dinner he said that although fibre was available in his area and the initial package seemed appealing and a discounted rate, in the small print he noticed it said that after the first year, the monthly subscription would increase four times higher than his current plan, which is why he is reluctant to move.
Regarding mobile and industry Germany was a pioneering country by providing a limited 100MHz bandwidth at 3.7-3.8GHz for industrial mobile usage. The national network authorities have thus far licensed more than 400 such licenses with most having been used for trials.
It seems that this is the year that we see the first real mobile private network implementations going live and the expectation is that due to security and performance, we can expect a much quicker transition to MPN 5G technology by industry for connectivity in the coming years. Despite this Germany and Europe lags well behind the leaders in this space with South Korea being comparable in size with several thousand such implementations already in operation.
To conclude as one of the operators said, if you compared the German fibre build to a marathon, Germany has run the first third and now has to do the hard miles in the middle before getting to the last and final third but they will get there.
