Germany - DTAG broadband plans

D Telekom switches tack on broadband

Deutsche Telekom has abandoned a contentious plan to build its own ultra-fast broadband network in its domestic market and has instead linked up with rival Vodafone to develop the next-generation network across Germany.

The move follows years of criticism from the European Commission, which feared that DT's go-it-alone approach, linked to a demand to keep rivals off its network, would lead to a new monopoly in Europe's largest telecoms market.

Co-operating with competitors could also raise the overall investment in Germany in the so-called VDSL technology, which can support download speeds of up to 50MB, at a time when the government is looking to foster high-tech investment as it tries to cushion the country from the blows of global economic crisis.

At a recent meeting of German corporate bosses and Angela Merkel, the chancellor, in Berlin, René Obermann, DT's chief executive, lobbied for the government to support the building of a high-speed internet network across the entire country.

The former state monopolist and UK rival Vodafone said yesterday they would co-operate about bringing VDSL technology to the southern German towns of Würzburg and Heilbronn.

Friedrich Joussen, the head of Vodafone's German unit, said the UK-based operator would in the coming months lay VDSL lines in Heilbronn and give DT access to this network. In return, Vodafone would get access to DT's broadband lines in Würzburg.

"Infrastructure investment is important, especially in difficult times like these," Mr Joussen said. "We are in favour of competition between different infrastructures offering next-generation high-speed internet connections." DT clashed with Viviane Reding, the European Union's telecoms commissioner, three years by asking the German government to legislate to keep rivals off a planned VDSL network for three years in order to recoup a planned investment of €3bn ($4.2bn).

Although the law was watered down and DT cut back its plans, laying VDSL lines in only 50 cities, the Commission is suing Germany for breach of European law - a charge that, if upheld, carries a hefty fine.

Adding to the pressure from Brussels has been the push by Germany's three big TV cable operators into the internet market. Their state-of-the art fibre networks are a serious threat to the incumbent telecom operator's ageing technology.

DT said yesterday that the group was "open" to cooperating with other rivals in Germany, although it declined to go into detail. The "pilot programme" with Vodafone should be up and running next year, it said.

Spanish rival Telefònica has a big client base in Germany through its O 2 mobile phone subsidiary, and big cities such as Hamburg, Cologne and Munich have strong local telecoms providers with infrastructure that DT could also access.