Dispute: Empty pipes: Vodafone wants to rent space from Telekom

In the dispute over underground pipes for fiber optic internet, the Federal Network Agency is facing a groundbreaking decision.

Dispute: Empty pipes: Vodafone wants to rent space from Telekom

In the dispute over underground pipes for fiber optic internet, the Federal Network Agency is facing a groundbreaking decision. “We will publish a draft decision shortly,” said the Federal Network Agency upon request. It's about Telekom's so-called empty pipes, in which there is still space for the competition's cables. Telekom has to let competitors in, but in Vodafone's opinion it is asking for too much money. These are “lunar prices,” says the technical director of Vodafone Germany, Tanja Richter. Telekom, on the other hand, considers it to be in line with the market. The Federal Network Agency now wants to set the prices at which Telekom competitors can lay their optical fibers in plastic pipes.

The fiber optic expansion has been going on in Germany for several years, with the fibers being laid right into the home (Fiber to the Home; FTTH). Fiber optic is considered the best technology for meeting the growing data needs in the digital age. Telephone lines (DSL/VDSL) are being phased out. Television cables are also not expected to have a future.

Telekom and Vodafone took different paths when it came to landline internet for years: Telekom relied on VDSL and Vodafone relied on television cable. They are now both heading towards fiber optics, but at different paces: Telekom was ahead of the game, while Vodafone got into the swing of things late. By the end of 2023, the Magenta Group made fiber optics available to 7.9 million households. The Vodafone fiber optic subsidiary OXG only started in autumn 2023 - no household has yet been finally connected, the target is seven million. Numerous other companies are also involved in the deal, such as the Telefónica subsidiary Our Green Fiber Optic (UGG).

During the expansion, the streets have to be torn up in order to lay cables to the houses - a complex task that can also be annoying for residents. It makes sense that the construction work only takes place once, especially since most pipes have enough space for cables from several companies.

Hundreds of thousands of kilometers of fiber optics laid

Deutsche Telekom in particular could be considered as a lessor of empty pipe capacities. According to its own information, the group has laid around 400,000 kilometers of fiber optics within nine years. "We have spent billions to speed up the issue of fiber optics, and Vodafone has sat back and invested hardly anything in its network," says Wolfgang Kopf, head of Telekom's regulatory department. "And now they want to get into our pipes at a ridiculous price and thus partially devalue our investments." Telekom is not Caritas for mismanagement at Vodafone.

Vodafone insists that Telekom should only charge a moderate rent. With a view to the network agency's imminent decision, Vodafone manager Richter says: "We need the right guardrails so that Germany can move from mediocre to the top group when it comes to fiber optic expansion." According to Richter's account, Telekom is demanding a rent of just under five euros per year and per meter for a certain category of pipe, which is twelve times the usual price for empty pipe usage in other EU countries.

This example calculation, however, causes Telekom to shake its head. “The price must match the respective investments,” says Telekom representative Kopf. The comparison with an EU state like Spain is extremely flawed, after all, the circumstances there are completely different. Installing “Fiber to the Home” (FTTH) in a household in Germany costs between 1,000 and 1,500 euros, but in Spain it only costs 200 to 400 euros.

Is Telekom slowing down fiber optic expansion?

Vodafone complains that high empty pipe rental prices would have a negative impact on the overall fiber optic expansion in Germany. If the Federal Network Agency were to follow Telekom's stance and set high prices, then that would only benefit the Bonn-based company, says Vodafone manager Richter. “But that is damaging to Digital Germany because it slows down the construction of fiber optics and inconveniences citizens with sometimes unnecessary construction sites on sidewalks and streets.”

The logic behind such an argument: Because Telekom demands too much money, competitors would have to dig and lay their own pipes, even though there are already empty Telekom pipes in the street. Then the excavators were missing elsewhere, where no fiber optic landline network is yet available and it is actually needed much more urgently.

Other companies are holding back

It is noticeable that other companies that are also involved in fiber optic expansion do not want to join in with Vodafone's criticism. The industry association VATM, in which Telekom competitors have come together, argues in a similar way to Vodafone and also expresses sharp criticism of Telekom. But the opinion is by no means uniform among Magenta's competitors. The issue has been “exaggerated” by Vodafone, according to an industry representative who did not want to be named. A representative from another company expressed caution.

This attitude can be explained by the fact that a low access price would initially be good for Vodafone, but in the longer term it could be bad for other companies that have empty pipes themselves and would have to fear for their value: In a next step, not only Telekom, but in general the industry should be obliged to open its pipes. Then investments would no longer be worthwhile if the competitor can rent space cheaply, says one of the company representatives. "Nobody would want to lay pipes anymore - low rental prices would prove a disservice to the fiber optic expansion in Germany."