Telecommunications: German fiber optics pushes Internet expansion

telecommunications
German fiber optics pushes Internet expansion

Fiber optic cables are being laid. Photo: Armin Weigel / dpa

© dpa-infocom GmbH

It sounds strange: The state is making a lot of money available for expanding the Internet, thus creating a bad mood in parts of the telecommunications industry. How can that be?

The Internet provider Deutsche Glasfaser wants to significantly accelerate its network expansion – and believes that government funding is a headwind.

Currently around 35,000 fiber optic connections are being completed per month, by 2025 this value will increase to 70,000 connections per month as planned, said company boss Thorsten Dirks of the dpa in Düsseldorf. This would end up with around four million households in the company’s fiber-optic network by the end of 2025 – at the end of the year it would be around 1.2 million. The construction capacities for civil engineering are scarce, says Dirks. However, the company is very confident that it will achieve the goal.

Funding is more a curse than a blessing

From the company’s boss’s point of view, state funding for the expansion of fiber optic internet is more of a curse than a blessing. “That entails lengthy official procedures, and it makes building considerably more expensive,” says Dirks. “Even more funding is well-intentioned, but it is counterproductive: It does not provide more momentum, but less.” The industry association VATM has a similar stance, the «Redaktionsnetzwerk Deutschland» (RND) recently reported on this.

The federal government is currently relying on a broad range of funding: since April, money for the expansion can be applied for not only in areas with less than 30 Mbit per second, but also in areas with less than 100 Mbit per second – including in “gray spots” , after that was previously only possible in “white spots”.

In very sparsely populated areas with a snail’s pace of the Internet, subsidies as a last resort could make sense for expansion, says Dirks. Subsidizing construction projects in areas with mediocre internet, however, creates the wrong incentives. “The private sector can do this on its own.”

Contradiction from politics

There is contradiction in politics. Anke Domscheit-Berg from the Left Party also criticizes lengthy approval procedures that have to be accelerated – for example through fully digitized processes and more transparency in the market. In general, funding is an important component in finally moving Germany’s Internet landscape forward.

If there is more money and more demand, the construction industry will increase its supply and more will be built, says the digital-political spokeswoman for the left-wing parliamentary group in the Bundestag. “We have to use the funding better than before, especially for the expansion of fiber optic networks in municipal hands, then it will also improve Germany’s underdeveloped Internet supply.”

The company Deutsche Glasfaser is laying the cables into the apartments, called FTTH (“Fiber to the Home”). The company from North Rhine-Westphalia has financially strong investors behind it, such as the equity investment company EQT; it has 7 billion euros available for fiber optic expansion.

Competitors include UGG (Our Green Glass Fiber) and Deutsche Telekom. The Bonn-based company, which has long relied on copper telephone cables for Internet connections, is now also pushing the FTTH expansion – both in cities and in rural areas. Telekom recently announced that three million FTTH households in Germany could now use their fiber optic network.

Deutsche Glasfaser is a small player in the market compared to Telekom, but it is growing rapidly. The company currently has 1,700 employees, 300 more than a year ago; next year it should be more than 2,000.

dpa

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