2009 Germany - Telecoms, IP Networks and Digital Media

BuddeComm’s annual publication, Germany - Telecoms, IP Networks and Digital Media, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Germany.

Germany’s telecom market is supported by one of the largest and more affluent populations in Europe. The sector’s total turnover was about €63 billion in 2008, down more than 3% from 2007. Alternative operators account for 53% of market revenue, compared with only 26% in 1998, while they also account for 58% of total sector investment. The market is expected to remain stagnant in coming years, though propped up by data services and mobile telephony.

The incumbent, Deutsche Telekom, remains one of Europe’s major telcos, with a significant international presence. Domestically, the company has fared badly in recent years, being plagued by regulatory measures as well as by a workforce which is both too large and protected by its part civil-service status. In addition, DT, still 15% owned by the State, has drawn rebuke from the national regulator and the EC for its attempt to retain a monopoly on its all-IP NGN infrastructure. DT’s current streamlining and restructuring is a painful yet necessary procedure if it is to compete successfully against stiffening competition. The other main players, including Vodafone’s Arcor and freenet (which bought up mobilcom and debitel), provide extensive triple- and quad-play services, and offer effective competition in all sectors.

Germany’s broadband market benefits from excellent cross-platform competition. The cable sector has undergone considerable consolidation in recent years, though a proposed merger of the major operators KDG, Kabel BW and Unitymedia, which would have created a nationwide cable network operator, was halted by the authorities in April 2009 as anti-competitive. The DSL sector has benefited from regulatory measures to promote LLU and bitstream access. DT’s own VDSL network, originally planned to be built entirely ‘in-house,’ has recently been expanded with co-operation from numerous other players in a bid to reduce costs and expand the network more quickly and effectively.

Key highlights:

·         Germany’s digital TV transition was undertaken swiftly; in December 2008 network operator, Media Broadcast, had completed analogue switchover, having begun the process in 2003. Almost all residences can receive digital TV, though services are still dominated by digital cable and satellite rather than digital terrestrial.

·         Triple play is a rapidly developing market in Germany. By early 2009 almost 20% of the population subscribed to a bundled service, mostly broadband and telephony. In coming years the sector will be driven by the entry of a growing number of telcos into the market, cheaper services for consumers, and the greater availability of upgraded networks.

·         Germany’s VDSL network has been extended in 2009 through co-operative ventures between DT and utilities as well as its competitors including Arcor, Versatel, Hansenet, Telefónica Deutschland, NetCologne and QSC.

·         Germany has the largest mobile subscriber base in Europe, with about 107 million subscribers and a penetration rate of around 130%. There is a strong shift among subscribers from 2G to UMTS networks. Operators have largely upgraded their networks with HSDPA technology, and are looking to capitalise on LTE from 2010 while developing business models to encourage further consumer use of higher-ARPU mobile data services.

 

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc, are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.