Germany changes funding policy, hoping to close connectivity gap

Germany will change its funding policy to expand digital infrastructure and ensure fibre-optic connections reach the most underserved communities, according to the ‘Gigabit Funding 2.0’ plan presented by the Digital and Transport Ministry. 

Read the original German article here.

The way Germany promotes its broadband expansion will now focus on underserved communities without interfering with the progress of digital connectivity in the private sector, according to the Digital Ministry’s new plan, announced on Monday (3 April).

“Our new gigabit funding specifically directs funds to the regions where the need is greatest. The dynamics in the market are great, the industry’s willingness to invest is high. And we are supplementing precisely where there is no private sector expansion,” explained Digital and Transport Minister Volker Wissing.

However, the business community gave the plan a cold reception, fearing that the long-term lease envisaged by the ministry’s plans for ‘Gigabit Funding 2.0’ would reduce the incentive to take part in the roll-out of fibre-optic networks.

If the roll-out loses momentum, this could jeopardise the strategy’s goal of having every household, whether in cities or rural areas, covered by fibre optics and equipped with the latest mobile communications technology by 2030, set as part of the EU Digital Decade targets.

“The planned funding guideline thus also does not create the urgently needed planning security for the rapid self-supported expansion of fibre-optic networks by 2030,” said Jürgen Grützner, CEO of VATM, a German telecommunications association.

New funding policy also affects ownership 

The new funding concept is also intended to comply with the Telecommunications Act (TKG), a minimum level of internet coverage and the legal right to internet access.

In the past, municipalities took part in the expansion in places where it was difficult for municipal companies. The municipalities cooperated with the companies that took over the operation and thus gave the companies the opportunity, after years of leasing, to buy up the networks and thus integrate them into the private sector.

But under the ministry’s new funding plan, networks will remain in the hands of municipalities, which would be a disadvantage for the entire roll-out, according to Grützner.

As companies would no longer have the opportunity to buy up networks, it is feared that they may no longer be willing to invest in the expansion.

“It will not be possible to find investors for Germany who would be willing to organise the operation of these small, very regional grids not only for the foreseeable future, but permanently, and to pay high rents on a permanent basis,” Grützner argued.

“This thwarts the goal of the sensible interconnection of the grids,” he added.

‘Priority lanes’ for underserved areas

The new funding concept also includes a so-called ‘fast lane’, prioritising underserved locations to be supplied with fibre as quickly and efficiently as possible.

But what about areas that do not fall into the ‘fast lane’ criterion but still need support?

“It would have been at least as important, however, to be able to connect the few houses in need of support immediately in one go in places where the majority of the expansion is self-supported,” Grützner explained.

Germany lagging behind

In terms of expanding the fibre optic network, Germany lags behind other countries.

It ranked 35th among 38 countries in terms of how many fibre-optic connections compared to fixed broadband ones it has installed, according to OECD statistics from June 2022.

With 8.11% of fibre-optic coverage, only Austria, Belgium, and Greece performed worse. By contrast, South Korea, Japan, and Spain already have ten times as many fibre-optic connections.

Policymakers hope the ministry’s new push will help Germany close the gap with other EU countries.

“Promoting alternative and faster installation methods will additionally accelerate the expansion. Through these numerous measures, Germany will catch up,” Johannes Schätzl, spokesperson for digital policy of the main governing party, the SPD, told EURACTIV.

However, the business community believes that the subsidies of around €3 billion are too high and point to the risk that expansion could be slowed down.

“If too much state funding competes with private funding, this leads to already scarce construction and planning capacities being tied up in subsidised projects and thus no longer being available for faster self-supported expansion,” said Nick Kriegeskotte from the digital association Bitkom.

[Edited by Luca Bertuzzi/Zoran Radosavljevic]


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