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Telekom Cranks Up Speed on Fiber Optic Expansion
Telekom is powering ahead with its fiber-optic expansion, announcing a significant acceleration in its rollout. By the year's end, over 8 million homes across Germany will have access to the fiber network, representing a substantial increase of more than 2.5 million homes compared to a year ago. The expansion has reached almost 3,500 cities and municipalities, witnessing a jump of 1.2 million in 2021 and 2 million in 2022. Telekom plans to maintain this growth momentum, targeting between 25 million and 30 million households by 2030.
"We're making great strides," declared Telekom Germany CEO Srini Gopalan, acknowledging the company's progress in the light of intense competition.
FTTH: The Future of Fast, Stable Internet
Cell Phone Network Updates
"Fiber to the Home" (FTTH) has established itself as the preferred technology for delivering swift, stable internet connections. The German government has set its sights on achieving nationwide fiber optic coverage by the end of the decade, with other technologies deemed obsolete. Connections delivered via telephone lines (VDSL) remain susceptible to fluctuations and are generally slower, while television cables enhance speed but are also affected by neighborhood usage. The soaring demand for high-resolution movies, virtual reality applications, and computer games further fuel the need for robust, dependable fiber optic connections.
Meanwhile, Deutsche Telekom's mobile coverage with the 5G radio standard now spans 96% of German households, reaching two percentage points more than a year earlier. Vodafone trails behind at 91%, while O2 is just shy of achieving 90% coverage. By the end of 2025, Deutsche Telekom aims to blanket 99% of its customer base with 5G antennas.
Vodafone and the Struggle to Catch Up
While Telekom races ahead with its fiber optic deployments, competitor Vodafone strives to close the gap resulting from a late start. For many years, the company focused mainly on internet distribution through cables auxiliary to fiber optics. Comprising just a niche market, Vodafone finally threw its weight behind FTTH last year through the formation of beloved public enterprise OXG, in alliance with a Luxembourg investment partner.
OXG has since initiated fiber optic expansion projects in 13 German cities, with an estimated 330,000 households set to receive direct access to the network. By 2029, the Montreal-based company expects to connect over 7 million households via its modern lines.
Fiber Optic Activation Remains Moderate
Despite the substantial investments poured into the fiber optic expansion, the adoption rate remains modest. A mere 13% of the German households with access to Telekom fiber optics have taken advantage of the offering so far, with 700,000 more households signing contracts in the pre-marketing phase, 2 years away from receiving their connections.
Telekom's rival, Deutsche Glasfaser, boasts an activation rate of 30%. Gopalan attributed his company's lower figures to the rapid deployment pace, which necessarily generates low activation numbers at the outset, but sees the imminent improvement.
"Demand is on the rise," reported Gopalan, noting a 60% surge in fiber optic customers this year compared to 2022. This steady quarterly increase highlights the promising trend, which Gopalan predicts will persist.
Resistance to Expansion Funding
As part of the fiber optic expansion, substantial government subsidies contribute to the overall effort, with further financing expected in 2023 to enable FTTH connections in rural areas and suburban locations. However, the private sector has expressed reservations about the potential allocation of such funds, citing potential delays and the misallocation of construction capacities.
In a recent letter to the government, several digital industry organizations, including the German Broadband Association, have called for a reduced annual allocation of €1 billion instead of €3 billion, voicing concerns over lengthy application processes and the diversion of resources to lower-priority projects.
- FTTH: Fiber to the Home has become the default technology for delivering fast, stable internet access. The German Government aims to achieve nationwide, fiber-optic connectivity by 2030.
- While Deutsche Telekom leads the fiber-optic race, only 13% of its eligible households have adopted the technology, displaying a slow rate of migration to this future-proof solution. Competitor Vodafone, though late to the game, has signed a partnership with Luxembourg-based OXG to accelerate its FTTH rollout.
- The benefits of FTTH extend to mobile communications, where the deployment of 5G SA technology promises faster response times, crucial for high-bandwidth applications. This pivotal improvement can significantly enhance the user experience, particularly in densely populated areas.
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Enrichment Insights:
- The German federal government has invested €2 billion in fiber optics expansion projects in 2022, resulting in over 440,000 new connections and benefiting 1,700 municipalities.
- Vodafone recently launched tests using industrial-grade drones to install fiber optic connections over long distances, emphasizing its commitment to innovation in service delivery.
- German fiber optic connections have grown considerably, increasing by 3 million households since 2019. This expansion aligns with the EU Guidelines, which aim to build a secure, sustainable, and digitally advanced European economy.
