Network & infrastructure expansion.

  • Telekom recognized as Mobile Network Operator of the Year for the 13th time in a row.
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Digital networking is one of the main trends in the modern information society. Full broadband coverage is becoming a key requirement for participating in society. That is why we focus our efforts on using new technologies to connect areas that previously had no coverage as part of the CR action area "Connect the unconnected."

Today, as a result of high-performance standards, top data transmission speeds are provided even in remote areas:

The network infrastructure is at the heart of our business. As Germany's largest provider of telecommunications services, Telekom sets up and operates networks that meet the high demands of the gigabit society. Telekom continues to rely on a combination of wireless and fixed-line technologies, with an emphasis on the high-speed LTE mobile communications network and the new VDSL  vectoring technology. The Group's extensive, integrated network strategy, which was adopted in 2012, describes the steps that Telekom is planning to take in the medium term along the road to the network of the future. The main objectives are growth, efficiency and quality.

Network expansion in line with political goals.

Telekom supports the EU Commission and the German government's network expansion goals. We plan to provide high-speed Internet access to as many households as possible mainly in rural areas of Germany that do not yet have coverage. In this context we use VDSL as an important starting point for even more convenient ICT solutions in the future.

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The European Commission passed a Digital Agenda in May 2010 as part of its Europe 2020 strategy in order to create the necessary conditions for economic growth in Europe. This agenda specifies that all Europeans will be able to surf online at speeds of at least 30 Mbit/s by the year 2020. Connections enabling at least 100 Mbit/s should be available to half of all European households by that year

In line with the EU's digital agenda, the German government decided to pursue a similar goal with its broadband strategy, which it passed in 2009. It requires network access with speeds of at least 50 Mbit/s for all households by 2014, giving priority to infrastructure expansion in rural areas. Deutsche Telekom is one of the most important partners of the broadband strategy and is making a significant contribution in helping the German government achieve its broadband goals.

Network expansion strategy relies on broadband investments.

Providing high bandwidths is a key component of Telekom's network expansion strategy. We once again made extensive investments in this area in 2012, including investments in fiber-optic networks, new mobile communications technologies and IT processes. Telekom in Germany has been the largest investor for years now when it comes to providing broadband access. We purchased LTE frequencies in 2010, laying the foundation for further investment in fast, mobile Internet. These frequencies, which used to be used for television and radio broadcasting, are now available for providing full broadband coverage.

In the fixed network, the fastest transmission speeds can be achieved with fiber-to-the-home (FTTH) technology. However, laying the cables and providing FTTH to each household can be very costly because of the required civil engineering works, especially in rural areas. Costs can be reduced with fiber-to-the-curb (FTTC) technology where fiber-optic systems are only installed up to the cable distribution boxes. With vectoring millions of household in Germany can get high-performing broadband connections without FTTH expansion and at a reasonable costs—provided that the German Federal Network Agency approves the use of vectoring technology. The innovative hybrid technology, which we are planning to introduce, will transmit data traffic via vectoring and LTE in the future, combining the advantages of both networks. From 2014 this will enable download speeds of up to 200 Mbit/s and upload speeds of up to 90 Mbit/s.

Telekom is planning to invest around six billion euros in the fiber-optic network by 2020 to support its network expansion strategy. It is also planning to expand its fiber-optic network to cover around 65 percent of households by 2016. Up to 85 percent of the German population should have access to the new LTE wireless technology by 2016, with data transmission rates of up to 150 megabits per second (Mbit/s).

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The Group will be able to tap into significant growth opportunities with its network expansion strategy. Our business model relies on the following key elements:

1. The network factory.
Our business is based on the network infrastructure and this will remain so. To update the infrastructure, we are planning to change entirely over to all-IP  technology in the next few years. Fixed and mobile networks will be fully integrated. The aim will not only be to provide high bandwidths but also top quality and the best possible service experience to our customers.

2. Toolkit of standard services.
The second component consists of modern, highly efficient and standardized IT systems. Telekom currently operates thousands of IT systems. The plan is to reduce, simplify and update these systems. This will save money while improving the quality, flexibility and speed of our services.

3. Content and services for customers.
The third component of the strategy are enabling services that make it possible for providers in areas such as healthcare, energy and media distribution to expand their services and tailor them more to their customers' needs with the help of ICT. This way we help our customers grow by making their services more efficient and focusing on their customers' needs.

We are combining our network and IT capabilities to create a toolkit of standard services. This applies to our own products as well as to the option of integrating our services into third-party services, such as those provided by companies and software developers, by using standardized interfaces. This toolkit will be a springboard for new business models and sales opportunities. With it, we will enable our partners to develop innovative solutions while participating in the process at the same time.

Telekom helps business customers bring their content and services to the customer. For example, Telekom provides its partners with state-of-the-art billing models, installs modern access management systems and guarantees high service quality.

 

More Broadband for Germany project.

Telekom also continued its cooperation with local governments in 2012, responding to calls to bid in the context of the More Broadband for Germany project. In those areas where broadband expansion may not be economically feasible for us as a company, support from public funding is a viable option. For example, communities could provide existing conduits that are not in use, perform the civil engineering work required or make a financial contribution. More than 4,000 communities and over one million households have been receiving broadband infrastructure through these means since 2008. We entered into 830 cooperation projects with communities to expand the broadband infrastructure in 2012 alone, making it possible to give more than 280,000 households access to the broadband network. We are planning to team up with communities for additional projects of similar size and scope in 2013. Since 2011, Telekom has also been building up VDSL  technology with bandwidths of up to 50 Mbit/s in rural areas on the basis of such cooperation projects.

