Deutsche Telekom/EWE €2bn fibre project to offer wholesale access to rivals

22 March 2019 | Alan Burkitt-Gray

Cover

Deutsche Telekom is to work with German electricity, gas and telecoms company EWE to build a €2bn wholesale fibre company in the north-west of the country.

Glasfaser NordWest – North-west optical fibre – will aim to connect 1.5 million homes and businesses in parts of Lower Saxony, North Rhine-Westphalia, and Bremen. EWE already runs a telecoms network (pictured) with 855,000 customers through its EWE TEL brand.

First customers should be connected next year, and the companies said they would offer wholesale access to third-party operators.

Deutsche Telekom board member Dirk Wössner said: “Glasfaser NordWest will capture enormous synergy effects, because we will plan and build the fibre-optic infrastructure together. This means we’ll have greater capacity utilisation in the operating phase.”

The two partners expect to invest up to €2 billion over the next ten years, and Glasfaser NordWest will offer all customers fibre-to-the-home (FTTH).

“We’ll be able to connect households that would have been uneconomical otherwise,” said Wössner, who is managing director of Telekom Deutschland, the German operating company of Deutsche Telekom. “The new joint venture is logical and a manifestation of our collaboration-based strategy.” Deutsche Telekom spoke in 2017 of its willingness to work with rival operators, including EWE

Glasfaser NordWest will offer wholesale access to customers. Once the fibres have been laid, “EWE, Deutsche Telekom and all other interested telcos will compete directly for the respective customers”, said yesterday’s announcement from Deutsche Telekom.

Dido Blankenburg, responsible for broadband cooperation at Deutsche Telekom, said: “End customers can then purchase a fibre-optic line from EWE TEL or Deutsche Telekom. The joint venture will offer its upstream services to all providers to consumers at the same conditions. The telecommunications companies can choose whether they wish to participate in the build-out with a fixed quota, which will earn them a discount, or purchase each line separately.”

The companies have notified Germany’s monopolies regulator, Bundeskartellamt – the Federal Cartel Office. But Wössner warned against regulators that might want to block the Deutsche Telekom/EWE move. “The new joint venture is logical and a manifestation of our collaboration-based strategy,” he said. “Ultimately, we are still convinced that we have to team up with other companies to digitalise Germany – and without any regulatory intervention.”

He added: “Our partnership shows: FTTH expansion without regulation works. We’re boosting expansion and we’re willing to cooperate with competitors. We don’t need regulatory intervention.”

Stefan Dohler, CEO of EWE, backed Wössner’s proposition. “In northwest Germany, EWE is known for fast internet and the digitalisation of rural areas,” he said. “We’ve already achieved a lot on our own, but we want to offer even more fast internet connections to as many people in our home region as possible. By teaming up with Deutsche Telekom, we can achieve this goal more quickly.”

Glasfaser NordWest will not have its own retail customers, but will be a wholesale provider to Deutsche Telekom, EWETEL and any other provider. Blankenburg said: “The main product will be layer-2 bitstream access. In addition, Glasfaser NordWest will offer layer-3 bitstream access for customers that cannot use layer-2 bitstream access due to technological constraints. This means the future company will not market any services directly to end customers.”