BREKO Broadband Study 2017 Market survey among BREKO members For the BREKO Broadband Study 2017, all BREKO network operators were interviewed (nationwide). The study comprises data from around 90% of all BREKO network operators. In addition, data from publicly available sources was used for verification and determination of total market figures. The source of the data used is indicated at the end of each respective graph. The figures refer to the end of 2016, if not indicated otherwise.
BREKO member survey representative for the fixed broadband market in Germany 172 network operators (300 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!
Status quo FTTB/H deployment in Germany FTTB/H total availability (mid-2017): 3 households 82% 1 31% 0.5 17% 1.5 51% of FTTB/H development by alternative network operators Source: Federal Network Agency (BNetzA), BREKO Research
Alternative network operators: Enablers of the Gigabit Society 53% 4.15 billion 3.85 billion 47% Investments made within the scope of operator models not yet considered (municipality builds but rents out operations) Total investments since 1998 136 billion 53% Competitors Deutsche Telekom Competitors Source: BNetzA, BREKO Research
Progress in broadband deployment? Households with connections 50 Mbps More than two-thirds of investments in 2015 and 2016 did not contribute to the Federal Government's broadband targets but have led to bad investments as a result of parallel roll-out 23.72 26.36 27.83 30.11 16.07 NGA penetration 50 Mbps Parallel roll-out 50 Mbps 10.65 2013 2014 2015 2016 Source: TÜV Rheinland, BREKO Research
Federal funding programme 935 865 423 911 3.1 billion federal funding 545 grants confirmed Examples: 93 Mecklenburg-Vorpommern 91 Bavaria 85 Saxony 17 Baden-Württemberg 8 Hesse Grants from the 5th tranche have not yet been awarded Awarded (2015-2017): 2.2% Source: Federal Ministry of Transport and Digital Infrastructure (BMVI), BREKO Research
Fibre networks: Enablers of digitisation 470 Fixed line data volume per year in billion (incl. TV, streaming, M2M/IoT) Average fixed line data volume per connection and month in (incl. TV, streaming) Mobile as share of total fixed line data volume 165 202.5 95% (76% in 2014, 80% in 2015) of mobile internet usage takes place in Wi-Fi networks (Source: Mobidia, Independent) 85% of the population does not want to do without fixed (only 65% in 2012) (Source: D21) 7 21.2 9.8 28 11.6 33 17.1 2012 2013 2014 2015 2016 2020 2025 46 22.5 4% 58 67.5 7% 9% Data volume grows annually by about 30% (Source: Cisco) Source: BNetzA, BREKO Research
Take-up of high bit-rates is increasing significantly 32 broadband connections (80% of premises) in fixed line networks by the end of 2016 (+1.3 ) 44% 43% 40% 36% 42% 43% 29% 21% - 2.2 + 0.8 13% 16% 21% 25% + 1.5 3% 5% 8% 11% + 1.2 < 10 Mbps 10-30 Mbps 30-100 Mbps >100 Mbps 2013 2014 2015 2016 Source: TÜV Rheinland, BREKO Research
Willingness to pay increases More than half of all German citizens would in principle be prepared to pay more for a faster internet connection 53% Willingness to pay more for a permanently faster internet connection 13% 40% 33% 14% Willingness to pay more for individual prioritised services, e.g. trouble-free video streaming, internet telephony 7% 31% 40% 22% Definitely yes Rather yes Rather not Definitely not Source: PWC
Investments in fibre networks FTTB/H homes passed 1.5 m Examples for FTTB/H deployment: 1.2 billion investments in FTTH networks FTTB/H networks of 8 districts + 230 municipalities 4.9 m Cover 25% of Schleswig-Holstein with FTTH until 2020
BREKO carriers build the basic infrastructure for Germany's Gigabit Society Indicators of BREKO network operators in 2016 Turnover: 8.4 billion (+5%) EBITDA: 2.3 billion EBITDA margin: 27% Investment rates: of Turnover: 19% (Deutsche Telekom 18%) of EBITDA: 70% (Deutsche Telekom 46%) Investments: 1.6 billion 8.7 NGA fixed line connections (+3%) Indicators do not include mobile 11.4 billion invested since 2010 Depending on the framework conditions, BREKO network operators predict a further increase of the 2016 investments by 40%