Plans to accelerate broadband network expansion.
In view of the planned reorientation of the EU's regulatory policies, which was announced in July 2012, Telekom is considering pushing broadband expansion in Germany in the next few years. By increasingly extending fiber-optic systems to the vicinity of our customers and using vectoring as a new transmission technology, we will be able to provide up to 24 million households (out of a total of 40 million) with state-of-the-art high-speed connections. However, we are still waiting for the German Federal Network Agency to approve use of this technology. We are also planning to equip the entire mobile network with LTE by 2015 so that we can provide even higher bandwidths throughout Germany. This will enable us to create an integrated infrastructure that provides large bandwidths for both fixed-line and mobile services.

Last year's CR report

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The backbone of high-speed broadband Internet is a fiber-optic network. Expanding the fiber-optic infrastructure to achieve full coverage goes hand in hand with tremendous financial expense. Experts estimate EUR 70 to 80 billion to provide full fiber-optic coverage in Germany alone. The more remote the communities, the higher the costs. Reasons for this include the necessary civil engineering works, which can cost up to EUR 70,000 per kilometer.

Blanket coverage calls for cooperation.
Telekom will not be able to afford to finance blanket coverage under financially viable conditions by itself. Even in Germany, where we have a share of around fifty percent of the broadband market, we will only be able to manage this task in collaboration with our competitors. That is why we encourage German and European government offices to provide sufficient incentive to secure the necessary industry-wide participation of all ICT network operators.

Using synergy effects for FTTH expansion.

Costs reduction potential and synergy effects can be realized and risks can be dispersed when installing new fiber optic networks based on network expansion collaborations. That is why we are open to collaboration and are reviewing all forms of cooperation in both the fixed-line and mobile communications areas.

For the first time, Telekom is working with energy service providers to set up a fiber-optic network in a city. In February 2012, we signed a cooperation agreement with network provider "eins," formerly the municipal utilities company in Chemnitz, Germany. "eins" is building a passive fiber-optic access network in Chemnitz in several stages. Telekom Deutschland leases the network, adds the system technology necessary for active operation and uses the network to offer users its double and triple-play products. The fiber-optic network project in Chemnitz is Telekom's largest project in all of Germany. Some 20,000 households in the city located in Saxony were provided with the new broadband connections between fall 2012 and January 2013. The plan is to add another 2,000 buildings with another 20,000 households by late 2013. By the end of 2014, the total figure should increase to 60,000. Around 1,000 kilometers of new cable will be laid over the course of this project.

Last year's CR report

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The range of possible collaborations covers options such as marketing collaboration, renting complete, passive access networks and joint ventures (joint regional companies founded with local utilities companies, special purpose associations or other partners). Telekom also launched the More Fiber  Optics for Germany initiative. The goal is to further local fiber optic expansion in collaboration with communities and local utilities companies using a standardized expansion and business model.

Agreements with local competitors regarding mutual guarantee of network access (open access) play a role here as well, because such agreements can prevent double investment. We also offer special terms and conditions packages to enable pure service providers (resellers that do not have their own network) to bear part of the expansion costs and risks involved in new networks.

Migration to All-IP.

We are planning to switch our entire network over to an all-IP  infrastructure in the next few years. With this step, fixed network and mobile communications will be integrated end-to-end in a next generation network based on the Internet Protocol (IP ). Numerous IT systems will be simplified and updated for this purpose.

Many people already use IP-based solutions to organize their day-to-day lives conveniently and individually. We are constantly improving our offer of fast mobile communications and fixed-line connections to lay the foundation for this change. The voice and data service platforms, which are currently separate, will be integrated onto a standardized platform over the course of the all-IP  migration. This should help reduce energy consumption considerably.

The all-IP  migration and the demand for increasingly faster bandwidths require the provision of new, efficient technologies for both data transport and individual network access. That is why we are planning to further expand our fixed-line network in 2013 on the basis of vectoring technology.

Expansion of All-IP network technology.

Makedonski Telekom (T-Home) continued to expand its IP-based network during the reporting period. With a total investment volume of EUR 14 million, the network upgrade is due to be completed by the end of 2013. Within the first nine months of the project 100,000 customers were migrated to the IP  network. They can now enjoy the benefits offered by the new IP-based multimedia platform. By replacing the existing digital telephone exchanges, the company is simplifying the everyday lives of its customers through the high quality of its new, converged multimedia services. Besides, the new IP-based technology will significantly reduce the network's overall energy consumption once the old digital equipment has been switched off. Thanks to the company's investment in this new technology, Macedonia will be the first country in Southeast Europe to have a fully IP-based network.

Telekom testing TeraStream in Croatia.

In a pilot running in the Zagreb region of Croatia Deutsche Telekom is testing its new TeraStream architecture. TeraStream is a network technology based on a cloud-based IP  architecture. Hrvatski Telekom is thus taking on a pioneering role within the Deutsche Telekom Group. The new network technology significantly reduces the IT complexity of existing networks, with the cloud concept greatly facilitating network administration and management. Deutsche Telekom has developed TeraStream to deal with the rapidly increasing volume of data traffic—now and in the future.

Award for mobile communications network in Germany.

In the network test carried out by the German telecommunications magazine "connect" in 2012 we held top spots in both Germany and Austria. In Austria we came first in the category of voice quality and were given the overall rating of "very good." German "connect" readers felt the same, rating Telekom the best and most reliable provider of both telephony and mobile Internet. In another network test, this time carried out by the "CHIP Online" portal, our mobile network in Germany came top for the third time in a row.

Mobile Network Operator of the Year for the thirteenth time.

In Germany, we were voted "Mobile Network Operator of the Year" for the thirteenth time running by readers of the trade magazine "connect". We were also named best mobile network operator by readers in Austria.