New Telecommunications Act sets the course for Germany’s digital future

BREKO sees useful impetus but also a clear need for improvement for a rapid fibre-optic roll-out
Berlin/Bonn, 6 November 2020 The Federal Ministry for Economic Affairs and Energy (BMWi) and the Federal Ministry of Transport and Digital Infrastructure (BMVI) today published a so-called “discussion draft” for the “Telecommunications Modernization Act” (TKMoG). The law is intended to set the course for the digital infrastructure of the future and thus for the further expansion of fiber optics in Germany. In the view of the German Broadband Association (BREKO), some of the planned regulations provide the right impetus. However, the design of the “legal entitlement to fast Internet” and the apportionment of the costs of broadband connections require a fundamental revision.
BREKO President Norbert Westfal emphasizes the importance of the law for the further expansion of the digital infrastructure in Germany: “In a world in which digital technologies are developing as rapidly as they are today, we need a law that creates the right conditions for the digital transformation. The basis for the challenges of digitalization are future-proof and sustainable fibre optic networks right into buildings and homes. Whether for working from home, digital administration, Industry 4.0 or as an indispensable basis for the 5G mobile network – we need the transmission speed and, above all, the quality of fiber optic networks for the digital transformation. When designing the legal framework, it is therefore important to focus on creating targeted incentives for the nationwide expansion of fiber optics. This will only succeed if we focus on competition and diversity more than ever before. Today, Deutsche Telekom’s competitors are the main drivers of fiber optic expansion in Germany. They will continue to make a significant contribution to ensuring that Germany does not fall behind in the future. Our companies are aware of this responsibility.”
“Right to fast Internet” – Proposed approach delays fiber optic expansion
BREKO still sees a considerable need for adjustment in the design of the so-called “legally secured right to fast Internet” already enshrined in the coalition agreement between the CDU/CSU and SPD. “We did not agree with the idea of creating a legal entitlement from the outset. The announcement and the subsequent discussion about the design have led to uncertainty among the expanding companies,” says Albers.
Background: The draft law provides for a solution whereby the Federal Network Agency can oblige individual telecommunications providers to provide citizens and companies with a particularly poor internet supply with a connection with a minimum standard of bandwidth upon request (“universal service”). However, the universal service may only be legally based on the bandwidths already used by the vast majority of the population. This leads to intermediate steps instead of a direct expansion of fiber optics. The connection is to be financed via a levy from the network operators not involved in the expansion in the area concerned. For BREKO Managing Director Stephan Albers, this is the wrong approach: “Our common goal is to advance the expansion of fiber optics for people and companies. However, we will not be able to achieve this with the proposed solution. In areas where the coverage of citizens and companies is particularly poor (“white spots”) and expansion is not profitable for companies, we need targeted state funding measures in addition to the self-business expansion to bring fiber optics to these areas,” emphasizes Albers.
“Relying on levy-financed interim solutions instead of expansion incentives will slow down the expansion of fiber optics in Germany. Only then – and this is also stated in the EU Directive, which forms the basis for the revision of the Telecommunications Act – if all other available instruments promise no prospect of success, may universal service be used as a last resort, so to speak,” explains Albers. Accordingly, this may only be used if neither existing infrastructures can guarantee a minimum level of coverage, nor if there is any prospect of this being the case in future as a result of self-sufficient or state-subsidized expansion. The requirement should also be designed to be technology-neutral, so that mobile or satellite solutions can also be considered.
Paradigm shift for fiber optic regulation
In the area of fiber optic network regulation, the draft law provides for a paradigm shift compared to the old “copper world”. Instead of strict ex ante regulation, a significantly reduced intensity of regulation is envisaged for the cooperative expansion of fiber optic networks. In order to set the right incentives for fiber optic expansion in a competitive environment, BREKO has long advocated the priority of freely negotiated and market-accepted network access (open access) with the regulatory authority as a neutral dispute resolution body. “We have a completely new market situation in the expansion of fiber optics, a new world. The “Regulation 2.0″ planned in the draft law fits in with this. It is important that there are fair and clear regulations for all market participants and that the Federal Network Agency can intervene at any time in the event of infringements. In the further legislative process, we will pay very close attention to ensuring that this is adequately guaranteed in the legal regulation and that there is no risk of abuse,” summarizes BREKO President Westfal.
Modernize apportionability – driving force for fiber optic expansion in apartment buildings
The Telecommunications Modernization Act provides for an amendment to the Operating Costs Ordinance and a deletion of apportionability as part of the amendment to the law. From BREKO’s point of view, the deletion without replacement means that an important instrument for bundling forces for digitization is being wasted. The BREKO is therefore campaigning for a modernization of the regulation on apportionability.
“There is great potential in apportionability to give a motivational boost to fiber optic expansion in cities, where we typically have multi-family housing development. With a forward-looking design, the ability to pay-as-you-go is not a relic of the past, but can become a driver for fibre expansion and thus for digitization,” explains BREKO Managing Director Dr. Stephan Albers. “In short: we need ‘pay-as-you-go 2.0’. The revision of the Telecommunications Act offers the opportunity to set the right course and to further develop the regulation on apportionability in the interests of tenants as well as homeowners and housing associations.”
This is what a modernized “apportionability 2.0” could look like from BREKO’s point of view:

The possibility of billing the costs of the broadband connection via the operating costs will in future be linked to new investments in fiber optic networks to the buildings and apartments. Companies that connect buildings, in particular apartment buildings, with real fiber optic connections can continue to charge the costs for this connection via the operating costs.
It should not be possible to agree the allocation “indefinitely”, but for a period that takes sufficient account of the value of the investment in the new fiber optic infrastructure.
In addition, in order to create incentives for cooperation and the greatest possible diversity of offerings, companies that enable other providers to access customers on their network by granting open access should be able to benefit from the possibility of apportionment for longer.

With “Apportionability 2.0”, tenants could receive a future-proof and sustainable fiber optic connection at an attractive price. This would be significantly lower than the costs that would be incurred if collective collection were to be discontinued when booking individual connections. In addition, opening up the networks would provide tenants with a much more comprehensive range of services. Today, cable network operators usually only offer their own or selected TV services and often do not transport third-party TV services, for example. With the open access concept preferred by BREKO, on the other hand, tenants would be able to choose from a comprehensive range of services from a large number of providers. Overall, this would lead to significantly more competition on the provider market, as there would not only be a TV product from one cable network operator to choose from, but also offers from other TV service providers.
For building owners and housing associations who want to make their properties fit for the future with a high-performance and future-proof infrastructure and thus attractive for private and commercial tenants, there is no way around fiber optics. For them, this would result in a significant increase in the value of their properties. This would make their own efforts to modernize the buildings obsolete.
Right of way for fiber optic expansion – speeding up approval procedures
In terms of the administrative procedures that must be completed before the start of an expansion project, the draft bill provides for a change in the approval periods. In the past, companies often had to wait a very long time for approval from the authority responsible for road construction – usually the local authority or district – but in future the authority responsible for processing the application is to take action within one month of the application being submitted. If the authority raises no specific objections, the application is considered complete and the processing period of three months begins. As before, the approval for the expansion must then be completed within this period.
In addition to the simplified deadline regulation, the so-called “one-stop store principle”, which BREKO has been calling for for some time, is to be implemented: This provides for all necessary statutory approvals for fiber optic expansion to be issued jointly, which in turn simplifies the application process and leads to greater planning certainty for the expanding companies. “The administrative procedures must be significantly simplified and shortened. Reducing bureaucracy is not an end in itself, but a key component in accelerating the expansion overall,” emphasizes Albers. “The motto must be: less bureaucracy for more fiber optics,” he continues.
In addition to these positive impulses, two other aspects are particularly important for BREKO Managing Director Stephan Albers: “Digital administration, which is also the focus of the German government’s current economic stimulus package, must finally become a reality. Applications and approvals by fax or post are simply no longer up to date. Local administrations also need additional staff to implement local digitalization projects that go beyond the expansion of fibre optics. Every euro spent on this is money well spent.”