Blog.Telekom

Henrik Schmitz

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Everybody #TAKEPART! Between expectations and reality of broadband expansion

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The debate about broadband expansion in Germany is being conducted intensively. Sometimes objective, sometimes emotional. But almost always from one’s own perspective. As a customer, as a politician, as a journalist.

I always have to think of the book respectively the speech "This here is water - incitement to thinking" by David Foster Wallace. There, he describes that we all tend to look at the world from our own perspective. And that we all tend to believe in things so strongly that we no longer question them. And that is why he promotes a cooperation in which one tries to take on the perspectives of others as well. And always questioning one’s own beliefs.

I would like to invite you to take a look at what Telekom has to offer. Our view of the broadband expansion. Our view of 5G. What is clear is that you should not - and will not - share this perspective 100 percent. But perhaps you will add this perspective to your own. Just as Deutsche Telekom takes on the perspectives of others, it reflects on them and in some cases adapts them. After all, Telekom's position is not purely economic. Instead, in my opinion there must always be a concrete feedback between the business of a company and what happens in society. What do people need? What do society, employees and customers need? What does the environment need? What does the digital education landscape need?

Our actions are therefore also derived from our responsibility to society. For our customers, who have a right to #TAKEPART in the digitization process. Whether professionally, or privately. And it derives from responsibility for the people who work for us. Still around 100,000 Telekomers in Germany, 30,000 of them in service alone. And perhaps this incentive can be summed up in one term. Our incentive is to create participation for people and companies. Participation in a digital society based essentially on exchange. Of knowledge, of opinions, of experiences and ideas. And our networks are the lifelines of this society.

And perhaps that also explains why we have a different perspective on our current broadband expansion than others. In short, a few years ago we were faced with the following decision due to limited construction capacity:

  1. By 2019, supply 10 to 20 percent of households with FTTH. And accept that rollout for 80 percent of households will de facto be put on hold. With 6 to 16 Mbit
  2. Or build out in such a way that we can supply 80 percent of households with 100 Mbit or more by the end of 2019. According to the political will of the federal government, which has targeted 50 Mbit for 100 percent of households. Meaning Telekom plus the competitors. And accept the fact that, although we put fiber optic in every street, the annual expansion of up to two million FTTH connections will not be achieved until 2021. (Just to mention a few: Deutsche Telekom currently has around 1.1 million FTTH connections. According to the news service golem.de, Deutsche Glasfaser, which rightfully boasts of its expansion, has about 500,000 connections.)

As you know, we have have chosen the second alternative. (as did the cable providers who do not lay FTTH or FTTB connections, but upgrade the copper coaxial cables) I still think that this decision is the right one. Economical on the one hand. And it would also be dishonest to claim that our expansion would not take into account the demand situation with customers.

In fact, significantly less than half of those who could get FTTH or FTTB actually book this technology.

On the other hand, and with a view to digital participation, I think that this decision is also socially correct. The social developments of the past few months have even confirmed this assertion to me. So I'm even more convinced despite all the headwinds we're feeling. I do not even want to know how the debate here would have gone if we had not massively reduced the digital divide in Germany, but had made it worse. It is rightly criticized that only 88 percent of households are supplied with 50 Mbit. So every tenth still does not have a fast Internet. But the reason for this is not that Telekom built FTTC (fiber up to the distributor). But without this technology de facto even fewer people would get at least 50 Mbit. Especially in the countryside.

Currently, 30 million households receive up to 100 Mbit. Of these, 20 million households receive up to 250 Mbit per second. After all, his means that many people can use all the services of today's Internet without a hitch.

The attitude with which we work, however, always includes the framework within which we perform. This means that we too are moving in dependencies that we cannot simply ignore. Not to mention just ending them.

The framework has to do with ourselves, first of all. How many people do we have? What skills do they have? What structures do we have in the company and how flexibly can we react to new challenges? What resources do we have? How much can we invest?

