DT: Fiber Regulation Could Hinder 5G Rollout

Germany's Deutsche Telekom has warned the country's regulatory authorities that regulation of fiber networks could hinder its ability to invest in 5G networks.

The warning comes just days after Germany's government published a 5G strategy plan indicating that "massive" infrastructure investments are needed if the country is to have a "high performance" 5G network in place by 2025. (See Germany Urges Telcos to Up Fiber Game for 5G.)

It clearly expects the private sector to shoulder that investment burden. "The federal government assumes that the network operators will significantly increase their investments in fiber optics for connection to base stations," say authorities in the strategy paper.

Deutsche Telekom AG (NYSE: DT), Germany's biggest operator, reckons it is in a "good starting position" for 5G thanks to the investments it has already made in the deployment of fiber-to-the-curb networks, which it is using to support its broadband offerings. "That comes with fiber to the distributors on the roadside," said a spokesperson for the operator in emailed comments. "In addition, we have also connected the vast majority of our 4G locations with fiber."

But Deutsche Telekom has also insisted that regulating further fiber expansion could have an impact on 5G deployment.

"5G requires fiber networks in nearly every street," said Deutsche Telekom's spokesperson. "What is crucial for us is that there is no regulation of further fiber expansion in order to facilitate private investment and cooperation among the operators."

Deutsche Telekom has been unwilling to embark on a widespread rollout of fiber-to-the-home networks largely out of concern that regulators would force it to "open" that network to rivals on unfavorable terms.

But this appears to be the first time it has suggested that fiber regulations could upset the rollout of 5G.

It is not the only operator to have drawn a link between fiber regulation and the 5G investment case.

Vodafone UK wants regulatory authorities to ensure it can access "passive" network infrastructure owned by fixed-line incumbent BT Group plc (NYSE: BT; London: BTA) on favourable terms, with a view to making investments in fiber backhaul for the future rollout of 5G services.

"With 5G you are talking about many gigabits per second per sector and … the limiting factor is going to be getting data from the basestation to the core network," Kye Prigg, Vodafone UK's head of mobile networks, recently told Light Reading. "We're tackling the backhaul part now but we need to work it out on an industrial scale." (See Vodafone UK Turns Mobile Network Guns on BT/EE.)

Yet the kind of regulatory intervention that Vodafone supports might dissuade Deutsche Telekom from making further investment in fiber networks.

In the current regulatory environment, Deutsche Telekom is not required to let other service providers access its ducts and poles on regulated terms, or to sell dark fiber -- which gives wholesale customers more control over connections than leased line products.

Asked during an email exchange if regulatory intervention in those specific areas could upset 5G rollout, its spokesperson replied: "Any regulation of new infrastructure would hinder further investment and cooperation among operators."

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There has been growing concern that Europe risks falling behind North America and Asia on the rollout of 5G networks, with some market watchers blaming regulatory conditions for the lag.

Earlier this year, some of Europe's biggest operators were reported to have slammed a 5G action plan from the European Commission that suggested building 5G networks across Europe would cost about €57 billion ($65 billion).

Deutsche Telekom CEO Timotheus Höttges reckons it will cost between €300 billion ($343 billion) and €500 billion ($572 billion) to blanket the whole of Europe with 5G.

Hossein Moiin, the chief technology officer of Finnish equipment supplier Nokia Corp. (NYSE: NOK), thinks regulators' aversion to merger activity may be holding Europe back, arguing the region needs a smaller number of big players.

But Arun Bansal, who heads up the European business of Swedish equipment rival Ericsson AB (Nasdaq: ERIC), thinks European operators simply have different investment priorities from counterparts in North America and Asia.

"Europe is mainly driving 5G from an industrial use case point of view, which requires lower latencies, and there is no low-latency solution until the end of 2018 or 2019, and hence there is no discussion of 5G deployment," he says. "North America is driving a use case which is more fixed wireless access and more about high speeds -- that can already be addressed by LTE-Advanced Pro and then enhanced with 5G."

Specifications for the first 5G standard, which will use 5G new radio technology in conjunction with an existing 4G network, are expected to be locked down at the end of this year, but versions of the technology supporting much lower latency are not expected until later. (See 3GPP Approves Plans to Fast Track 5G NR.)

— Iain Morris, , News Editor, Light Reading