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Deutsche to spend $20bn keeping cable at bay

By PETER WHITE

Published: 14 December, 2012

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For the full version of this story, request this week's copy of our paid weekly service, Faultline, at www.rethinkresearch.biz/faultline or email sales@rethinkresearch.biz

Deutsche Telekom will spend $30 billion revolutionizing its home network in Germany and its cellular network in the US, it told an audience of investors and analysts this week. The spending plans were cobbled together after the disappointment of being unable to sell its US T-Mobile operation and aim at creating a stronger German player to beat cable on its home turf.

It will spend around $20 billion in Europe, much of it for Germany and use it as a test bed for its fixed line assets in Croatia, Greece, Netherlands, Romania, Hungary, Czech Republic, Slovakia, Macedonia, Albania and Bulgaria.

This is done partly because the German broadband market is hotting up with Liberty Global buying two major cablecos there, and accelerating their investment and Kabel Deutschland beginning to look acquisitive and dangerous.

DT will develop a new type of hybrid base station for the home, featuring both LTE and WiFi, as well as speeding up its fiber to the curb wholesale strategy through a process called VULA (virtual unbundled local access). It will invite non-cable rivals, likely other cellular players like Vodafone and Telefonica, to help it fight against cable by reselling these lines. These will be fiber to the curb with vectored VDSL, offering 200 Mbps into a building and importantly 90 Mbps uploaded.

DT sees the cloud as obtainable only by allowing faster upload speeds, and will uses this to differentiate from cable. DT will also increase German hotspots it owns to 18,000, clearly heading to take advantage of Passpoint, the WiFi 2.0 definition for seamless offloading (roaming) between WiFi and LTE. In total DT will spend around €4.1 to €4.5 billion each year on from 2014 to 2016, up from a previous average of €3.6 billion. And where DT goes, France Telecom and others will follow.

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