KEYMILE has identified five prevailing trends on Germany's telecommunications market: rising bandwidth demand due to new online services, fibre to the home, hybrid solution scenarios, vectoring and partnerships between competitors.
In Germany, broadband expansion is progressing slowly but surely. According to information from the industry association VATM, approximately 3.1 million homes were connected to optical fibre networks at the end of 2017. That's an increase of over 20% compared with the previous year and a clear step forward. KEYMILE has pinpointed five trends that will have an impact on the telecommunications market in Germany in 2018 and encourage the growth of broadband connections.
1. Cloud services, streaming and gaming will continue to boost bandwidth demand
Over the past few years, the demand for bandwidth has consistently grown with this trend set to continue in 2018. The rising use of cloud services, in particular by companies, increases the amount of data transmitted. Cloud services require fast upload speeds, therefore stimulating the trend towards symmetrical data rates. Public clouds will become the core components of complex IoT (Internet of Things) networks and architectures. Homes where streaming of high-resolution TV content, YouTube videos and gaming take place also play their part in the growth. The increasingly complex and regular security patches and operating system updates for digital devices in homes or companies are other factors.
2. Optical fibre expansion focuses on FTTH
Bandwidths in the gigabit range are possible when homes and companies have direct optical fibre connections. As Fibre-to-the-Home (FTTH) and Fibre-to-the-Building (FTTB) are highly future proof, network operators will concentrate their investments on these areas wherever possible, regardless of whether active (Ethernet Point-to-Point, P2P) or passive (Passive Optical Network, PON) access technology is used.
Today's PON systems should take into account the requirement for symmetrical data transmission and be retrofittable with the next XGS PON and NG PON2 PON generations. Nationwide network operators primarily choose PON architectures whereas regional and local ones tend to pick P2P architectures. FTTH is the first and FTTB the second choice wherever FTTH isn't possible.
3. Hybrid solution scenarios build bridges
VDSL2 and vectoring with 17a profiles and G.fast as VDSL2's successor, as well as investments in optical fibre networks in residential and commercial areas, are part of a technology mix for the majority of German network operators to supply broadband in the medium term and head towards purely optical fibre networks. In order to make maximum use of existing investments, existing copper wire networks will still be in operation for five to ten years at least in most cases. Wherever required from a technical standpoint and possible financially, network operators will be pressing ahead with optical fibre expansion from Fibre-to-the-Curb (FTTC) towards FTTB and FTTH this year and using hybrid infrastructure to build bridges to the optical fibre future.
4. 35b profile vectoring offers data rates of up to 300Mbps
As a pioneer among telecommunications companies, Deutsche Telekom has started to upgrade its network with faster profile 35b vectoring. The current VDSL2/vectoring connections allow data rates of between 50Mbps and 100Mbps. Faster vectoring is based on the VDSL 35b profile and uses a bigger frequency range, i.e. 35MHz instead of 17MHz (17a profile vectoring). As a result, data rates of up to 300Mbps are possible. A volume roll-out of profile 35b vectoring is expected in 2019. Until then, further network operator will follow with their offerings.
5. Deutsche Telekom and EWE joint venture plans FTTH/FTTB expansion
Deutsche Telekom and its regional competitors have gone their separate ways until now. This seems to be changing because in November 2017 Deutsche Telekom and north German energy utility EWE announced a joint venture. The joint venture wants to invest up to €2bn and connect around a million homes in north-west Germany directly to the optical fibre network. The desire to make optical fibre expansion more cost efficient is one of the motivations for the partnership. During the course of the year, it will be interesting to see if this collaboration also motivates other market players to do the same.
"Supplying homes and companies with broadband connections in the gigabit range is one of the core objectives that both politicians and network operators agree on. If providers of telecommunications systems, network operators and politicians adopt a coordinated approach, it should be possible to forge ahead with expanding broadband in Germany in a targeted and cost-efficient manner," comments Lothar Schwemm, KEYMILE's CEO. "The fundamental technologies are already in place today and will be consistently developed over the next few years."