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DT's €30B Plan Wraps LTE With Vectoring

Craig Matsumoto
12/6/2012
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Deutsche Telekom AG (NYSE: DT) outlined plans Thursday to blanket most of Germany with 4G LTE and fiber-to-the-curb (FTTC), driving capital expenditures up €9 billion to €10 billion, to a total of about €30 billion ($38.9 billion). The carrier also mentioned it hopes to deploy a hybrid box that combines LTE and vectoring, but it didn't give any details.

DT hopes to reach 85 percent of Germany's population with LTE and 65 percent with FTTC by 2016. LTE would come with download speeds of up to 150Mbit/s, while FTTC would be paired with VDSL at speeds of up to 100Mbit/s.

DT expects to spend about €6 billion ($7.78 billion) on the FTTC and vectoring piece.

Oh, and it's planning upgrades in the United States, too, where T-Mobile US Inc. and MetroPCS Inc. (NYSE: PCS), combined, will get $4 billion (note that that's in U.S. dollars) to expand the LTE network. That figure, and the €30 billion one, assume the MetroPCS deal closes in the first half of 2013, as expected.

Why this matters
Clearly, DT believes it has to spend more in order to escape the doldrums of shrinking revenues from traditional services. "Hesitation now means playing catch-up later," Chairman René Obermann said in a statement.

AT&T Inc. (NYSE: T) is likewise upping its spending next year, adding $3 billion to bring capex to $22 billion. This is all good news for the equipment vendors, which are experiencing a lackluster second half of the year in the U.S. and are having a particularly dismal time in Europe.

This is also a good sign for vectoring technology. "Germany has been a bit of a catalyst market" for vectoring, says Teresa Mastrangelo, principal analyst with Broadbandtrends LLC . "If they get some regulatory relief, and they seem to believe they're going to get it, then they're going to deploy it," after which other European countries might follow suit, she says.

Then there's that LTE/vectoring hybrid system, which is particularly intriguing because DT gave no explanation for it. "My first thought was: Who would the vendor be for something like that, and how exactly would DT use it?" Mastrangelo says.

The box appears to be for the customer premises, based on a picture in a DT presentation online, she says.

For more



— Craig Matsumoto, Managing Editor, Light Reading

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