Network and infrastructure expansion.
Telekom voted the Mobile Network Operator of the Year for the 14th time in a row.
Find out more
Croatia: Setting up the first mega-fast 100 gigabit, manufacturer-independent fiber-optic connection.
Find out more
Makedonski Telekom: First national company in Europe to switch entirely over to IP technology
Find out more
Full-coverage, fast, secure telecommunications networks have become a permanent fixture in our lives. They make it easier to connect our professional and private lives and let us participate in society. They also bring tremendous economic benefit by enabling new business models and public services as well as innovative forms of collaboration. That is why we continue to work hard to expand our infrastructure and increase data transmissions speeds in both our mobile communications and fixed-line networks.
According to a study conducted by the US-based phone services provider, Cisco, in 2013, the data volume in ICT networks worldwide has quadrupled in the past five years and is going to continue to grow, tripling in the next five years. Networks need to be rapidly expanded to be able to handle this volume. Telekom has been the largest investor in this area in Germany for years now and will continue to pursue its activities in the future as well. We are planning to invest EUR 6.5 billion (not including costs for upkeep) from 2014 through 2017 to expand our German fixed-line and mobile communications networks.
The main objectives of our network expansion activities are growth, efficiency and quality. With our integrated network expansion strategy (INS), we aim to provide our customers with the best coverage, while taking into account the profitability of our plans. With this strategy we also support the network expansion targets of the EU Commission and the German federal government (Digital Agenda and broadband strategy).
Four-pillar network expansion approach.
Telekom's INS in Germany is based on four pillars - LTE, fiber-optic, VDSL vectoring and hybrid access. In addition to continuing to expand our LTE mobile communications network, the short and medium-term focus of our INS includes expanding our fiber-optic lines all the way to the splitter at the curb (fiber to the curb, FTTC) in connection with VDSL vectoring. With this innovative vectoring technology, Telekom will be able to meet the broadband needs of many households. We are planning to introduce an integrated hybrid access offer in 2015, a combination of LTE and fixed-line networks, which will again increase bandwidths considerably.
We have defined two targets in implementing our INS in Germany that we plan to have achieved by 2016. We expect to be able to provide 85 percent of the population with LTE at their place of residence. We also expect to have made enough progress in expanding our fiber-optic network to be able to offer a VDSL vectoring connection with bandwidths of up to 100 Mbit/s to around 65 percent of all households.
Updating and simplifying network architecture.
Our goal is to make our networks faster and more efficient, which is why we are systematically replacing conventional equipment and simplifying our network architecture. We plan to deactivate all PSTN (public switched telephone network) analog network technology platforms that we no longer need by 2018 and switch our entire phone network to IP connections. By consolidating different services on a single IP platform, we will be able to improve the energy efficiency of our network operations considerably. By 2020 we expect to be able to reduce the CO2 emissions produced by the Telekom Deutschland fixed-line network by around 50 percent compared to 2008. By using technologies like VDSL vectoring, we will also be able to increase data transmission speeds. This technology enables transmission speeds of up to 100 Mbit/s. But vectoring requires more energy. The combination of IP technology and VDSL vectoring, however, is considerably more energy-efficient than conventional PSTN technology. We have been testing control solutions since 2011 for more energy-efficient operation of our systems when data traffic is low in order to improve the energy efficiency of VDSL vectoring. Telekom is one of the pioneers when it comes to more flexible, energy efficient network operation and is conducting different research projects in this area, like the ComGreen project.
Simplifying our network architecture plays a significant role in our network expansion strategy, because it increases bandwidth, makes it easier to develop new, innovative services quickly and makes it possible to considerably reduce energy consumption. One way we are simplifying our network architecture is by introducing a broadband network gateway. The gateway handles the functions of several conventional technological network components. By deactivating these components, we can reduce the network's energy needs and simplify network operation. Another example is combining network nodes in an IP backbone, the technical backbone for online data transmission. Among other benefits, this also reduces network energy consumption.
Outlook: New technologies for increasing bandwidth.
Our primary goal in expanding our network is to be able to meet the ever-increasing demand for large bandwidths. We expect to be able to meet the needs of 90 percent of our customers for the next ten years with VDSL vectoring alone. We also continue to work on developing new technologies with considerably higher bandwidths. And we are already installing empty pipes in the context of civil engineering works. That way we will be prepared for further technological advancements that could require us to lay new cable.
