IN FOCUS POTENTIAL: FIBRE-OPTIC EXPANSION WITH ALTERNATIVE INSTALLATION TECHNOLOGY
THE CENTRAL LEVER IN FIBRE OPTIC EXPANSION
An interview with the Head of Law & Regulation at VATM,
Dr. Frederic Ufer.
Dr. Frederic Ufer.
Whether in the private or in business, the importance of a fast and stable Internet connection has once again taken on a whole new dimension in the Corona pandemic.
Pupils depend on being able to learn at home, while employees and employers rely on digital tools to keep their daily business running as effectively as possible. Last not least, a state-of-the-art internet connection is indispensable for the future-oriented digitalised and automated industrial production. Reliable and an above all fast internet has become an indispensable tool to master the new challenges. Since 2018 the German government has therefore been supporting areas where no market-driven broadband expansion is taking place, with a maximum of 30 million Euros. By 2025, Germany is to be supplied with Gigibite-Internet nationwide. At present, this target seems to be in jeopardy because expansion work is progressing only slowly. There are still great differences in terms of the availability of a fast inernet connection. Not only between urban and rural areas – but even between industrialised nations. By comparison, Germany is situated in the bottom third. This is the result of the OECD country ranking of 2019. What is the reason for this? The INSIDER editorial team asked Dr. Frederic Ufer.
Pupils depend on being able to learn at home, while employees and employers rely on digital tools to keep their daily business running as effectively as possible. Last not least, a state-of-the-art internet connection is indispensable for the future-oriented digitalised and automated industrial production. Reliable and an above all fast internet has become an indispensable tool to master the new challenges. Since 2018 the German government has therefore been supporting areas where no market-driven broadband expansion is taking place, with a maximum of 30 million Euros. By 2025, Germany is to be supplied with Gigibite-Internet nationwide. At present, this target seems to be in jeopardy because expansion work is progressing only slowly. There are still great differences in terms of the availability of a fast inernet connection. Not only between urban and rural areas – but even between industrialised nations. By comparison, Germany is situated in the bottom third. This is the result of the OECD country ranking of 2019. What is the reason for this? The INSIDER editorial team asked Dr. Frederic Ufer.
Dr. Ufer, the German government has expressed clear targets with regard to the nationwide expansion of fibre optics by 2025. Are we currently on track here in Germany?
To supply the entire country with fibre-optic connections across the board is a task for a whole decade. Currently slightly less than two million households have a “real fibre optic connection”, including connections to the building or into the home. However, five million connections have already been installed by the network operators. This means that more than 60 % of home connections are not used by customers, even though super-fast surfing with gigaybyte bandwidths is possible. At the same time, millions of citizens would be happy if they had access to gigaybyte bandwidths, instead of slow DSL connections. The corona crisis has shown that in future hardly anyone will be able to avoid the fast internet. However, five million connections have already been installed by the network operators, which means more than 60 % of the home connections are not used at all by the customers, despite the opportunity for super-fast surfing with gigaybyte bandwidths. At the same time, millions of citizens would be only too happy to have access to gigaybyte bandwidths, instead of their slow DSL connections. The Corona crisis has shown that in future, hardly anyone will be able to bypass the fast internet. The market potential for fibre optic expansion is therefore huge: Not only 43 million private households need to be developed, but also several thousand companies. By the way, this is one of the reasons why a lot of money is currently flowing in Germany. Financial investors, banks, insurance companies, even pension and church funds are looking at means to invest the enormous returns from the capital business in long-term investments. In many other countries this investment phase is already ebbing away, because their infrastructure development is already much more advanced. In Germany, new companies and alliances are now constantly being set up - most recently, for example, the establishment of a fibre optic alliance between Telefonica and the insurance company Allianz caused a stir. The two companies have set up a joint venture and intend to invest up to 5.5 billion Euros. Or the Swedish investor EQT and the Canadian pension fund OMERS, who took over Deutsche Glasfaser from the previous owners KKR and Reggeborgh and then merged it with Inexio from the Saarland region. This company alone will send seven billion Euros “underground” for the fibre optic infrastructure in Germany.
To supply the entire country with fibre-optic connections across the board is a task for a whole decade. Currently slightly less than two million households have a “real fibre optic connection”, including connections to the building or into the home. However, five million connections have already been installed by the network operators. This means that more than 60 % of home connections are not used by customers, even though super-fast surfing with gigaybyte bandwidths is possible. At the same time, millions of citizens would be happy if they had access to gigaybyte bandwidths, instead of slow DSL connections. The corona crisis has shown that in future hardly anyone will be able to avoid the fast internet. However, five million connections have already been installed by the network operators, which means more than 60 % of the home connections are not used at all by the customers, despite the opportunity for super-fast surfing with gigaybyte bandwidths. At the same time, millions of citizens would be only too happy to have access to gigaybyte bandwidths, instead of their slow DSL connections. The Corona crisis has shown that in future, hardly anyone will be able to bypass the fast internet. The market potential for fibre optic expansion is therefore huge: Not only 43 million private households need to be developed, but also several thousand companies. By the way, this is one of the reasons why a lot of money is currently flowing in Germany. Financial investors, banks, insurance companies, even pension and church funds are looking at means to invest the enormous returns from the capital business in long-term investments. In many other countries this investment phase is already ebbing away, because their infrastructure development is already much more advanced. In Germany, new companies and alliances are now constantly being set up - most recently, for example, the establishment of a fibre optic alliance between Telefonica and the insurance company Allianz caused a stir. The two companies have set up a joint venture and intend to invest up to 5.5 billion Euros. Or the Swedish investor EQT and the Canadian pension fund OMERS, who took over Deutsche Glasfaser from the previous owners KKR and Reggeborgh and then merged it with Inexio from the Saarland region. This company alone will send seven billion Euros “underground” for the fibre optic infrastructure in Germany.
