Timotheus Höttges’s speech at the Group’s annual Shareholders Meeting saw the Group Chief Executive take another clear swipe at key rival Vodafone over its recent attempts to co-opt the term “Gigabit Society” as a marketing tool for its next-generation broadband services – and a stick with which to beat Deutsche Telekom (DT) over its ongoing prioritisation of copper-based technologies, rather than fibre-to-the-premises (FTTP).

The event – held during late-May 2016, in its traditional venue of Cologne’s Lanxess Arena – saw Höttges declare that “in 2010, my predecessor René Obermann was the first person in Germany to refer to a ‘Gigabit Society’. Now everyone is talking about it. But Deutsche Telekom was the only company to act on these words in the past six years”.

He also told shareholders that network buildout “will continue to be the basis for everything we do. It has top priority for me”.

“ Deutsche Telekom has delivered the best network for many years. Our core product is timeless. But we go on re-inventing it. And we plan the network in such a way that it is the answer to the digital future. ” – Höttges.

Fighting talk

The Chief Executive – who had also taken a thinly veiled swipe at Vodafone after early-May 2016’s blow of seeing the European Commission (EC) launch a probe into Telekom Deutschland’s (TDE) vectoring expansion plan (Deutsche Telekomwatch, #52) – accused the operator’s competitors of doing “nothing but moan and groan”.

“ Sometimes they complain that the prices they pay for our network are too high. Sometimes they say that we have the wrong technology. Then build-out is too slow, they claim. But as soon as we expand it, these critics are only too happy to use our network. They market our products under their name. It would be better for Germany if others also contributed to expansion. Moaning won’t build a network. Better to invest than criticise. Then we would have real infrastructure competition. ” – Höttges.

Colao finds a Höttges pressure point

Höttges tends to show a lot of passion in his public appearances, which is refreshing and laudable – but in this case he could be seen as having given away more than necessary, and demonstrated to competitors that they are scoring a hit on DT’s leadership.

His claims regarding Obermann are accurate – DT’s Annual Report for FY10 (January 2010-December 2010) contained numerous references to a “Gigabit Society”. In the report’s Letter to Shareholders, for example, Obermann told investors the Group was “laying the foundations for economic success in the so-called Gigabit Society” through the-then Fix Transform Innovate turnaround programme.

Nonetheless, the term is not something DT has pushed heavily in the interim, and it looks like the Group has lost an opportunity for “ownership” of a handle clearly now highly valued by industry peers.

At Mobile World Congress in February 2016, Vittorio Colao, Höttges’ counterpart at Vodafone Group, built his keynote presentation around the vision of a Gigabit Society delivered by next-generation wireless and wireline technologies such as 5G, FTTP, and new iterations of DOCSIS, as well as software-based reshaping of underlying infrastructure. Since late-2015, the UK-based group has also submitted applications to trademark the term Gigabit Society – as well as a series of related brands such as “Giga Business”, “GigaMobility”, “GigaTV”, “Vodafone Giga”, and “Vodafone Gigabit”. Most of these applications have been made by Vodafone Germany, in Germany.

More broadly, Vodafone has evidently in recent months re-focused its strategic antennae onto incumbent rivals such as DT, BT Group, and Telecom Italia – switching tack from a previous approach more geared towards squeezing smaller market players. Colao has repeatedly warned of “re-monopolisation” by national telcos in Europe, and welcomed the EC’s decision to review TDE’s plan, stressing vectoring as merely an “intermediate” technology.

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Picking your battles

While amusing, and quite petty, the spat with Colao is clearly significant for DT – whose strategy in Germany, and elsewhere, rests on avoiding being pinned with the label of a legacy-encumbered laggard and roadblock to progress, and thus being dragged into a ‘speed war’ on broadband rollout. If this were to take place, it would be highly disruptive to DT’s already capital expenditure-heavy financial plan, with knock-on impact on operations beyond Germany.

DT has so far resisted being dragged into a speed race with German rivals, avoiding the temptation to lay down a home-market fibre-to-the-premises target in its latest Strategy Update – and instead focusing on vectoring as its wireline broadband standard bearer for at least the period to FY18 (Deutsche Telekomwatch, #41 and see table).

Nonetheless, TDE’s top “100Mbps” broadband service is already well behind those of key cableco rivals such as Vodafone’s Kabel Deutschland and Liberty Global’s Unitymedia (both of which provide “200Mbps” services), and Tele Columbus (“400Mbps”) – and if the NatCo’s broadband subscriber growth were to take a dip, pressure could build for a stronger (and costlier) fibre investment plan. With net debt having risen by more than EUR5bn in FY15 (Deutsche Telekomwatch, #50), This could, in turn, tip the balance on outgoing M&A moves that have been considered recently by Group leadership, such as 2015’s attempt to sell T-Mobile Netherlands, and the evolving idea of a European tower spin-off (Deutsche Telekomwatch, #51).