Telekom continues to work on developing new online access technologies. We want to give people high-performance access to the information and knowledge society regardless of where they live or work and enable new forms of organization and added value. With these efforts, we are contributing significantly to the development of our economy.
More and more people in today's digital society are sharing their personal experiences by sharing photos, videos, audio files and software. Uploading information to servers like the cloud is becoming increasingly important. That is why we are working on being able to provide our customers with more upload bandwidth by introducing VDSL vectoring, for example.
Our innovations give us a competitive edge and help us face the challenges involved in ever-increasing data traffic volumes. We continue to work on developing new access technologies with higher bandwidths like LTE and VDSL vectoring to help us master these challenges.
The graphic below shows the different technologies used by Telekom for fixed-line Internet access. It includes the year each technology was introduced as well as maximum upload and download speeds. The physical basis is copper or fiber-optic lines. Many times a mixture of both types is used.
Note 1: This is a simplified illustration that should not be viewed as complete.
Note 2: Maximum upload speed is indicated in front of the triangle pointing upwards and maximum download speed is indicated in front of the triangle pointing downwards; indicated in kbit/s (values rounded off).
Note 3: VDSL and VDSL vectoring refer to VDSL2 and VDSL2 vectoring.
Mobile Internet has become much faster within just a few years thanks to different access technologies. The graphic below provides an overview on the development of transmission technologies and their maximum transmission speeds since 2002.
Note: Maximum upload speed is indicated in front of the triangle pointing upwards and maximum download speed is indicated in front of the triangle pointing downwards; indicated in kbit/s (values rounded off).
Throughout the Telekom Group subsidiaries are investing in the expansion of their fixed-line networks, as the following examples from the reporting period illustrate. In Croatia T-HT Hrvatski Telekom successfully designed, tested, received regulatory approval, and started deployment of its FTTC network topology with VDSL technology in 2013. Moreover, Hrvatski Telekom won state subsidies for rural broadband development in additional two counties. The total investment in fixed broadband was €10 m. Slovak Telekom for its part launched VDSL in 300 000 households during 2013. In Greece OTE also invested heavily in the expansion of its networks and by autumn 2013 had achieved coverage of over 1 million households.
During 2013 Magyar Telekom expanded its VDSL coverage in Hungary by 106% through replacing legacy DSLAM ports with MSAN ones. By the end of the year, VDSL coverage had reached 920,000 households from a total of 3.4 million households within Magyar Telekom's reach. This represented an increase of 52% during the reporting period. The modernization process for Magyar Telekom's fixed ADSL network, which began in 2012, involves installing broadband MSAN devices with VDSL2 cards.
Fixed-line network expansion continues in Germany, too. We now cover 98.1 percent of the population with ADSL, and 69.4 percent with ADSL2+. VDSL is available to 38.9 percent of the German population.
Telekom cooperates with a number of communities as part of its activities to expand its fiber-optic broadband network. Telekom continued this collaboration in 2013 in the scope of invitations to bid for the More Broadband for Germany project. We entered into 686 cooperation projects with communities to expand the broadband infrastructure in 2013 alone, making it possible to give more than 271,000 households access to the broadband network. We are planning to team up with communities for additional projects of similar size and scope in 2014.
In addition to setting up fiber-optic connections that run all the way to the home (FTTH), we are expanding our FTTC network (fiber-optic lines up to the last network node in that household's neighborhood). FTTC enables a faster broadband connection when used in combination with VDSL vectoring. We selected a number of expansion areas in 2013. Our goal is to give as many people as possible access to broadband Internet while keeping the costs involved for us and our customers low and conserving resources. That is why we use what is referred to as "passive infrastructure" for our expansion activities whenever possible. Passive infrastructure can include pipes, fiber-optic lines or splitters from other companies (e.g., municipal utilities companies or cross-regional power supply companies) that are not in use.
