German telecom giant Deutsche Telekom (DT) has to open its broadband Internet network to rival operators. The german telecom regulator Bundesnetzagentur has reportedly ordered the country’s incumbent telecom carrier to grant its competitors access to its broadband network infrastructure.
As such, rival operators such as Vodafone (VOD) and Telefonica (TEF) will be able to connect into Deutsche Telekom’s street cabinets (that host copper cables and switching equipments) or access dark fiber facilities. This will provide last mile connectivity (from street cabinets to customer premises) to these competitors.
The new regulatory mandate aimed at invoking more competition in the domestic broadband market by providing Deutsche Telekom’s competitors the opportunity to offer similar network speeds (bandwidth) as offered by the company. Deutsche Telekom is trying to offset declining fixed-line voice revenue with broadband Internet and video services.
The company continues its successful initiative in the domestic broadband market as it still remains the leader in quarterly new DSL broadband customer additions in Germany with roughly 46% share of the domestic broadband market (in terms of new additions). Deutsche Telekom is actively pursuing its network expansion strategy which will enable more households to connect to the high-speed network infrastructure.
The company has upgraded its DSL broadband network to high-speed VDSL network in 50 cities and is currently rolling out the upgraded services in specific areas serving an additional 100,000 homes. The company’s VDSL network is the only one of its kind in Germany. Over the past few years, the German fixed-line telecom market has been thrown open to competition.
The unbundled local loop (“ULL”) regulation requiring the incumbent carrier to share its local network with other carriers has forced Deutsche Telekom to open its fixed-line network to competitors. The wholesale rates at which competitors are allowed to access the company’s network have been capped, as mandated by the regulation.
Bundesnetzagentur has reduced the monthly unit leasing fees to €10.20 (US$13.60) from €10.50 (US$14.00) charged by Deutsche Telekom till Mar 31, 2009 for unbundling its network. As a result, lower ULL fees have created problems for the company in financing its ongoing high-speed broadband network expansion initiatives in Germany.
While Deutsche Telekom has to unbundle its VDSL broadband network, the access fee it will charge its competitors in a stringent regulatory environment remains to be seen. Moreover, given the limited available space in the street cabinets, there will be fierce competition among rivals to secure early access to the company’s network.
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