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Eurobites: DT Defends Vectoring, Slams Vodafone

Also in today's EMEA regional roundup: Telekom Austria buys Swiss cloud provider Exoscale; Russians warm to pricier devices; Telenor downbeat on 5G; Sequans makes AT&T inroads.

  • Deutsche Telekom AG (NYSE: DT) has defended its use of vectoring over higher-speed fiber technology while dismissing the challenge from Vodafone, its biggest rival. In a blog post on its website, the German operator said there was "neither the civil engineering capacities nor the financial resources" for a widespread rollout of fiber-to-the-premises (FTTP) technology. Pressure has been growing on Deutsche Telekom to invest in faster broadband technologies than vectoring, which boosts connection speeds on last-mile copper loops. Despite the comments in the blog, CFO Thomas Dannenfeldt earlier this month promised to ramp up spending on FTTP rollout starting in 2019, without providing more details. Any future FTTP rollout, though, seems bound to focus on more densely populated communities: Deutsche Telekom has previously warned the industry that connecting every home in Germany to fiber would cost between €60 billion ($71 billion) and €80 billion ($95 billion). Currently, it spends about €4 billion ($5 billion) annually in Germany.

    Facing criticism about the limitations of vectoring, Deutsche Telekom insisted that Germany ranked well against other European countries on broadband performance. Having invested heavily in a fiber-to-the-curb network to support the vectoring rollout, it also pointed out that its fiber networks now stretch across 455,000 kilometers, while Vodafone's cover less than 60,000 kilometers. Deutsche Telekom also insists it has connected most of its mobile sites to fiber to enable high-speed backhaul connectivity, while Vodafone is still relying on microwave technology, it claims. Vodafone, however, has previously complained that it cannot obtain access to European incumbents' fiber backhaul networks on favorable terms. It also now offers a 500Mbit/s cable-based broadband service to about 6% of German households. Vectoring tops out at 100 Mbit/s, and Deutsche Telekom has continued to lose market share to Germany's cable operators. (See DT to Ramp Up FTTH Capex Starting in 2019.)

  • Telekom Austria AG (NYSE: TKA; Vienna: TKA) has acquired a majority stake in Swiss cloud provider Exoscale from shareholders Swisscom Ventures and Anaroll Holding. While the terms of the transaction were not disclosed, the Austrian incumbent reckons concern about data protection is fueling demand from European companies for domestic cloud providers. Exoscale already caters to organizations including Swisscom and nuclear research institute CERN. Telekom Austria, whose networks cover seven markets in Europe, plans to build an Exoscale access point in Vienna in the summer and says a future location in Germany will follow. The move will represent a clear challenge to Deutsche Telekom, which is similarly positioning itself as an alternative to US cloud providers for European organizations. (See DT Takes Cloud Fight to Google, Amazon.)

  • Russian consumers are splashing out on costlier handsets but upgrading phones less frequently than before, according to new research from MTS, the country's biggest telecom operator. In a blog, Mobile TeleSystems OJSC (MTS) (NYSE: MBT) said there had been an increase in demand for advanced smartphones costing more than 40,000 Russian rubles ($677) each in the April-to-June quarter. The operator held the wider availability of credit facilities responsible for the development, pointing to its introduction of better installment terms and launch of online lending services. In the meantime, the average lifetime of a device has risen from 18 months to two years, said MTS (it did not indicate over what period). Samsung, Apple and Huawei are now entrenched as the dominant smartphone brands in MTS's own retail network. (See Russia's MTS to 'Sacrifice' Connectivity in Software Rebirth.)

  • Telenor Group (Nasdaq: TELN) CEO Sigve Brekke gave a downbeat assessment of 5G technology during a conference in Oslo earlier this week. Brekke told attendees that he expects 5G networks to be rolled out gradually, unlike earlier 3G and 4G technologies that were deployed relatively quickly. He also said that customers do not need 5G for any for any of the services they currently use, which implies that the Norwegian operator is more interested in using 5G to provide new types of service for enterprise customers. A gradual rollout means there will be no "big investment plan" for 5G, said Brekke. Operators in other regions are eyeing a more aggressive 5G deployment than Telenor intends. T-Mobile US, for example, aims to build a "nationwide" 5G network by the end of 2020. (See Don't Count on 5G for a Capex Boost.)

  • European 4G chipmaker Sequans Communications has certified a new LTE-M module for use on the network of AT&T Inc. (NYSE: T). The company, which is one of several makers of chips that can support the LTE-M and NB-IoT standards, is already working with AT&T arch rival Verizon Communications Inc. (NYSE: VZ) on the rollout of LTE-M technology, which is aimed at providing connectivity for smart meters and other tracking devices. (See NB-IoT Interoperability a Problem, but It's Being Fixed – Sequans CEO.)

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

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