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As Germany prepares to spend €2.7bn on broadband, vectoring fight breaks out

While a plan by the German government to fill in broadband not-spots has been welcomed, Deutsche Telekom's vectoring strategy hasn't won it any friends.
Written by Sara Zaske, Contributor

The German government wants every citizen to have internet speeds of at least 50Mbps by 2018, and is spending up to €2.7bn to help make it happen. However, a Deutsche Telekom proposal to help reach those top speeds through an exclusive vectoring plan has caused alarm among competitors.

Alexander Dobrindt, the German minister for digital infrastructure, said the new investment is meant to cover "white spots": places where there is currently no coverage, which in Germany are primarily in rural areas where low population density means telcos are discouraged from rolling out their infrastructure there.

"With the federal funding for the rollout of broadband networks, we will close the white spots on the map," Dobrindt said. "We will invest the funds selectively in regions where commercial network expansion is not expected. This will create fast internet for all throughout Germany by 2018."

Of the total €2.7bn to be invested, almost half, €1.33bn, is coming from the recent spectrum auction in which telecom companies paid the federal government nearly €5.1bn.

The industry group Bitkom welcomed the announcement. "By sending at least a portion of the funds back to rolling out broadband networks, the federal government is taking political responsibility," said Bernhard Rohleder, Bitkom's CEO. "It's important that the promised funds are awarded as soon as possible and are technology-neutral."

But that neutrality is in question, given a recent legal opinion favourable to Germany's biggest telco, Deutsche Telekom. In February, Deutsche Telekom asked the Germany regulatory agency, the Bundesnetzagentur, to change current rules to allow it to use close-range vectoring technology on existing copper lines in both urban and rural areas, without having to allow competitors VDSL (very-high-rate digital subscriber lines) in the exchange.

According to the company, the technology could bring 5.9 million households speeds of up to 100Mbps. However, the plan also means that Deutsche Telekom would control the last mile from the exchange to those 5.9 million households, and existing customers of competitors' VSDL would have to end their contracts and be switched to a different service.

The Bundesnetzagentur has not yet decided whether to allow the change for Deutsche Telekom, but it did say last week that such an agreement was legally possible.

The response from competitors was quick. The VATM, an association that includes major rival telcos such as Vodafone and Telefonica Deutschland, issued a statement the same day warning that such a plan would allow the former state-owned Deutsche Telekom to re-monopolise the broadband market in key areas.

"[Deutsche] Telekom calls for expanding a monopoly with vectoring technology for all the choice items, and in exchange provides a nearly worthless expansion obligation," said Jürgen Grützner, VATM CEO. "Competitors and investors are extremely concerned."

The two issues--the government's new broadband investment and the potential vectoring change in favour of Deutsche Telekom--have the potential to influence the German broadband market for years to come.

Tabea Roessner, the Green Party's spokesperson for media and digital infrastructure, said it was "high time" the government invested in broadband network deployment, especially in rural areas. However, she argued that the government should be supporting more advanced technology instead of vectoring.

"Fibre broadband expansion is especially important. Germany is far behind by international standards," Roessner told ZDNet. "Fibre is a technology that guarantees stable and high transmission rates in the future, unlike radio or internet via copper cables. Investments into vectoring are therefore temporary solutions at best and ultimately not effective."

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