BREKO Broadband Study 2016

Transcription

1 BREKO Broadband Study 2016 Market survey among BREKO members Sources: BREKO network operators across Germany, if not indicated otherwise

2 Executive Summary Broadband Study Digitisation fully interconnecting all areas carries a high potential for growth and prosperity Digitisation requires comprehensive deployment of optical fibre networks Status quo: in the absence of counter-measures, Germany will further fall behind Alternative network operators guarantee comprehensive optical fibre deployment 2 2

3 Germany on the path to digital transformation? Regional network operators are leading the way! billion GDP growth at 1% increase in fibre penetration (Source: IW Consult) 78 billion cumulative potential of value added through industry 4.0 by 2025 (equivalent to an annual growth of 1.7% of gross value added) (Source: Fraunhofer IAO) 20% potential savings in administrative costs through egovernment (Source: European Commission) 8.6 connected devices per inhabitant in 2019 (currently 4.6) (Source: Cisco) 80% of FTTB/H deployment by regional network operators (as of end 2015) 3

4 Study by Prof. Dr. Nico Grove: Why fibre networks? Sustainable Deployment of Broadband Infrastructures Source: Adam.J.W.C. (creative commons) 4

5 8 Theses Sustainable Deployment of Broadband Infrastructures Infrastructure decisions are hardly reversible and create a path dependency. Sustainable infrastructure deployment takes the view of future needs set against known physical and economic drawbacks. Infrastructure supply creates and drives demand. 4 The trend towards exponential growth of bandwidth is set to continue. 5 Projections tend to underestimate future demand. 6 The future of mobile is fixed. 7 Download speed is not the only criterion determining Quality of Service. 8 Fibre is the broadband infrastructure with the highest potential to comply with future quantity and quality requirements. Source: Grove (2016) 5

6 Future bandwidth development Sustainable Deployment of Broadband Infrastructures Bandwidth development WIK Study 2025 Nielsen s Law: (Supply drives demand) Bandwidth doubles every 21 months Source: Grove (2016); Monti, A. & Schäfer, R. G. (2012): Marktpotentziale für hochbitratige Breitbandanschlüsse in Deutschland: Abschlussbericht, Presentation. Bad Honnef. WIK, Godlovitch, I., Lemstra, W., Pennings, C. & de Streel, A. (2016): Public Workshop: Regulatory, in particular access, regimes for network investment models in Europe (SMART 2015/0002). Brussels. WIK, Deloitte & IDATE. 6

7 How good is broadband? Sustainable Deployment of Broadband Infrastructures Quantity Maximum speed Up-/Download Average speed Quality Delay/Latency Jitter Packet loss DNS response time Reliability (QoS: Quality of Service) Application Bandwidth Delay/ Latency Jitter Packet Loss E Mail Low Low Low Medium File Sharing High Low Low Medium Web Access Medium Medium Low Medium Remote Login Low Medium Medium Medium Audio on Demand Low Low High Low Video on Demand High Low High Low Telephony Low High High Low Videoconferencing High High High Low Source: Grove (2016); Tanenbaum & Wetherall (2011): Computer Networks 5th Edition, Tanenbaum and Wetherall, Prentice Hall. 7

8 BREKO member survey representative for the fixed broadband market in Germany 151 network operators (265 members in total) BREKO unites more than 80% of broadband network operators in Germany and thus represents the voice of competition The leading fibre association in Germany: 60% of competitive FTTB/H deployment by BREKO network operators Deploying fibre networks: Strong partners for cities and municipalities! 8

9 BREKO network operators are the foundation of Germany's Gigabit Society Indicators of BREKO network operators in 2015 Turnover: 8 billion (+ 3%) EBITDA: 2 billion EBITDA margin: 25% Investments: 1.9 billion (+12%) Investment rates: turnover: 24% (Deutsche Telekom 17%) EBITDA: 95% (Deutsche Telekom 43%) 8.5 million fixed line connections (+7%) Indicators do not include mobile 9.5 billion invested since 2010; depending on the framework conditions, BREKO network operators predict a further increase of the 2015 investments by 15% 9

