Page 2: Dual expansion in practice

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What connects Kleinblittersdorf in Saarland, on the border with France, Horneburg in Lower Saxony, Abensberg in Bavaria and the Bavarian capital of Munich? A fierce battle is raging here for supremacy in the ground and among fiber optic customers.

The municipality of Kleinblittersdorf with its districts of Rilchingen-Hahnweiler and Auersmacher involuntarily became the scene of the dispute over the dual expansion. Deutsche Glasfaser had announced its intention to develop the area in 2022. However, apart from marketing activities, nothing visible happened at first. GlasfaserPlus then came to Kleinblittersdorf in 2023. And announced: We are expanding. GlasfaserPlus is a joint venture between Deutsche Telekom and an investor. So far, only one provider has been offering its services on the network in Kleinblittersdorf: Deutsche Telekom.

Kleinblittersdorf thus stands for several areas in Germany. Mayor Rainer Lang (SPD) is annoyed. "As mayor, I see more disadvantages than advantages for the citizens and the municipal administration," he says. And fears that the fiber optic expansion by two companies could lead to two providers vying for customers in some streets, while the expansion in other areas is called off because it is no longer economically viable.

For residents, the competitive situation is accompanied by a great deal of uncertainty, reports Lang. And the situation is also a burden on everyday life: "Roads and sidewalks have to be opened and closed twice or even several times." The resulting even more frequent road closures and traffic light regulations would also cause resentment among citizens – and for the administration, says Mayor Lang, the additional workload is even "many times greater than just a double burden."

Competition for even more construction sites

Mayor Lang blames the legislator for the misery: The legislator has legally ensured "that companies that initially decided against an expansion now want to invest in fiber optic expansion after all". Lang is calling for "legal protection for citizens and for the municipality, so that as soon as the parties have concluded a contract, the fiber optic expansion must then also be carried out by the company on a binding basis".

Neither Deutsche Glasfaser nor GlasfaserPlus want to have made mistakes in Kleinblittersdorf or elsewhere. "Of course you don't give each other roses, but that's competition," says Jens Berwig, the commercial director (CCO) of GlasfaserPlus. He points out that every fiber optic infrastructure is itself already a competitor – to television cable and copper wire. The fact that there are multiple expansions is also common practice elsewhere in Europe.

"It is not part of our corporate strategy to deliberately harm competition through a planned double expansion of fibre optic networks," emphasizes Dennis Slobodian from Deutsche Glasfaser. For the company, double expansion is completely superfluous. "Every location that is rolled out twice means that another location has to wait for access to fiber optics." "There are hardly any consequences for expansion as a result of double expansion," disagrees Berwig. "To be honest, you have to say that the discussion about it is bigger than the fact itself. What we observe in the regions where we are active in terms of double expansion is manageable and manageable."

This is also in line with what is on file with the Federal Network Agency in terms of superstructure activities, says Berwig. In percentage terms, the issue only affects a "vanishingly small proportion". However, according to him, GlasfaserPlus, for example, does not even report to the monitoring body when it is affected. And is by no means the only operator to do so.

Abensberg: Telekom comes, Leonet cancels project

In Abensberg near Regensburg, Leonet withdrew after Telekom announced that it would be providing access to 6,000 households –, significantly fewer than Leonet wanted to expand. This meant that the number of connections required for an economically viable expansion was no longer achievable. "The approach, which focuses on the former monopolist and its subsidiary, resembles a bulldozer mentality in many places," says Wolfgang Wölfle from Leonet. This is because, especially in rural areas, a double expansion is nonsense, both economically and ecologically.

"The damage that the strategic superstructure has done to fiber optic expansion in rural regions in recent years is huge," says Frederic Ufer, Managing Director of the VATM association. Telekom has focused "on the lucrative inner-city areas". "This cherry-picking has destroyed the business case of competitors in many places, whose aim is to supply the entire village with fiber optics on their own," says Ufer. Several parallel networks are only viable in large cities. But even there, there are disputes.

The competition in the Bavarian capital of Munich is even fiercer than in Kleinblittersdorf or Abensberg. For years, it looked like peaceful coexistence there: M-Net, a subsidiary of Stadtwerke München, had undertaken the expansion of the inner city area, while Telekom wanted to focus its expansion on the outer districts. To this end, both companies had issued a fine-sounding declaration of intent in 2021.

Dispute in Munich

The idea: M-Net and Telekom give each other access to their networks to supply end customers and save expansion costs. However, a simple idea is far from a simple solution – and the tone has become harsher. M-Net believes that Telekom is to blame. For years, they had been trying to find a solution with Telekom. Then Telekom broke off the talks. Deutsche Telekom basically confirms this. However, it sees M-Net as being to blame. "Our common goal, as we thought, was always the cooperative expansion in Munich," says a Telekom spokesperson. "This was also clear and transparent to M-Net and the municipal utilities over many years of intensive discussions."

In Regensburg, for example, a good agreement was reached with the local municipal utility subsidiary R-Kom, Telekom cites as an example: "That would also have been a way forward in Munich. However, all negotiations and possible cooperation models have failed. In this respect, we are now expanding our network in Munich because the cooperation we wanted there was not possible."

Everyone in the industry likes to emphasize that open access is a successful model that they support. However, technical and financial issues are regularly the subject of dispute: under what conditions and how does a competitor gain access to the network? There are various models for this. One is that passive infrastructure is shared – where a provider rents a fiber from the network operator that has expanded the network. Each provider provides the active network infrastructure itself. Other variants are bitstream access to the active network, where only data streams are transferred, or even a white label connection for which the service provider only bills.

With bitstream access, two billing options are common: the providers pay a comparatively high price per connection in order to be allowed to use the infrastructure of the other provider. The second option is much more attractive for many connections: one provider pays a kind of basic fee, but the individual connection is cheaper. But Munich is also a special case here.

The 089 problem

Even in the age of fiber optics, this has to do with the age-old area codes. This is because Telekom's calculation basis for the "commitment fee", the basic fee, is the size of the theoretically available connections. And that is the number in the respective local network area code –, in this case 089. The entire local network of Munich, in which M-Net has already connected 640,000 households. While Telekom customers are already connected to M-Net's infrastructure, M-Net cannot market in the Telekom area due to the unresolved dispute over the calculation of the basic fee.

The Federal Network Agency confirms that the "commitment fees" are part of the problem. A small group of companies is affected, but so far the models have proved to be successful. There is still no final assessment of whether there should be a "static option", for example for entire streets. Deutsche Telekom does not answer questions on this aspect of the debate.

Deutsche Telekom is now planning to expand in the inner city area of Munich itself in parallel, adding 80,000 to 110,000 households per year. "In total, Deutsche Telekom plans to supply around one million Munich households with fiber optic to the home," says a spokesperson. Right into the home – M-Net has not yet reached many Munich residents. But at least it has already reached the basement. According to Munich's administration, this means that often no users are connected yet. But that is more than Telekom has achieved in the outer districts of the state capital bislang.