Public funding in the Federal States Federal State First Call Second Call Third Call Total Mecklenburg-Vorpommern 24 53 15 92 Saxony 1 18 25 44 Bavaria 3 8 30 41 Lower Saxony 6 15 13 34 North Rhine-Westphalia 4 3 20 27 Schleswig-Holstein 2 2 11 15 Rhineland-Palatinate 2 3 9 14 Brandenburg 0 1 7 8 Hesse 2 3 2 7 Baden-Württemberg 3 1 0 4 Berlin 0 1 0 1 Hamburg 0 0 1 1 Saarland 1 0 0 1 Source: BMVI, BREKO Research
Broadband availability 50 Mbps in Federal States for households (fixed network) 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 48.40% 62.30% 57.40% 59.40% 57.60% 94.60% 93.60% 90.20% 82.20% 80% 78.30% 77.30% 76.40% 76.50% 75.50% 75.50% 72.10% End-2016 Mid-2015 Percentage increase TOP 3: 1. Thuringia 2. Saxony 3. Saxony-Anhalt Absolute increase TOP 3: 1. North Rhine-Westphalia 2. Baden-Württemberg 3. Bavaria Source: TÜV Rheinland, BREKO Research
Bandwidth demand 2025 Ca. 40.7 households 29.7% Top-Level demand: 1 Gbps and more downstream, 600 Mbps and more upstream Ca. 12.1 households Ca. 300 000 businesses 46.6% High-Medium demand: 500-1000 Mbps downstream, 300-600 Mbps upstream Ca. 19 households 8.7% 7.5% 7.5% Medium demand 150-500 Mbps downstream, 100-300 Mbps upstream Low-Level demand: Up to 150 Mbps downstream, up to 100 Mbps upstream No broadband / Refusal Ca. 3.5 households Ca. 2.7 businesses Ca. 3.04 households Ca. 590 000 businesses Ca. 3.06 households More than 75% of households will demand bandwidths higher than 500 Mbps by 2025 Source: WIK
Demand for high bit-rate connections increases significantly BREKO members expectations of average broadband demand by 2025 600 Download in Mbps 200 75 Currently 2020 2025 2016 2017 350 Upload in Mbps 100 20 Currently 2020 2025 2016 2017 Current sample offers on the market: EWE TEL Vereinigte Stadtwerke: 1 Gbps symmetrical Deutsche Glasfaser: 1 Gbps download RFT kabel: 400 Mbps download 1&1 Versatel: 1 Gbps symmetrical for business customers
Is Germany on the way towards the Gigabit Society? Households with available connection bandwidths 50 Mbps 80% 61.00% 63.60% 63.60% 65.00% 17.10% 26.50% 44.90% 4.40% 6.71% 7.50% 35% CATV VDSL/DSL FTTB/H Forecast 2020 Source: TÜV Rheinland, BREKO Research The forecast is based on optimal conditions, such as a funding programme focused purely on FTTB/H, wholesale access cooperation instead of overbuild, and co-investment models on the passive infrastructure level.
The current funding programme is clearly a RISK for fibre deployment 100% 90% 17% 80% 70% 60% 69% 58% 61% 88% 50% 40% 83% 30% 20% 10% 31% 42% 39% 13% 0% 5G Current funding programme Funding programme FTTB/H Wholesale coop. Deutsche Telekom Commercial Trading Platform Risk Opportunity
Challenges for BREKO network operators in 2017 1 Federal funding programme 2 4 3 Vectoring and overbuild Implementation of regulatory requirements (Broadband Cost Reduction Directive, etc.) Civil engineering costs 5 Price competition
European ranking of household penetration (FTTB/H) Latvia Sweden Lithuanua Russia Romania Norway Bulgaria Portugal Spain Finland Belarus Estonia Denmark Slovenia Slovakia Netherlands Hungary Luxembourg France EU average Macedonia Czech Republic Poland Italy Croatia Serbia Germany Austria 1.6% 9.4% 45.2% Latvia notably tops the ranking with a household penetration rate of 45.2% Russia has the highest household penetration rate for FTTB: 30% Norway has the highest household penetration rate for FTTH: 29% Germany, Austria, Serbia, Croatia and Italy have a household penetration rate for FTTB/H of less than 2% Source: FTTH Council Europe
How good is broadband? Sustainable development of broadband infrastructures Application Bandwidth Delay/ Latency Jitter Packet Loss Email 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 Quantity Maximum speed Up- & download Average speed Quality Delay/Latency Jitter Packet Loss DNS Response Time Reliability (QoS: Quality of Service) Source: WIK
The BREKO Broadband Study shows: Demand and willingness to pay are clearly present Alternative network operators shoulder more than 80% of fibre deployment Join forces: need for an infrastructure target Promote competition