GERMANY FOCUS: German broadband leads reluctant European pack

The European broadband market, which optical networking companies see as a key reason for their existence when it comes to bulk traffic management, is extremely varied when it comes to availability and take-up. Germany however, is seen by many as a success story, but what exactly is the progress here, and are there any problems?

The number of broadband users in Europe, according to analyst Frost & Sullivan, is estimated to rise from 3.8m at the end of 2001 to 28.1m by 2008.

And as far as Germany is concerned, internet research company netvalue says that by January 2002, more than 12% of German internet users had already used broadband. In the previous year, this figure was only 4.6%. Jupiter Research predicts that broadband usage in Germany will jump from 7% this year to .20% by 2005.

German Government figures show that there are well over 2m ADSL users in Germany, making it the most important broadband player in Europe. In the UK for instance, there are currently only 100,000 private ADSL users using the market leading provider in the form of incumbent BT, with a few thousand more using other providers. BT also claims to have 60,000 business ADSL customers.

Until recently private internet users in Germany had accessed the Internet mainly via analogue modems and ISDN, and the percentage share being around 55% and 33% respectively. But in third place is ADSL with 9%, followed by cable on 3%. There are also small pockets of broadband take-up built on electricity power lines, and there is wireless and satellite technology too.

Because ADSL uses the existing copper telephone network, it is ideally suited to turning broadband access into a mass service, and the most serious competition for ADSL and its DSL variants comes unquestionably from cable modem technology which provides high speed access via the cable television networks.

But like in other European countries, to a lesser or greater degree, the German cable network is not all-encompassing geographically. Although German cable infrastructure does pass almost 20m homes, government figures show there were only 30,000 cable broadband customers at the end of last year. Therefore the broadband focus has been on DSL technology.

The key broadband player in Germany so far is undoubtedly Deutsche Telekom (DT), which has the vast majority of the country's 2m ADSL users. While its role as the incumbent telco naturally gave it pole position to achieve the lion's share of ADSL connections, it must be pointed out that DT was very quick off the mark when it came to promoting and installing ADSL technology in the exchanges and homes. DT took the broadband market seriously well over three years ago to achieve in the situation it is now in.

In other European countries there was a great deal of prevarication before anything was done, but DT must be applauded for getting things right with large parts of the infrastructure quickly to allow such a relatively high connection figure to be reached.

The novel approach taken by DT included the strategy of promoting ADSL over ISDN infrastructure in peoples' homes. At first this strategy caused certain technical problems with some users reporting hardware and line problems, but all DT was doing was what BT in the UK for instance has only recently started to do – promoting ADSL to existing ISDN users and providing a conversion package to allow it to happen.

Like other incumbents in other countries, DT could have sat on its existing strong ISDN revenues and refused to cannibalise them in favour of investing more in ADSL, but it didn't do this.

Kenny Van Sant, chief operating officer of broadband solutions provider BroadJump, says of the situation in Germany: "Germany did react very quickly to the increasing need for broadband, and broadband company T-Online boasts that broadband users stay on-line four times longer than other users connected to the Internet."

But Van Sant stresses that the competition to DT is only just starting to make any sort of impression and there are fears that DT's position will not be seriously challenged, meaning DT itself may become a broadband slouch in taking the technology forward.

To avoid such a scenario, 300 German companies with the assistance of the German government have formed the D21 initiative to guarantee Germany's international competitive advantage when it comes to broadband availability. There should be a national strategy paper from the group to achieve this by the end of this year, and the national ministry of research plans a well-targeted programme to promote broadband.

You can see Germany is well on the way though considering it is one of the few European countries with advertising hoardings promoting the use of SDSL (symmetrical digital subscriber line) which offers the same fast speeds to send data as well as receive it, a solution particularly important for business. Most other countries are only just seeing the open mass marketing for ADSL.

A German spokeswoman from Alcatel (which is a leading European provider of DSL modems and DSL exchange equipment) confirmed there were fears about broadband penetration stagnation though. She pointed out that government figures showed that total ADSL penetration would only reach 2.6m by the end of the year. Industry had come to realise that more had to be done to deliver new content and applications to make broadband more attractive, including more video applications and the introduction of TV over broadband.

As far as TV is concerned, other countries are also coming to realise that traditional media, like TV, have to be incorporated into broadband to make it a comprehensive solution. In the UK, for instance, the government is considering asking the TV industry to subsidise an interactive TV channel that would be broadcast over the Internet.

And while the German market hasn't so far created a strong challenger to DT's dominance, the degree of satisfaction from users about their existing broadband connections isn't very good either.

Broadband management software company Motive Communications commissioned an NOP survey of 200 German broadband users this spring and found that on average customers had to wait over two months to have broadband installed once they had ordered it.

In addition, almost 40% of users encountered problems when they finally started the installation process and had to contact their provider for help. And even when they overcame the installation hurdle, 45% said they continued to experience service problems – mainly not being able to connect to the Internet – which led to them contacting their provider once a month for help.

Motive found that on average it took three days for users to resolve technical problems, and that a third of users are considering leaving their provider as a result of continuing problems. With DT's market domination though, in many areas there aren't many alternatives to such shoddy support. And such problems are expected to get worse of course if take-up increases.

But despite some fears that DSL will not be as readily available to the German population as was hoped, local authorities and business campus environments are starting to plan their own local loop architecture to take advantage of broadband.

Wilfried Brachschoss, marketing manager at the access business unit of Infineon's wireline communications group, sees progress in this area. He says: "10 Base S is promoted via Cisco equipment via the DT business services unit to corporate customers, to offer internal broadband services via the existing copper network."

As in other countries, there is still a broadband divide in Germany, with remote areas often missing out. But Brachschoss (who works for the company instrumental in delivering the chips which enabled DT to offer ADSL over ISDN) points out that DT has just started offering broadband over satellite connections to rural users.

While technical and commercial teething problems still exist in the German broadband market, it still remains one of the best broadband business models in Europe so far.

Antony Savvas
LWE Contributing Editor,
and Networks and Telecoms writer

Antony Savvas is a freelance networks & telecoms writer: [email protected]