Munich dispute: Fiber optic rollout row between Telekom, M-net and utilities

Deutsche Telekom on the one hand and Stadtwerke München and its telecommunications subsidiary M-net on the other have buried the hatchet. The three companies are now focusing on long-term cooperation to drive forward the expansion of fiber optics throughout the Bavarian capital. The aim of the cooperation is to make Munich the first major German city with a comprehensive fiber optic expansion plan for the entire city area.

The fact that an agreement has been reached after years of dispute is surprising. The idea that M-net and Telekom would give each other access to their networks to supply end customers and save on expansion costs had been around for some time on the Isar. However, Telekom broke off talks meanwhile and threatened a double expansion in the metropolis. This would have put both players at loggerheads.

The late peace declaration envisages laying fiber optic cable as fiber-to-the-home (FTTH) directly to every home and business unit. The partners want to fully equip the city with this future-proof technology in the coming years. All citizens and businesses will have the option of booking a fiber optic tariff. Both sides emphasize that this will create a sustainable infrastructure that meets the constantly growing demands of digitalisation.

Stadtwerke has already connected around 650,000 units in the city center and neighboring districts with fiber optics since 2009. However, the lines have mostly ended in the basements of buildings (fiber-to-the-building – FTTB). With the new agreement, the connections are now to be consistently extended from the basement to each individual unit. Florian Bieberbach, Chairman of the SWM Management Board, describes the expansion as a "digital public service" that will make Munich fit for the future and set standards for the coming decades. Stable, fast Internet is the basis for modern life, living, and working.

Fewer construction sites, more choice

The cooperation covers around 550,000 connections in the future, i.e. a large proportion of the apartments and offices developed by SWM. Each unit will receive a fiber optic connection box with two inputs, one each for M-net and Telekom. This gives customers a free choice between the two providers and others who use their networks.

Mayor Dieter Reiter (SPD) sees another major advantage in the reduction of roadworks: instead of roads having to be torn up several times to lay different cables, this could be significantly reduced by working together. Christian Scharpf, Head of Economic Affairs, emphasizes that this agreement forms the foundation for an efficient and cost-saving expansion and keeps Munich at the forefront of technology.

The cooperation is based on SWM leasing parts of its passive FTTH fiber optic network to Telekom via M-net. In return, M-net receives open access to Telekom's fiber optic network in Munich via active bitstream access. This model enables the complete development of the city, whereby the connections of both network operators are also accessible to other telecommunications service providers via open access.

"Fatal signal"

The Association of Providers in the Digital and Telecommunications Market (VATM) warns that the Munich case "massively endangers the success of the fiber optic expansion driven by competitors." Telekom is sending a "fatal signal in the south: grant us access to the passive infrastructure or you will be overbuilt." It was only through the start of corresponding activities and Telekom's consistent refusal to lease the well-developed fiber optic network of the municipal utility subsidiary on a bitstream basis that an agreement was reached. This shows how helpless even the largest municipal provider in Europe is in the face of Telekom's market power.

According to the industry association, a study commissioned by VATM shows that the top dog is relying on exclusive leasing models instead of open network access cooperations. In doing so, it takes over entire fiber optic networks of regional infrastructure providers on a long-term basis but does not open up passive access for competitors in its own network. In this way, Telekom systematically controls construction, operation and marketing.

The German Broadband Association (Breko) is less critical of the deal. "People in Munich can breathe a sigh of relief," a spokesperson told heise online. The double expansion threatened by Telekom in 2024 is probably off the table. However, the top dog must finally "open up to other forms of cooperation – especially for the purchase of bitstream pre-services on the fiber optic networks of competitors". It would also be logical for Telekom to commit to switching off the copper network in expansion regions as part of such an agreement.

(mki)