The strategy has two phases: connecting all households to broadband internet by end-2010, and bringing 75% of the households under the coverage of 50 Mbps broadband by 2014.
Germany has, rightly, chosen not to distort the market by massive deployment subsidies. The supply-side measures, such as frequency liberalising and mediating cooperation between the operators, are in the key role.
Germany's federal government has presented its national strategy for the development of broadband infrastructure.
The strategy's first target is to ensure that all German households will have access to broadband Internet at the end of 2010 at latest. The second phase is to bring broadband access of or above 50 Mbps to 75% of the households by 2014. The government had also earlier hinted to include a third phase—to cover all households by 100 Mbps by end-2018—yet this has been dropped from the final version. During the public consultation there was willingness to define the first-phase target as broadband access of at least one megabyte per second, but this mention does not seem to have made it to the approved strategy either.
Firstly, the government urges the operators to cooperate in broadband deployments—pointing out that typically some 70% of fixed-line roll-out costs consist of excavations and other civil-engineering works; it estimates that by coordinating the works and sharing civil infrastructure, companies can accumulate savings of three billion euro (US$3.8 billion) in the medium term. The government promises to help partnerships for example by opening public infrastructures relevant to deployments—such as sewers—and by setting up a new database platform through which the carriers can share the information of their plans.
Secondly, the government sees wireless frequencies as necessary for the adoption of the strategy. It supports telecoms regulator Bundesnetzagentur (BNA)'s plans to free up the 900-Mhz GSM concessions for data services, pledging also liberalise the radio spectrums previously used for analogue TV broadcasting and auction them to internet service providers. Both measures are European Union (EU)-wide goals, and we expect most, if not all, member states to follow the suit. As for the distributing the 790-862 MHz frequencies, which became vacant as Germany switched off its analogue TV broadcasts, the government wants to push the federal liberalisation measures through before the parliament's summer break, which would allow the BNA to start preparing auctions possibly during the second half of this year. This "digital divide" created by the analogue switch-off—which in the EU has been thus far completed also in Finland, Luxemburg, Sweden, Belgium (Flanders), and the Netherlands—is regarded as one of the most immediate incentives for connecting the rural and suburban areas currently without broadband coverage.
Thirdly, although the strategy is predominantly market-driven, the deployments in the areas where they would not otherwise be economically feasible will be partly-financed by public subsidies. Up to now the government has approved a total of some 180 million euro for these purposes, adding that it is ready to direct more should the market fail to deliver.
Fourthly, the government wants to secure an investment and growth-friendly regulatory environment for the telecoms industry, acknowledging that the broadband expansions require both necessary incentives and a predictable market framework. Most notably, the report says that the BNAs market analyses—which have been up to now taken in two years' intervals—would be in future conducted every three years. The government promises also to ensure that charges the operators pay each other for instance for leasing broadband cables and the civil infrastructure accommodating them will be reflect the owner's investments.
The government has chosen the right priority in its strategy—a market-driven approach with frequency liberalising and self-incentivised partnerships as key means to achieve the first-phase target. It has also decided not to direct substantial handouts for VDSL and other high-speed roll-outs, which is in line with IHS Global Insight's view that the main priority should be given to expanding basic broadband rather than enhancing the existing infrastructure; connecting the whole country has the potential to bring greater productivity gains than boosting access speeds in locations which are already connected. The industry's reaction to the initiative has generally been also positive, with the sector's main interest group, Bitkom, lauding particularly the aim of increasing the predictability of the regulatory framework. Both the government and the association estimate that achieving the strategy's targets will require investments worth up to 50 billion euro during the coming years.