Various Telekom subsidiaries throughout Europe advanced their IP migration process in the reporting period. By enabling the use of VDSL vectoring, the IP technology makes download speeds of up to 100 Mbit/s and upload speeds of up to 40 Mbit/s possible. Macedonia was the first Telekom country in Europe to have migrated all 290,000 lines to IP network technology. The process was completed at the end of 2013 in only 25 months at a cost of €13 million. The example of Macedonia provides clear proof that Deutsche Telekom's goal of transforming its networks to IP technology is entirely realistic. A countrywide campaign to market IP-based lines began in Germany in 2013 and by the beginning of 2014 over two million households had already been switched to IP-technology. In Hungary Magyar Telekom's IP migration targets include modernizing the IP network, meeting additional capacity needs, simplifying operation and introducing new services. The ultimate aim is to build a future-proof convergent fixed/mobile IP platform that also reduces energy consumption and by the end of the year, completion of these project targets rose from 22 percent to 46 percent in a year-on-year-comparison. In Poland T-Mobile increased the number of IP nodes from 191 to 920 during 2013. In the PSTN migration process in Croatia, which is part of the IP transformation, T-HT Hrvatski aims to migrate all customers to IP by the end of 2015 and shut down all 72 local exchanges. For this reason, T-HT completely shut down a local exchange in Prečko as a pilot in April 2013 and by the end of the year 10 more local exchanges had been successfully shut down. As a result, a total of 481,000 users (or 38,5 percent of the customer base) had been migrated by the end of 2013 – a key enabling factor in PSTN network decommissioning.
In Montenegro migration to IP technology is expected to be completed by 2015, whereas Slovakia will reach this goal during 2014 and Hungary in 2016.
Fiber optics is the fastest data transmission medium. For this reason, we intend to connect a large number of homes directly to our high-speed fiber-optic network (FTTH).
The number of cities with FTTH networks increased to 25 in total in 2013. Network expansion in Bad Dürrenberg, Dresden, Ilmenau, Leipzig and Magdeburg was primarily based on existing fiber-optic technology. That is why we did not require the usual threshold of 80 percent approval by home owners and 10 percent early orders. These towns and cities are currently in the FTTH network expansion or provision phases. Some newly built-up areas - in Stuttgart and Nuremberg, for example - were connected with a fiber-optic network instead of a copper network as originally planned thanks to a previous feasibility study.
A total of around 3,500 kilometers of new fiber-optic cable was laid throughout Germany in 2013 together with the set-up of 478 new distribution cabinets (the gray boxes at the roadside). We are planning to continue FTTH expansion in 2014 in additional areas. FTTH technology will also be installed for apartments of the Deutsche Annington Immobilien SE (DAIG) real estate company.
Mobile workplaces, multimedia applications and high-quality online services mean that higher bandwidths are in constant demand. The long-term success of our business is based on being able to meet this demand with new technologies like VDSL vectoring. In August 2013, the German Federal Network Agency approved network expansion of VDSL vectoring technology. We began setting up vectoring-compatible VDSL lines in November 2013. We had provided almost 100,000 households and commercial units in 12 local networks with VDSL infrastructure by early December of that same year. We also began selling the lines at that time. We will have equipped an additional 41 local networks with VDSL by April 2014 and another 3 by late May 2014. The initial maximum transmission speed in these local networks is 50 Mbit/s. With the help of vectoring technology, download speeds will be doubled to 100 Mbit/s and upload speeds quadrupled from 10 to 40 Mbit/s in the second half of the year.
We are planning to introduce the VDSL vectoring infrastructure in several local networks throughout Germany in 2014. We will be offering transmission rates of up to 100 Mbit/s to more than four million households by mid-2015. By late 2016, the total number of VDSL connections is expected to increase to 24 million.
Telekom's TeraStream pilot network in Croatia is an important step towards making 100 GBit/s Ethernet generally available – a data speed required to cope with the huge increase in network traffic and keep network costs to a minimum. Extensive pilots are required to gather the practical data needed to develop TeraStream to market maturity. The pilot in Croatia, which has been running since 2012, is delivering this kind of data. During 2013 Telekom and its partners in Croatia successfully tested a manufacturer-independent 100 GBit/s fiber-optic line between Cisco and Alcatel-Lucent routers in Split and Varazdin, a distance of 600 km. This is expected to deliver significant energy savings in the range of tens of GWh.
We are constantly expanding our network infrastructure and using it as a basis to develop new solutions for our customers. We offer a number of advantageous access options via WLAN hotspots to make it easier for our customers to access information and knowledge in many locations when they are on the go.
WLAN TO GO worldwide.
Our customers have been able to use more than 12 million hotspots worldwide run by our cooperation partner, Fon, as well as all Telekom Hotspots in Germany since June 2013. Any Telekom customer with an IP-based Internet connection and a Speedport W724V can use this service free of charge. All they have to do is make unused bandwidth from their Internet connection available to others as a hotspot via a second WLAN signal, naturally with no limitation to their own surf speeds. More than 12.6 million DSL users worldwide are already sharing their WLAN. Telekom guarantees a high level of data privacy and security with this service. The home networks stay protected and customers do not assume any liability.