  • For example, resources: In the course of the privatization process, we inherited not only a network from the former Federal Post Office (Bundespost), but also high debts - 64 billion euros - and a lot of civil servants and other personnel. In order to make the necessary staff restructuring socially compatible, we have invested a lot of money over the past 20 years. Around 600 million euros on average every year! 13.4 billion euros since 1995.
  • Another example, the market environment: Deutsche Telekom is not only the engine of digitization, we also have to live with the effects. The telecommunications business can be presented in this way simplified: You build an infrastructure. You have to invest a lot of money for this. In the following years you will earn money on this infrastructure; your investments will pay for themselves. However, digitization contributes to the fact that innovation cycles are becoming ever shorter, while the necessary investments remain the same. The time periods in which you not only have to amortize the infrastructure, but also earn the money for the next stage of innovation, are therefore becoming shorter and shorter.

The result is that Deutsche Telekom is currently indebted with 51 billion euros. This puts us in a better position than many telcos in other countries. But worse than, for example, European companies that do not build their own networks. Should we not actually assume that companies that build networks and take the entrepreneurial risk to do so will also be rewarded?

Framework conditions

In addition to this internal framework, there is of course also a kind of "external framework".

Example 1: How to lay cables.

Example 2: Licensing procedure in mobile communications: It takes two years and more for a site to be approved. We currently have problems with this at 700 locations.

Example 3: The competition. It's very high in our industry. As a result, prices in mobile communications have fallen. Minus 16 percent. At the same time, costs for civil engineering, for example, have risen by 23 percent. And labor costs by 22 percent.

Price trend


Last point: The social environment. Also here only three small examples: Everybody wants cell phones. But nobody wants the antenna next door. Sometimes the monument protection prevents a new antenna. Then nature conservation again. And the discussion about antenna and mobile phone radiation is also gaining momentum again, which has already taken place with previous mobile phone technologies.

But one thing is clear: every company in the world has such a framework. Some more, some less.

Entrepreneurship simply means dealing with it and getting the best out of it. That's what Telekom does.

My point is as follows: When requirements are formulated for a company, the given framework must always be taken into consideration and, in case of doubt, also changed. If, for example, you expect Europe to win the digitization canter with China and North America, you shouldn't put extra ballast in your saddlebag all the time.

And by the way, in my opinion, many country comparisons simply go wrong. No matter what the area. Societies are complex entities with many dependencies. But in many comparisons the result is considered, but rarely the framework on which this result is based. The simple reason is that this framework is complex and consists of many individual parts that are mutually dependent. Sweden, for example, has good FTTH coverage. About one third of the population live in the 10 largest cities. In Germany the figure is around 13 percent. The Netherlands has the best mobile network in Europe. And that's from Telekom. There live 413 inhabitants per square kilometer. In Germany there are 232.

And China in turn certainly has a good mobile phone network. There, however, bourgeois protest against mobile masts is also rather low. Even if everyone has reception, they don't receive everything. The price for this state-imposed expansion is, among other things, the lack of freedom of opinion.

We at Deutsche Telekom are therefore convinced Europeans. We firmly believe in our social model. There is no other region in the world where democracy, social security, freedom, respect for civil rights, the humanisation of labour and much more form such a strong unity.

Despite all the criticism that I myself express, the following applies to me: In dubio pro Europe. For us as Telekom, this includes assuming our responsibility for digitization. That while we fight for a better framework. But that we do what we do best: Take the spade in your hand. Building nets. Fixed and mobile.

Fiber optic lining

The fiber optic expansion is running. And he goes on. We're already building fiber optics. 40,000 to 60,000 kilometers a year. In total, we have over 500,000 kilometers of fiber optic in our network.

We will also be constantly expanding the expansion of FTTH, so that from 2021 we will be connecting up to two million households a year with FTTH. With appropriate regulation. A completely new infrastructure is being created here. And that's on the fly. It's as if Deutsche Bahn were replacing all its lines with magnetic levitation technology. That is why we must also see this expansion as a social task. Telekom will do everything it can for FTTH. But not everything society expects of us will be possible for us. That's why we have initiated a cultural change at Deutsche Telekom.

