Overbuild of altnets by Deutsche Telekom is accused of slowing down overall fibre rollout
Deutsche Telekom accused of strategic overbuilding
The Verband kommunaler Unternehmen (VKU) – which represents the interests of the local public utility sector in Germany – has called for immediate intervention by BNetzA that would require former incumbent Deutsche Telekom to provide regular information about its network expansion plans over the coming 12 months. In a press release, the association states that strategic overbuilding by “market-dominating companies”, such as Deutsche Telekom, is in many cases slowing down the expansion of fibre across the country. According to the VKU, various reports published by policymakers show that this practice is not a “niche phenomenon”, adding that 62% of its member companies have been overbuilt or at risk of it. In response to a VKU survey, 65% said that overbuild by a larger rival has happened during their own network deployment phase.
Widening the digital divide?
Overbuild means that some locations are connected to fibre by two or more networks, while others are not connected to fibre at all. The VKU considers this particularly problematic when potential competition from Deutsche Telekom leads a smaller operator (i.e. an altnet) to partially reduce or completely halt its rollout plans, with Deutsche Telekom later deciding not to expand its fibre coverage in that area. The VKU states that end users are harmed greatly by this “who digs loses” mechanism as they continue to wait in vain for access to ultrafast broadband. Announcements that would lead to situations of overbuild can also be significantly impactful in rural areas, where only one network may be commercially viable. The prospect of rollout by a private operator may dissuade investment by a municipal company, although fibre coverage might then not materialise due to the areas’ relatively low economic attractiveness. The VKU believes this risks exacerbating the digital divide between town and country.
More regular reporting has been proposed as one way to identify any anti-competitive behaviour
The VKU states that overbuilding not only endangers the business case of altnets, but also the German Government’s goal of nationwide fibre coverage by 2030. BNetzA has reportedly received almost 300 complaints about overbuild since it started to monitor the situation in July 2023. Deutsche Telekom considers that it is behaving in line with the country’s regulatory framework and that it faces strong competition in the fibre market. However, the VKU argues that obliging the operator to provide clear information about its deployment plans over the next year is necessary to enable fair, market-driven infrastructure competition. It states that this requirement could be implemented relatively quickly and that it would be effective because deviations from Deutsche Telekom’s original expansion (to overbuild rivals) could be identified immediately.