Hotspot access points expanded in cities.
In our hotspot City Hamburg pilot project, Telekom has been providing WLAN coverage to heavily frequented tourist hubs in the city at no charge since September 2013, creating one large, seamless hotspot zone. We will continue to increase the number of WLAN access points we offer in Hamburg from 500 to around 700 over the course of 2014. Anyone, regardless of whether they are Telekom customers, can surf for one hour a day at no charge in the HotSpot zone at speeds of up to 50 Mbit/s. Since December 2013, people have also been able to surf up to one hour a day at no charge at 21 access points in our T-City Friedrichshafen. Telekom has been offering customers up to 30 minutes a day of free WLAN usage at more than 150 HotSpots in Bonn since January 2014.
Telekom and Deutsche Bahn also continue to expand the WLAN network at train stations where people can surf up to 30 minutes a day at no charge. We are planning to increase the number of hotspots at train stations from 115 to 120 in 2014. Our customers can also use our on-board hotspots to go online while traveling on Deutsche Bahn high-speed ICE trains along a total of 5,200 kilometers of track.
Telekom subsidiaries throughout Europe are investing considerable resources to ensure their 2G/3G networks reach as high a proportion of a country's population and territory as possible. By the end of 2013, we were providing 2G mobile communications via GSM plus EDGE to 99.8 percent of the German population and 3G mobile communications via UMTS or HSPA+ to 90 percent of the German population. At the same time COSMOTE Romania was offering seamless 2G mobile communication services to more than 99 percent of the population and 90 percent of the territory. In Albania AMC invested €2.4 m in expanding its 2G GSM network in 2013 and reached a population coverage of 97.4 percent. Moreover, in Albania AMC invested €2.5 m in 3G network expansion during the reporting period. As a result, 3G (UMTS/HSPA+) coverage rose from 93 percent to 94.5 percent of the population.
In Croatia T-HT modernized the legacy 2G network through swapping the 2G hardware and deploying 3G sites and capacity expansions to accommodate the doubling of data traffic on a year-on-year basis. T-HT also introduced 69 new 2G services and 631 new 3G services in 2013. As a result, the Croatian population's 3G coverage increased in 2013 from 68 percent to 77 percent, bringing broadband service to rural areas, roads, touristic centers and islands.
By the end of 2013 Cosmote Romania was offering 3G mobile broadband to more than 78.99 percent of the Romanian population. Download speeds of up to 43.2 Mbit/s were thus possible in 248 cities and more than 3,850 localities across the country, which adds up to a coverage of over 66.84 percent of the population. In 2013 Slovak Telekom installed HSPA+ technology in all its base transceiver stations and increased 3G/HSPA+ coverage from 70 percent to over 80 percent of the population. In Greece OTE and Cosmote had achieved almost comprehensive nationwide 3G coverage by the end of 2013. During the reporting period T-Mobile Poland increased its 3G/UMTS coverage from 78% to 92% of the population while territorial coverage rose from 50 percent to 81 percent. In 2013, T-Mobile Austria offered its customers nationwide 2G service (99 percent) and increased 3G coverage to 94 percent of the population.
All over the Telekom Group subsidiaries invested heavily in 2013 to expand their LTE networks. After achieving almost comprehensive nationwide 3G coverage and launching LTE for the first time in Greece, OTE and Cosmote were awarded the title of Internet Service Provider of the Year in April 2013. In less than a year since the network launch, COSMOTE has achieved a coverage of 55 percent of the population, with 4G becoming available in 30 cities and more than 100 districts of Greece. COSMOTE’s 4G network is already offering more than double the coverage of other networks in Greece and 4G data traffic tripled during the last six months of 2013.
In Hungary the ongoing rollout of LTE base stations by Magyar Telekom brought LTE technology to 37.99 percent of the Hungarian population coverage and 99 percent in Budapest by the end of 2013. That meant T-Mobile Hungary was ahead of the two other national mobile service providers in LTE population coverage.
In Montenegro Crnogorski Telekom launched LTE commercially on 1 November 2013. By the end of the year, 38 percent of the population was covered and €818,000 had been invested in LTE expansion. The total investment in fixed-line & broadband networks during 2013 was €2.68 m. After launching LTE in 2013, Slovak Telekom had made the network available in 31 cities in Slovakia and covered 24 percent of the population by the end of February 2014.