What will it take to keep up with the other countries again?
The Federal Government’s target refers precisely to so-called gigaybyte connections – this also included broadband cable connections. If you take this into consideration, then Germany is not doing too bad at all. The old television networks cover more than 70 % of the area and can be upgraded relatively quickly – in this respect the country already has almost 30 million gigaybyte connections.
That is a considerable discrepancy between area coverage of gigaybyte connections and actual use of them. What reasons do you see for this imbalance?
The discrepancy between available connections and those actually used shows: We still have too little demand from customers for really fast connections and there is a very low price level for traditional copper connections. However, once you have experienced a gigaybyte connection, you will no longer want to go at bandwidths in the double-figure range. The Corona pandemic with home offices and lockdown is now also accelerating this development. Companies are noticing an increasing dynamic.
What are the challenges for the installation of the new connections?
The tight civil engineering resources and costs on the final metres can be an obstacle. Since we do not want to see cables hanging from the facades in Germany, as is common in many other countries, above-ground installations are rarely used. Monument and nature conservation, as well as federalism and bureaucracy do the rest. The acceptance of alternative installation techniques also leaves a lot to be desired at present. As an industrial association, we are very active in this area, in order to fight for improvements for the supliers.
You just mentioned alternative installation techniques. How would you assess the importance of trenchless installation methods in this context?
Alternative installation techniques are one of the key levers in fibre optic expansion. There are innovative companies, such as Deutsche Glasfaser, who manage completely without the classical trench construction method, in order to maintain the high rate of expansions. Overall, civil engineering companies and also the Telecommunication providers are still finding it difficult to make comprehensive use of these time- and cost-saving applications. Also, many building authorities are still alienating themselves with the alternatives and have unsufficient knowledge about their huge advantages.
What does this mean for the achievement of the targets for 2025?
Without a massive increase in directional drilling, soil displacement hammers, ploughing method and trenching, we will certainly not achieve the gigaybyte targets. The German government has recognised this and is paving the way for the widespread use of alternative installation techniques with the current amendment to the Telecommunications Act and standardisation activities.
Many thanks, Dr. Ufer
The Federal Government’s target refers precisely to so-called gigaybyte connections – this also included broadband cable connections. If you take this into consideration, then Germany is not doing too bad at all. The old television networks cover more than 70 % of the area and can be upgraded relatively quickly – in this respect the country already has almost 30 million gigaybyte connections.
That is a considerable discrepancy between area coverage of gigaybyte connections and actual use of them. What reasons do you see for this imbalance?
The discrepancy between available connections and those actually used shows: We still have too little demand from customers for really fast connections and there is a very low price level for traditional copper connections. However, once you have experienced a gigaybyte connection, you will no longer want to go at bandwidths in the double-figure range. The Corona pandemic with home offices and lockdown is now also accelerating this development. Companies are noticing an increasing dynamic.
What are the challenges for the installation of the new connections?
The tight civil engineering resources and costs on the final metres can be an obstacle. Since we do not want to see cables hanging from the facades in Germany, as is common in many other countries, above-ground installations are rarely used. Monument and nature conservation, as well as federalism and bureaucracy do the rest. The acceptance of alternative installation techniques also leaves a lot to be desired at present. As an industrial association, we are very active in this area, in order to fight for improvements for the supliers.
You just mentioned alternative installation techniques. How would you assess the importance of trenchless installation methods in this context?
Alternative installation techniques are one of the key levers in fibre optic expansion. There are innovative companies, such as Deutsche Glasfaser, who manage completely without the classical trench construction method, in order to maintain the high rate of expansions. Overall, civil engineering companies and also the Telecommunication providers are still finding it difficult to make comprehensive use of these time- and cost-saving applications. Also, many building authorities are still alienating themselves with the alternatives and have unsufficient knowledge about their huge advantages.
What does this mean for the achievement of the targets for 2025?
Without a massive increase in directional drilling, soil displacement hammers, ploughing method and trenching, we will certainly not achieve the gigaybyte targets. The German government has recognised this and is paving the way for the widespread use of alternative installation techniques with the current amendment to the Telecommunications Act and standardisation activities.
Many thanks, Dr. Ufer