European commission investigates Deutsche Telekom network upgrade
Tue 10 May 2016
The European Commission has announced that it will begin an investigation of the German telecom authority’s decision to allow a vectoring upgrade to Deutsche Telekom’s existing network. A vectoring upgrade would allow Deutsche Telekom to increase bandwidth available to users, and provide a higher degree of quality and reliability. The Commission, however, fears that these changes would unfairly affect competition and future investment in digital infrastructure, also known as the Gigabit Society.
Vectoring is the use of noise-cancelling technology to increase bandwidth speeds on an existing copper network, allowing users a significant upgrade to service without the trouble and expense of a full fiber-optic cable rollout. The problem is that existing technology only allows vectoring technology to be applied to an entire bundle of copper cables, preventing ‘unbundling’ of subscriber lines by alternative providers. If a competitor is buying data lines from DT, they would have no option to physically unbundle the data stream in order to manage their retail offerings, customer base and billing services.
The proposal by the German telecom regulator, BNetzA, provides for an alternative to physical unbundling by other service operators. Instead, they can choose between an active access product or a virtual access product. The active access product has technical restrictions that would make it a non-viable alternative using current technology; the virtual unbundling option would place limits on access by competitors that would weaken competitive pressure immediately and could have lasting effects on the fair market of the future.
Germany has one of the largest telecom markets in Europe, with over 118 million mobile subscribers generating the largest proportion of revenue. Deutsche Telekom is the leader in the broadband and fixed network markets; however, their market share has been declining as competitors like freenet, Vodafone, and Telefonica have grown. DT dominated the German telecom market in 1998 with 74% of market share, but that number has declined to 44% as of 2014.
In vectoring, the copper bundle is applied with an out-of-phase signal, which effectively eliminates crosstalk, or the noise that can occur through interference from adjacent cables or bundles. Existing lines are therefore set to operate at peak levels without being affected by adjacent cables. The result is higher streaming speed and quality, maximizing the efficiency of existing networks over the last mile of service. And while the European Commission recognizes that a DT vectoring upgrade would lead to significant broadband speed increases for many customers, their concern is for the effect that this upgrade could have on sustainable competition and building of the future digital infrastructure.