In the Netherlands the process of modernizing the network continued in the reporting period and mobile Internet and voice service coverage improved significantly. The final step in 2013 was the launch of LTE in November. The focus in the activation of LTE was on the four major cities of the Netherlands, Amsterdam, Rotterdam, Den Haag and Utrecht, which account for approximately 30 percent of subscriber coverage. In these four cities the LTE rollout reached its full potential with LTE1800 on more than 1,000 sites.
By the end of 2013 Cosmote Romania had expanded its LTE network to achieve 90 percent population coverage in the capital and reach another 17 cities throughout the country. During the reporting period T-Mobile USA rapidly modernized its LTE network, improved coverage, aligned spectrum bands with other key players in the U.S. market, and deployed nationwide LTE services. By October 2013 the company had exceeded its 2013 targets for LTE network coverage by delivering LTE to more than 200 million people in 254 metro areas. Additionally, the migration of MetroPCS brand legacy CDMA customers onto T-Mobile’s 4G HSPA+ and LTE network was ahead of schedule, providing faster network performance for MetroPCS customers with compatible handsets. This migration is expected to be completed by the end of 2015.
T-Mobile Macedonia customers in most of Skopje (i.e. Centar, Karpos, Aerodrom, K. Voda) and in Mavrovo now have access to the 4G network. The upgrading process is ongoing so that all T-Mobile customers in the Republic of Macedonia will enjoy 4G access in the future. In Croatia T-HT Hrvatski Telekom had deployed 36 LTE sites by the end of 2013, with LTE population coverage reaching 23 percent– up from 13 percent at the end of 2012. The additional digital dividend band spectrum acquired in November 2013 gave the company strategic resources for further expansion of broadband services throughout Croatia. T-Mobile Austria is also driving LTE expansion forward. By the end of 2013, 25 percent of the population had access to the high-speed mobile network.
In Germany, we started marketing improved features for the LTE network under the name "LTE Plus" in 2013. These are based on the CAT4 standard, which increases possible data transmission download rates from 100 to 150 Mbit/s and upload rates to up to 50 Mbit/s. Technical requirements for using LTE Plus are already available in all regions with LTE 1,800 MHz service (cities, and high-density population areas). LTE Plus was available in more than 150 cities in Germany as of late 2013. Both the network and the devices used need to support the CAT4 standard. CAT4-compatible devices have been available since October 2013.
Since 2011 we have been offering "Call & Surf via Funk", a FMS product (fixed mobile substitution). With the corresponding hardware we are able to combine fixed-line telephony and mobile data services. Additional data transfer via a faster wireless connection is of great benefit to cutomers particularly in areas were we can only provide limited Internet bandwidths via fixed-line networks.
Between 2012 and early 2014, we worked to upgrade this FMS product into a Hybrid Access. Hybrid Access automatically activates LTE (long term evolution) when the fixed-line network is used intensively. Customers benefit from the fact that the transmission speeds of both connections are combined. A new router model distributes data traffic onto the fixed-line and wireless networks. The first version of the router was completed in early 2014. We use a new central network component, HAAP (hybrid access aggregation point), available since the start of the year, to reintegrate the signals. We are planning to begin selling Hybrid Access as a standard product in 2015.
In 2013, the Telekom network was the winner in tests of German mobile networks featured in the trade journals, "connect" (issue 1/2014) and "Computer Bild" (issue 23/2013), and the Chip Online portal (issue 10/2013). "connect" readers also voted us Mobile Network Operator of the Year in Germany for the 14th time in a row (issue 7/2013).
We were named the winner in the categories of voice quality, network coverage and fast connection set-up in the "connect" network test. "connect" also praised the excellent interplay of LTE and UMTS network technology, which enables high data transmission speeds. "CHIP Online" reported similar findings regarding these aspects and came to the conclusion that our network provides the highest download and upload rates for mobile Internet. The portal also stated that mobile calls were supported by the high quality of our network. In this category, the portal found our network to be highly reliable and rated the Telekom network as the best for the fourth time in a row. The title of Best LTE Network, which Chip Online awarded for the first time this year, went to Telekom as well.
The results of the "Computer Bild" network test were determined with the help of around 83,000 readers. They used a network test app to collect more than 12 million measurement values. Results showed that our mobile network provides the fastest download rates in 50 major German cities. Some readers recorded speeds of up to three to six times higher than test competitors.