10 Investment record: Alternative network operators invest in the networks of the future 8.1 billion investments in 2015 Total investments since 1998: 128 billion 53% of which by competitors 47% 3.85 billion 53% 4.2 billion Deutsche Telekom Competitors Source: BNetzA, BREKO Research 10

11 Status quo FTTB/H deployment in Germany FTTB/H total availability: 2.65 million households 0.87 million 32% 1.28 million 49% 81% of FTTB/H deployment by alternative network operators 0.5 million 19% BREKO network operators Deutsche Telekom Others Source: BNetzA, TüV Rheinland, BREKO Research 11

12 BREKO DEPLOYING FIBRE NETWORKS! BREKO network operators: 300,000 km of fibre in total 8.3 million 4.3 million 3.3 million 4.2 million of which FTTB/H 2.4 million 1.28 million of which FTTB/H Number of households/businesses that have access to NGA networks* due to these investments * NGA networks: 30 Mbps (definition by the European Commission) 12

13 Broadband availability 50 Mbps in federal states for households (fixed) Hamburg Bremen Berlin North Rhine-Westphalia Schleswig-Holstein Hesse Baden-Württemberg Lower Saxony Saarland National average Rhineland-Palatinate Bavaria Brandenburg Mecklenburg-Vorpommern Thuringia Saxony Saxony-Anhalt 41.9% 52.5% 50.4% 49.5% 55.4% 69.8% 68.5% 67.5% 71.4% 71.4% 70.9% 70.6% 76.1% 74.4% * 90.1% 94.4% 93.4% * Including wireless: 70.1% Source: TüV Rheinland end of

14 Availability of broadband connections 50 Mbps for businesses Risk of a location disadvantage for the German economy 68% Large businesses 63% Average: 59% Medium size businesses 58% Small businesses Average rural area: 29% Source: TüV Rheinland end of

15 Fixed line network: Indicator of the digital economy Fixed line data volume per year (incl. TV, streaming, M2M/IoT) Average fixed line data volume per connection and month (incl. TV, streaming) Mobile as share of total fixed line data volume 56 billion GB 80.4% (76% in 2014) of mobile internet usage takes place in WiFi networks (Source: Mobidia) 4.6 billion GB 1 % 5.5 billion GB 7 billion GB 21.2 GB 7.8 billion GB 22.7 GB 9.7 billion GB 11.8 billion GB 14 billion GB expected 27.3 GB 32 GB 37 GB 5 % 6 % 110 GB 9 % 2020 expected 85% of Germans do not want to do without fixed (only 65% in 2012) (Source: D21) Data volume is expected to triple by 2019 (Source: IW Consult) Source: BNetzA, Cisco, BREKO Research 15

16 Take-up of high bit rates is increasing significantly 30.7 million (contractual) broadband connections in fixed line networks by the end of 2015 (+1.1 million) 44% 43% -3.8 million 29% 40% 36% +2.2 million 42% 13% 16% +1.7 million 21% 3% 5% +1 million 8% <10 Mbps Mbps Mbps >100 Mbps Source: BNetzA, BREKO Research 16

17 Bandwidth demand 2025 Top-Level demand: 1 Gbps and more downstream 600 Mbps and more upstream High-Medium demand: Mbps downstream Mbps upstream Medium demand: Mbps downstream Mbps upstream Low-Level demand: Up to 150 Mbps downstream Up to 100 Mbps upstream Ca million households Ca businesses Ca. 19 million households Ca. 3.5 million households Ca. 2.7 million businesses Ca million households Ca businesses 29.7% 46.6% 8.7% 7.5% No broadband / Refusal Ca million households 7.5% More than 75% of households will demand bandwidths greater than 500 Mbps by 2025 Ca million households 100% * The demand estimates for businesses have not been updated but were included in the projections for private households without new calculations. Source: WIK market potential model

18 Demand for high bit rate connections increases BREKO members expected average bandwidth demand (in Mbps) by 2025 Download in Mbps Upload in Mbps Present Examples for current offers on the market: Vereinigte Stadtwerke: 1 Gbps symmetrical speed Unitymedia: 400 Mbps download speed RFT kabel: 400 Mbps download speed 1&1 Versatel: 1 Gbps symmetrical speed for business customers 18