We no longer do everything on our own, but rather seek solidarity with companies that work with us to expand. For example, in Stuttgart, where we intend to invest more than one billion euros and supply 90 percent of households there with direct fiber-optic connections by 2030. Or our joint venture Glasfaser Nordwest EWE, where we intend to supply 1.5 million households with FTTH in ten years. Invest: Two billion euros. Unfortunately, the impression arises that 1&1 and Telefónica wanted to prevent this.

Second point: mobile radio and 5G

Deutsche Telekom will permanently improve mobile communications coverage in Germany. By 2021, we aim to supply 99.3 percent of the population with LTE and at least 50 Mbit. This puts us at the level of leading networks such as Norway, which achieve 99 percent coverage, and Switzerland with 98 percent.

Measuring points to mobile phone networks in Albania, Peru and Germany.

Measuring points to mobile phone networks in Albania, Peru and Germany.

Also here a small note on the topic of country comparison. I read more often that the German mobile network is worse than in Albania. You can't leave it like that. The German network doesn't exist. Or the Albanian net. But there are networks of different quality in every country. And in Germany it is unfortunately the case that there is a network of another operator, which pulls the quality cut downwards. Albania and even Peru are also doing better than Germany for the app provider Open Signal. Here is a map where you can see where in Albania, Peru and Germany (unfortunately only a section, but the picture is green throughout) was actually measured (green areas). I think that speaks for itself.

What  Deutsche Telekom does

In 2025, Telekom's network will supply 90 percent of Germany's total area with 5G. With 4G we already reach this value in 2021. Just for comparison: 30 percent of Germany's land area is forest. 51 percent is arable land. These areas are therefore also largely supplied. And at the same time, it brings us much closer to a feeling of full coverage. And in pure telephony we achieve even better coverage due to the combination of different standards.

The Deutsche Telekom is 5G ready. We have connected by far the largest part of our antenna locations with fiber optics. This is the prerequisite for 5G. We currently have 29,500 locations. 1,800 are expected to be added this year. 50 percent of them in rural areas. By 2021, there should be 36,000 transmission stations.

Deutsche Telekom also stands for world premieres in speed, latency and cross-network interoperability. Telekom's 5G antennas transmit under real conditions here in Berlin, test fields for network slicing can be found in the Port of Hamburg, for networked driving on the Lausitzring or for advanced energy control in Dresden. With Osram, we have a project in which we are, so to speak, abolishing all factory cabling and networking all machines and devices with mobile communications. In the future, the cable spaghetti in factories could come to an end.

To cut a long story short: the seamless transition from LTE to 5G is guaranteed. By 2025, we also want to supply 90 percent of Germany's surface area with 5G. Not just with the frequencies from the current auction, but with the intended frequency mix of 3.6 Ghz, 700 MHz, 26 GHz and the conversion of existing frequency bands. Deutsche Telekom will continue to invest more than five billion euros annually in Germany. This is glass, this is 5G and these are other innovations. For example, we have developed a technology with which we can supply houses with one to two gigabits via radio connection. From the lantern to the apartment.

Collaborations

And we will also be joining forces with other companies on the 5G issue. We will also offer our antenna locations to other companies. And talk together about how the industry as a whole can close radio gaps. But here too, new regulation or the much-discussed involuntary "regional roaming" will ultimately have the opposite effect. We are open for cooperations, as far as they are fair. Keyword balanced burden sharing. How much rent do we get where? There is a difference whether we talk about capacity in the city or in the country - the connection costs much more. Those who want to expand their network in the city and rent the infrastructure in the countryside at city prices can be subsidized by the others.

In a nutshell: Telekom has a clear stance. We want our customers in Germany # to be at the forefront of the possibilities that digitization offers them. Both private and business customers. We believe that Germany needs the right framework for this. This requires a rethinking both here and abroad, but it also requires the courage in other places to throw old paradigms overboard. An occasional change of perspective can help. This is my very personal experience.

Our concrete expansion plan for Germany is described here.

Breitbandausbau

Networks

DT invests several billion euros every year in building networks.

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