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DT's $1.1B Vectoring Plans Thrown Into Doubt After New Ruling

Iain Morris
11/24/2015
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Deutsche Telekom's vectoring plans have been thrown into doubt by a new draft ruling from Germany's regulator that will require the operator to offer additional wholesale services to its rivals.

On Monday, the German incumbent was given the regulatory go-ahead to spend about €1 billion (US$1.1 billion) on extending vectoring to another 6 million homes, representing about 15% of Germany's population, having previously received permission for a deployment covering around 65% of the population.

The Bundesnetzagentur (BNetzA) 's approval came with a number of conditions, however, that could force Deutsche Telekom AG (NYSE: DT) to go right back to the drawing board.

Answering questions from Light Reading, a company spokesperson hinted that Monday's regulatory move could force Deutsche Telekom to reconsider its latest spending plans but would not affect the original scheme of covering 65% of Germany's population with vectoring technology.

"Deutsche Telekom must provide another regulated wholesale product [and] this means more regulation and more administrative effort and affects the investment decisions," he said. "The rollout outside of the [new] area … remains unaffected and we will be pushing it continuously ahead."

The spokesperson also suggested that BNetzA's ruling might even prevent Deutsche Telekom from introducing vectoring in some of the new areas, instead giving its competitors "the possibility of an exclusive vectoring rollout."

"It remains to be seen how seriously the competitors will engage themselves in the broadband rollout in these areas and what this will mean for our calculation," he said.

Deutsche Telekom is looking to vectoring technology to boost connection speeds on its copper-based broadband network and help it compete against cable operators touting faster services.

The question is whether adverse regulation and concomitant slow progress on the rollout of vectoring might persuade the operator to consider alternative technologies.

Deutsche Telekom has previously flagged plans to extend vectoring to 80% of premises by the end of 2018 but appears to be a long way off this target right now. (See DT Expands Its Vectoring Commitments.)

In July, a Deutsche Telekom spokesperson told Light Reading that vectoring was then available to just 2.5 million homes -- about 6% of total households in Germany -- and that it would be extended to 6 million by the end of this year.

The operator has recently refused to disclose figures about the current status of the vectoring rollout, instead directing Light Reading to a website (German-language) that features broad details of the areas in which vectoring is now available.


For more fixed broadband market coverage and insights, check out our dedicated broadband content channel here on Light Reading.


By cutting out noise interference, vectoring boosts the connection speeds that can be delivered over last-mile copper connections to a theoretical maximum of 100 Mbit/s, although real-world speeds are likely to be much less, especially where homes are located at some distance from street cabinets. (See Copper Soldiers On: Broadband Special Report Part 1 and Optical Options for FTTH/B: Broadband Special Report Part 2.)

In the meantime, Deutsche Telekom has continued to lose out to its cable rivals, its share of retail broadband connections dipping to 41.2% in the July-to-September quarter from 41.8% a year earlier.

While cable competition is not present in all parts of Germany, cable services of up to 400 Mbit/s are currently being advertised by some players. (See Tele Columbus to Launch 400Mbit/s Service.)

Deutsche Telekom is now looking at an upgrade called super-vectoring that it claims could boost connection speeds to around 250 Mbit/s, but it has yet to announce any firm plans in this area.

CEO Timotheus Höttges has also highlighted his interest in another copper-fortifying technology called G.fast, which -- he says -- could support connection speeds of up to 1 Gbit/s thanks to recent improvements. (See DT Eyes Gigabit G.fast in Germany.)

In the UK, fixed-line incumbent BT Group plc (NYSE: BT; London: BTA) hopes the use of G.fast will allow it to provide 300-500Mbit/s services to as many as 10 million homes by the end of 2020. (See Long-Range, High-Speed Gfast Is Coming – BT.)

As with super-vectoring, however, Deutsche Telekom has yet to indicate how G.fast will figure in its broadband plans and currently insists it will not introduce the technology before it has deployed services based on super-vectoring.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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VernonDozier
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VernonDozier,
User Rank: Moderator
11/28/2015 | 5:22:59 AM
Re: Additional Regulated Service
In the US, telecommunications companies have been forced to upgrade networks to both Fiber and HFC networks to create redundant networks which meet consumer demand and incentivize competition.  

The issue is, and has always been that twisted pair copper doesn't scale, and will always have a fixed bandwidth of 300-350Mhz.  Regulators are making a mistake in saying a "virtual" service is the same as a physical one.  Who owns the meter..? 

As a former Government-owned monopoly, and part of the Germany's post office, Deutsche telekom will always have built-in bureacracy. 

Deutsche Telekom is only going to do what the law says it SHOULD do, and not what it COULD do from a service perspective. 

For example, to maintain a wireless license in the US, the letter of the law states that wireless providers are only required to provide coverage to 70% of the licensed service area.  This FCC requirement leaves up to 30% of the area to be un-covered, but still covered on the map.  As another example, Deutsche Telekom's US division was found guilty in issues of labor.  The company required female employees to sign gag orders when they have become victims of sexual harassment.  Deutsche Telekom has ignore requests of its employees, along with 20 elected members of congress, and also the orders in the Court (NLRB) Ruling where Deutsche Telekom was found guilty of 11 counts.  (only appealed two).   What kind of service would you expect from a company that operates this way..?

Not only should this be questioned; but DT's attempt to acquire British Telecom is also now very suspect.  The technology is designed in a way that prevents choice, competition, and requires goverment to pick companies to become monopolies.
iainmorris
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iainmorris,
User Rank: Blogger
11/24/2015 | 3:06:46 PM
Re: Additional Regulated Service
Yes, I've been getting a bit more information from Deutsche Telekom and it appears to be a VULA service they are unhappy about.
ElliottBonnett
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ElliottBonnett,
User Rank: Light Beer
11/24/2015 | 2:34:58 PM
Additional Regulated Service
Can you elaborate on what the additional regulated service they are being required to provide actually is? Some form of Layer 1 unbundling? Some form of Bitstream Layer 2 (centrally aggregated or a VULA type service off the back of the DSLAM)?

Cheers
ethertype
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ethertype,
User Rank: Light Sabre
11/24/2015 | 2:04:02 PM
Re: Posturing?
Of course.  Every regulatory constraint on incumbent last mile access generates a variant of the same response: "If you regulate us like that, we may not invest any more in broadband upgrades, and all the poor consumers will lose."  It's automatic.
Ray@LR
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[email protected],
User Rank: Blogger
11/24/2015 | 12:31:10 PM
Posturing?
Is this just posturing on DT's part??
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