Study: 4 million households need to be connected to fiber optics every year

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The German government is aiming for "fiber for all" by 2030 with its gigabit strategy. However, according to a market study published by the broadband association Anga to mark its 50th anniversary on Thursday, this target is likely to be delayed by at least four years.

This applies even if the benchmark used is not the actual desired connection to the fiber optic network, but "Homes Passed": This means that a household is considered to be "supplied" even if the fiber optic cable is not laid to the apartment or house, but the property is at least located in a developed area. A house connection is then still missing. This doesn't help anyone, industry representatives emphasize. "People are using 'Homes Passed' to make Germany look good," says Netcologne CEO Timo von Lepel.

In 2023, the proportion of households connected with fiber optics was between 37 and 40 percent on the basis of Homes Passed. In order to achieve the goal of full coverage by 2030, around 28 million households would have to be added in seven years, according to calculations by Goldmedia, the consultancy firm commissioned with the analysis. That would be an average of 4 million per year. This figure does not seem unattainable. However, expanding companies have recently predicted slower growth and a failure to reach the 100 percent target.

Fiber optic expansion in rural areas is becoming more difficult

The researchers explain with a focus on the residential buildings still to be developed: 60 percent of these would be located in semi-urban or rural areas. The development of a household in the countryside is on average more complex than in the city because the associated civil engineering work involves significantly longer distances. To reach 1000 new homes passed, around 700 residential buildings would have to be developed in rural areas, more than twice as many as in urban areas.

Goldmedia also assumes that the previous development of 40 percent of households with FTTB/H expansion has been successful in cities and suburbs with a disproportionate number of multifamily houses. A total of 13.4 million out of a total of 19.6 million residential buildings therefore still need to be connected to meet the government's target. This would account for 68 percent of all residential buildings or around half of all apartment buildings and 72 percent of detached and semi-detached houses.

By 2030, at least 1.9 million additional residential buildings would need to be developed each year, the authors write. In the past three years, however, the average increase has only been 1.3 million residential buildings per year. "Following this growth path, the 2030 target is likely to be missed," the authors state. "Full supply will not be achieved until 2034 at the earliest." However, this is an optimistic scenario: many network operators are currently focusing on increasing the utilization of their lines with the help of higher take-up rates ("Homes Activated").

Growing hunger for bandwidth

This plays into the hands of fiber optic providers: Experts estimate that the average connection data load will increase by a factor of 2.4 to 3.7 by 2030. The former is supported by the "trend scenario", according to which the amount of data per connection will more than double and power users will generate over 3 terabytes of traffic per month. If new technologies such as virtual reality (VR) or artificial intelligence (AI) achieve a breakthrough, the average data traffic per connection in the "potential scenario" will grow significantly faster to around 1,300 gigabytes per month. Large consumers would then have average monthly traffic of around 5 terabytes. With a volume of 457 billion gigabytes per year, these heavily used connections would generate around 76% of bandwidth requirements in 2030.

53.7% of data usage in Europe will already be attributable to video in 2023, explains Goldmedia. In particular, an increasing share of live streaming is increasing traffic volumes and requires high bandwidth reserves for stable transmission. Gaming in the cloud, social media and VR are also increasing the demand for bandwidth. "The connection requirements of emerging networked applications can no longer be met by existing DSL connections," the study concludes. "This will increase the demand for high-performance gigabit connections and fiber optics in particular in the medium term."

Sticking point: copper network shutdown

The analysis also shows that, especially in areas where only a fiber optic network is economically viable, the competition-neutral and non-discriminatory shutdown of Deutsche Telekom's copper networks is another important stimulus. This is the only way for competitors to realize existing regional marketing potential for fibre optic connections.

According to the study, however, there is no economic interest for Deutsche Telekom to switch off its copper network in the fiber optic expansion area of a challenger and switch to the latter's optical network. Only when the copper network utilization falls below 20 percent do competitors' fibre optic networks represent an economic alternative. Such customer migration is not to be expected if the DSL network is maintained. From Telekom's point of view, it only makes sense to switch off copper lines as early as possible in areas where it is building fiber optic networks itself. A voluntary, non-discriminatory copper-to-glass migration by the Magenta Group cannot be expected.

In order to prevent Telekom from preventing the nationwide expansion of fiber optics and overbuilding competitors' existing gigabit networks, the Anga is calling for the copper-to-glass switchover to be "competition-neutral". The Federal Network Agency must develop a holistic concept for this with the participation of all interest groups. As a minimum requirement, the Anga states, for example, that Telekom must submit applications to switch off its copper network in both its own and competitors' fiber optic network areas. End customers should be able to choose freely from the available offers. In addition, the interests of competitors who want to use access via the Telekom network must be safeguarded. The industry associations VATM and Breko are also making similar appeals to the regulator and politicians.

"We must work together to close the gap between 'Homes Passed' and 'Homes Connected' or better still 'Homes Activated'", said Stefan Schnorr, State Secretary in the Ministry of Digital Affairs, at Anga's 50th anniversary celebrations in Berlin on Thursday. "However, politicians can only set the framework conditions for this."

The industry is urging haste. "There is an urgent need for action," warned Anga President Thomas Braun on Thursday afternoon in Berlin. "Time is of the essence." The network operators now expect "clear framework conditions" from politicians quickly, said Netcologne CEO von Lepel. Considering the failure of the traffic light coalition and the crisis in the German government, the industry now fears further delays.

(nie)