19 Is Germany on the way towards the Gigabit Society? Households with available connection bandwidths 50 Mbps % 63.60% 17.10% 26.50% % 6.71% CATV VDSL FTTB/H Source: TüV Rheinland end of

20 What has vectoring contributed to the broadband target of the German Federal Government? Households with connection bandwidths 50 Mbps million 18% parallel roll-out million 26% parallel roll-out Mio Mio million 38% parallel roll-out More than 2/3 of the investments in 2015 have not contributed to the broadband targets of the Federal Government but have led to parallel infrastructure rollout 4.3 million million connections 6.78 million million connections million NGA penetration 50 Mbps Parallel roll-out 50 Mbps Source: TüV Rheinland für Breitbandatlas BMWi end of

21 Vectoring in the nearshore area: Regulatory mandated overbuild of existing NGA infrastructures delays entire broadband deployment Deployment Deutsche Telekom Requirements: none Deployment deadlines*: 20% after 18 months 20% after 27 months (2018 target expired) 60% after 30 months (2018 target expired) Deployment technology: FTTC/B/H taken into account Wholesale products: VULA (not available) Bitstream Layer 2 (Vectoring I decision) mandated in 8/2013, to date not available Deployment alternative network operators Requirements: high already 40% of all street cabinets covered in a deployment area and 33% more than Deutsche Telekom Deployment deadlines*: 100% after 18 months Deployment technology: FTTB/H deployment of alternative network operators (existing and future) is subject to regulatory mandated overbuild Substitute product: Without specifications on Deutsche Telekom s VULA, no planning of migration, deployment and business possible * After completing procedure for LLU reference offer (not started yet) 21

22 Challenges for BREKO network operators in 2016 Vectoring in the nearshore area 40% Parallel roll-out 39% Price competition 38% Public funding programmes 29% Financing 24% 22

23 Where does Germany stand in the international competition? According to the Digital Location Index, Germany ranks 6th in the global competition (Source: TNS Infratest/BMWi)* * Based on the degree of digitisation of business processes and in-house processes as well as the intensity of use of new digital technologies and services Share of the implemented digital potential in percent USA 18 UK 17 Sweden The Netherlands Europe France Germany Italy Source: Mc Kinsey Global Institute 23

24 Infrastructure objective in Schleswig-Holstein is effective Households covered with FTTB/H (homes passed) National average: 6.7% NRW is the second federal state with an infrastructure objective * Below national average 24

25 The BREKO Broadband Study shows: Alternative network operators shoulder 80% of the deployment with ultrafast fibre connections BREKO network operators are prepared to take their fibre deployment to the next level Current political and regulatory framework conditions impede the urgently needed fibre roll-out 25

26 1. Infrastructure 2. Competition 3. Framework Conditions Areas of Action Germany needs gigabit networks. Only fibre-to-thebuilding/home provides the necessary capacity for a digitised economy. In order for Germany not to fall further behind other leading industrial nations, a political target towards FTTB/H infrastructures needs to be established. A regulatory framework with the aim to secure and guarantee effective infrastructure-based competition is a prerequisite for investment in FTTB/H. A greater commitment to statements within a market exploration procedure and investment protection can prevent strategic overbuild and thus promote FTTB/H deployment. Likewise, the regulatory mandated overbuild under Vectoring II must be prevented. 26

27 27 Backup

28 Deutsche Telekom is still dominant in the access segment Phone connections based on DT infrastructure 16% 84% % 82% 2015 Phone connections retail market 44% 56% % 55% 2015 Broadband connections DT market share (incl. resale und bitstream) 49% 51% % 51% 2015 Broadband connections DT market share (excl. resale and bitstream) 55% 45% % 41% 2015 NGA connections (with bitstream) 60% 40% % 34% 2015 NGA connections (without bitstream) 83% 17% 2015 Competitors Deutsche Telekom Source: Deutsche Telekom, BREKO Research 28

29 Regulation is not an obstacle: Deutsche Telekom s margin is highest in the regulated domestic market % 40% 39% 33% 34% 34% 29% 29% 29% 20% 19% 23% 9% 9% 9% EBITDA margin group EBITDA margin Germany EBITDA margin USA EBITDA margin Europe EBITDA margin systems solutions Source: Deutsche Telekom 29