VZCZCXRO2135
RR RUEHAG RUEHDF RUEHLZ
DE RUEHRL #1567/01 3431541
ZNR UUUUU ZZH
R 091541Z DEC 09 ZDK
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 6028
INFO RUCPDOC/USDOC WASHINGTON DC
RUCNFRG/FRG COLLECTIVE
RUEAFCC/FCC WASHINGTON DC

UNCLAS SECTION 01 OF 02 BERLIN 001567 
 
PLEASE PASS TO EEB/CIP/BA:Timothy Finton; 
FCC:Robert Tanner 
DOC/ITA/OTEC:Andrew Bennett 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS ECON GM
SUBJECT: GERMANY MAY MISS ITS BROADBAND GOALS 
 
REF: STATE 27310; BERLIN 000707 
 
¶1. Summary: The German government introduced a 
National broadband strategy in early 2009 that 
spurred a flurry of activity aimed at expanding 
broadband deployment at the state and local levels. 
In the aftermath of the economic crisis, however, 
the telecom industry has not invested the large 
sums required.  The government is still mapping the 
existing cable infrastructure, and work in various 
states and communities is progressing at different 
rates.  In addition, bickering continues over 
wireless spectrum allocation of the digital 
dividend, with the European Commission likely to 
halt Germany's planned frequency auction unless its 
modalities are revised.  In short, implementation 
of Germany's broadband strategy will take longer 
than projected, although the Economics Ministry 
(BMWi) and the Federal Network Agency (BNetzA) are 
still sticking to the original timeframe.  Note: 
This cable is part of a regular series of updates 
on Germany's telecom strategies and goals.  End 
Summary. 
 
Germany's Ambitious Broadband Plan 
---------------------------------- 
 
¶2.  Aimed at fostering economic growth, Germany's 
broadband plan is an integral part of the 
government's economic stimulus package.  The 
ambitious plan aims to provide every German 
household with access to broadband internet of at 
least 1 Mbit/s by the end of 2010; 75 percent of 
the connections would be at 50 Mbit/s by 2014, 
increasing to 100 percent as quickly as possible 
thereafter.  This would primarily benefit the 800 
towns and 1,400 rural communities with either no 
internet connection or low-bandwidth internet 
access.  BMWi has established a webpage 
(www.zukunft-breitband.de) featuring best practices 
of 30 communities that successfully deployed 
broadband. 
 
High Investments Needed; Private Sector Reluctant 
--------------------------------------------- ---- 
 
¶3.  To date, only Deutsche Telekom (DTAG) has 
invested 3 billion euro to equip households in the 
50 largest cities with 50 Mbit/s.  Current 
deployment stalled when non-DTAG investment dried 
up as a result of the economic crisis.  It will 
require a total investment of approximately 50 
billion euro (of an estimated total of 300 billion 
euro EU-wide) to adapt German infrastructure to 
enable rapid broadband deployment.  Even the 
dominant DTAG is seeking alliances with its 
competitors to share the investment burden.  The 
telecommunications industry has concluded that the 
stimulus funds allocated for this are not 
sufficient. 
 
¶4.  According to a poll by the German ICT 
federation (BITKOM), the private sector strongly 
favors broadband deployment.  A recent Columbia 
Business School study found that upgrading networks 
to 50 Mbit/s by 2014 would create 400,000 jobs in 
Germany and contribute 60 billion euro to German 
GDP by 2014. 
 
Digital Dividend Auction Likely To Be Postponed 
--------------------------------------------- -- 
 
¶5.  In June 2009, the Upper House (Bundesrat) 
approved the "digital dividend" provision as an 
important step towards nationwide broadband 
deployment.  The provision calls for the auctioning 
of frequencies no longer needed for broadcasting 
after digitalization.  The auction has been 
scheduled for the second quarter of 2010. 
 
¶6.  The European Commission, however, decided that 
the modalities of the auction, as determined by 
BNetzA in October 2009, pose a potential 
disadvantage to smaller mobile operators who might 
not be able to acquire an adequate share of 
frequencies.  The Commission is currently preparing 
infringement procedures.  This would significantly 
 
BERLIN 00001567  002 OF 002 
 
 
delay the reallocation of frequencies for broadband 
use and endanger the German government's broadband 
goals. 
 
¶7.  Critics, meanwhile, have dismissed the 
additional frequencies from the digital dividend as 
a "drop in the bucket," insufficient to close 
existing gaps and meet the needs of underserved 
areas.  The Association of the German Internet 
Industry (eco) noted that more fiber optic links 
would be required over the long term. 
 
DTAG to Provide Last-Mile Access 
-------------------------------- 
 
¶8.  German regulator BNetzA has ruled that DTAG 
must provide access to competitors beyond main 
distribution frames to the branch nodes.  The 
regulator argued that this would allow competitors 
to provide "last mile" service to customers.  The 
Association of German Cable Network Operators 
(ANGA) welcomed the step, but urged that fees be 
cost-based, so as not to pre-empt investments 
necessary for next-generation networks. 
 
Mapping Infrastructure Needs More Participation 
--------------------------------------------- -- 
 
¶9.  The Federal Network Agency is currently 
compiling data for its "infrastructure atlas" to be 
released in December 2009, which will chart 
available infrastructure and serve as the basis for 
improvements and construction projects.  A high 
rate of participation by companies with 
infrastructure could provide synergies and enable 
telecommunications companies rapidly to install 
fiber to new areas and customers at lower costs. 
The project is proceeding apace, but participation 
has not met expectations. 
 
Alliances for Deployment and Cost-Effectiveness 
--------------------------------------------- -- 
 
¶10.  Germany's regulatory authority aims to boost 
deployment and cost-effectiveness by encouraging 
alliances between telecommunications providers and 
utility companies.  Deutsche Telekom has confirmed 
talks with its competitors, while German power 
utility RWE is checking into potential synergies. 
DTAG and Ewetel, a subsidiary of EWE energy 
holding, have signed cooperation agreements at the 
regional level. 
 
¶11.  BNetzA also proposed that energy companies 
without a telecommunications subsidiary provide 
ducts for laying fiber optic cable.  BNetzA 
President Matthias Kurth commended Switzerland as 
an example, where utilities are laying fiber optic 
all the way into the homes of Swisscom customers, 
enabling rates of 100 Mbit/s.  Kurth has sent a 
letter to 3,000 companies with cable infrastructure 
in Germany requesting information on infrastructure 
that could be utilized for broadband service. 
 
Comment 
------- 
 
¶12.  Although the Economics Ministry and the 
Federal Network Agency continue to stick to their 
schedule, it appears increasingly unlikely that 
Germany will achieve its ambitious broadband 
deployment goals on time.  Remaining hurdles -- 
from completing the infrastructure mapping to 
funding high investment costs during an economic 
downturn to delays in auctioning off spectrum -- 
will continue to slow the process considerably. 
End Comment. 
 
MURPHY