Berlin, 24.10.2022 On October 23, the news agency dpa reported on a “fire letter” from 14 federal states and the leading municipal associations to the Federal Ministry for Digital and Transport Affairs (BMDV). In the view of the associations Bitkom, BREKO and VATM, the statements made in this letter by the federal states and municipal umbrella organizations regarding the funding freeze are a slap in the face for all companies that invest in the expansion of fiber optic networks in Germany and thus make a significant contribution to the fact that Germany is now making good progress in the expansion of high-speed Internet. Instead of an emotionally driven, sham public debate, Bitkom, BREKO and VATM are calling for a fact-based discussion and solutions that focus on prioritizing municipalities with particularly poor coverage.

“Many of the claims contained in the letter are factually incorrect and contradict the facts about fiber optic expansion in Germany. In order to bring fiber optic expansion in Germany to citizens and companies as quickly as possible, we need fact-based solutions based on current developments in practice. In addition to the acceleration of approval procedures and the increased use of alternative installation methods, this also includes a federal funding programme that sensibly supplements, but does not supplant, the self-economic expansion and provides for a clear prioritization in the allocation of funding,” the associations Bitkom, BREKO and VATM commented on the fire letter from 14 federal states and the municipal umbrella organizations to the BMDV that became known over the weekend. In the opinion of the associations, there is no factual basis for the claim that the BMDV’s funding freeze would thwart gigabit expansion and call into question the achievement of the expansion targets overall, as expressed by the signatory federal states and municipal umbrella organizations in their joint letter.

Most of the fiber optic expansion is self-economic

Looking at the current status of fibre optic expansion, only 1.2 million of the FTTB/H fibre optic connections available in Germany at the end of June 2022 were implemented on the basis of the federal broadband funding program. This corresponds to less than 10 percent. If connections that were installed with the support of broadband funding programs of individual federal states are also included, the percentage increases only slightly. The vast majority of investments and thus connections have been and are being realized by the company itself, i.e. without the use of taxpayers’ money. In 2021 alone, the telecommunications industry invested around EUR 11 billion in the expansion of the digital infrastructure in Germany. In 2021, state subsidies accounted for 9% of total investments. Over the next few years, the telecommunications industry plans to invest a further EUR 50 billion in the expansion of fiber optic networks.

In addition, the implementation of publicly funded expansion projects takes three times as long on average as a comparable project implemented by the company itself. This is due to the fact that the implementation of subsidized projects is naturally associated with many bureaucratic hurdles and a number of legal requirements must be complied with. State broadband funding programs do not accelerate the expansion, they make it possible in areas that are particularly difficult to develop and therefore uneconomical.

Funding freeze unavoidable in the view of Bitkom, BREKO and VATM

The associations Bitkom, BREKO and VATM consider the funding freeze to be unavoidable. They explain: “State ‘funding pots’ are always finite. If the budget funds that were earmarked for broadband funding in 2022 are exhausted, no more funds can be made available for new applications in the corresponding financial year. The Federal Ministry for Digital and Transport has therefore acted correctly and responsibly with the temporary stop.” The associations go on to explain: “Unfortunately, the funding freeze impressively shows that a large number of the federal states and in particular the German County Association are unfortunately not implementing the ‘natural prioritization’ they promised to avoid a ‘flood of funding’ in practice. This also explains why new funding applications totaling 500 million were submitted to the BMDV within just one week.”

Prioritization of municipalities in need of support required

The current development with a very large number of funding applications submitted to the BMDV within a very short period of time clearly underlines the fact that we need clear rules and effective prioritization for the distribution of funding for fibre optic expansion to ensure that particularly disadvantaged areas are supported and that taxpayers’ money is used in a targeted manner. Speed before the need for funding must not be the guiding principle of the funding program.

In view of the funding that will be available from 2023, a run on the available funding must be prevented. BREKO, Bitkom and VATM explain how this can be achieved: “Since the federal states are obviously not in a position to coordinate the prioritization of funding applications, we expect the BMDV to define clear criteria for prioritization in advance to ensure that funding is only used in areas where the coverage situation is particularly poor – i.e. in so-called white and light grey areas with less than 100 Mbit/s and where there is no potential for self-business expansion. Within these areas, those with the lowest chance of a self-service expansion must benefit first. The potential analysis commissioned by the BMDV, which is intended to determine for all municipalities in Germany whether there is potential for a self-sufficient fiber optic expansion, is a central tool for targeting the funding available for 2023 to areas in need of support. After the experiences of the last few days and weeks, the BMDV would be well advised to make the results of the potential analysis a binding basis for funding applications.”

Limitation of the funding volume

The statement by the federal states that there are no reliable financial commitments from the federal government for gigabit funding for 2023 is also factually incorrect. The draft federal budget for 2023 provides for funding of just under EUR 1.5 billion. This will be supplemented by co-financing from the federal states and local authorities, resulting in a total funding volume of around EUR 3 billion. As a telecommunications industry, we consider a total funding volume of a maximum of EUR 2 billion to be appropriate, because only by limiting the funding can we prevent the already scarce construction and planning capacities from being tied up in subsidized projects and thus no longer being available for self-service expansion.

Press contacts

Bitkom

Nina Paulsen

Press spokeswoman

+49 30 27576-168

n.paulsen@bitkom.org

BREKO

Annika Sasse-Röth

Head of Press and Public Relations

+49 176 30020906

sasse@brekoverband.de

VATM

Corinna Keim

Head of Communications and Press

0221 37677-23

ck@vatm.de