Höttges’ Shareholders Meeting comments came shortly before he joined a delegation of the national telco-led European Telecommunications Network Operators Association (ETNO) lobby group to Brussels, to champion “pro-investment” regulation. Meeting with senior EC figures including Günther Oettinger, Commissioner for the Digital Economy and Society, and Margrethe Vestager, Commissioner for Competition, the delegation – representing operators such as BT Group, DT, KPN, Orange, and Telekom Austria – provided input into the EC’s upcoming Telecoms Framework Review. In a statement, ETNO argued that both consumers and the digital ecosystem would benefit from more telecom innovation, but, if this were to happen, “the current sector-specific approach to service regulation should be abandoned to the benefit of a horizontal, principle-based one”. The lobby group noted in a recent report that since internet-based services had become “substitutes” for more traditional communication, the “regulatory framework needs to assess whether to maintain the complex and fragmented set of rules applicable to telco operators”

Image: © Bloomberg.

Table of Contents

3 Executive brief
5 Group
6 Strategy
9 M&A
9 Legal and regulatory
10 People
12 Network
12 Partnerships
14 Society
15 Alex Puregger on…
18 Germany
19 Strategy
20 Network
22 Europe
23 Region
23 Czech Republic
24 Greece
26 Netherlands
26 Poland
29 Systems Solutions
30 Partnerships
32 Supply chain
34 USA
35 Legal and regulatory
35 Network
38 Products and services
45 Supply chain
48 Further reading
51 Index

Index

A

Africa
– South Africa 13
Amazon.com Inc. 19
American Tower Corp. 45, 46
Americas
– Brazil 13
– North America 10
– Peru 40
– United States of America (USA) 9, 20, 34, 42, 45
– – Federal Communications Commission (FCC) 35, 36, 37
– – Federal Trade Commission (FTC) 35
– – States
– – – New York 13, 40
– – – Washington 10, 39
Apple 26, 35, 38
– iPhone 26, 38
Asia-Pacific
– Australia 10, 13
– Japan 13
AT&T 35, 36, 37, 38, 39, 45
Axiata Group Bhd (TM International) 12
– Indonedia (PT Excelcomindo Pratama Tbk/XL, see separate listing) 26

B

Belgacom Group 13
Blackstone Group 9
Booz Allen Hamilton 12, 14
Broadcom 12
BT Group 7, 9, 12, 13, 15, 16
Bundesliga 19, 20

C

CeBIT 26
Choice (Australia) 38
Cinven 9
Cisco Systems 25
Comcast Corp. 37
Cooliris 10
Crown Castle International Corp. (CCI) 45, 46
CTIA 37

D

Dailymotion 42
Delivery Agent 10
Deloitte Touche Tohmatsu 12
Deutsche Telekom 6, 7, 8, 9, 10, 12, 13, 14, 15, 16, 19, 20, 23, 24, 25, 26, 27, 30, 31, 32, 35, 36, 37, 38, 40, 42, 43, 45, 46
– Deutsche Telekom Capital Partners 9, 10
– – Deutsche Telekom Strategic Investments 10
– – – Cooliris (see separate) 10
– – – Delivery Agent (see separate) 10
– – – Pinger (see separate) 10
– – – Ruckus Wireless (see separate) 10
– – DocuSign (see separate) 30
– – Mojio (see separate) 10
– Europe
– – Croatia (Hrvatski Telekom) 8, 10, 13, 25
– – Czech Republic 23, 25, 26
– – Hungary (see Magyar Telekom) 8, 13, 26
– – International Carrier Sales & Services (ICSS) 10
– – Montenegro (see Magyar Telekom) 8
– – Netherlands 7, 26
– – Poland (Polska Telefonia Cyfrowa/PTC) 26, 27
– – Slovakia (Slovak Telekom/T-Mobile) 8
– Executives
– – Abolhassan, Ferri 32
– – Dannenfeldt, Thomas 10
– – Hartmann, Jens 10
– – Höttges, Timotheus 6, 14, 20, 30
– – Kramar, Sasa 10
– – Legere, John 42
– – Madunovic, Kresimir 10
– – Nejedl, Ralf 24
– – Ray, Neville 42, 44
– – Sievert, Mike 44
– – Tsamaz, Michael 24
– – Vasilopoulos, Konstantinos 10
– Ex-executives
– – Gold, Bernhard 10
– – Morosi, Margaret 10
– – Myers, Larry 10
– – Obermann, Rene 6, 7, 10
– – Post, Greg 10
– – Ragoncsa, Geza 10
– Germany 6, 7, 8, 10, 13, 19, 20, 24, 25, 26, 30
– – Strato 9
– – T-City 25
– – T-Online 10
– Investments
– – Magyar Telekom (see separate) 8, 13, 26
– – OTE (see separate) 8, 10, 13, 24
– Products and services
– – Binge On 38, 40, 42, 43, 44
– – Connected Car 25
– – Entertain 19, 30
– – My T-Mobile 26
– – QIVICON 25
– – Scout24 9
– Systems Solutions 29
– – T-Systems 10, 23, 25, 30, 31, 32
– Technology
– – BNG (Broadband Network Gateway) 8
– – TeraStream 8
– USA 10, 27, 30, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 46
– – Un-carrier 38
Deutsche Telekom Capital Partners 9
Discovery Communications, LLC 19
DocuSign 30

E

EchoStar Communications Corp.
– Dish Network 37
Emblaze Group
– European Telecom 9
Europe
– Austria 23
– Belgium 13
– Central Europe 23, 25
– Croatia 8, 13, 23, 24
– Czech Republic 23, 25, 30
– France 10, 13
– Germany 6, 7, 8, 9, 10, 12, 13, 14, 18, 19, 20, 24, 25, 26, 30, 31, 32
– – Bundeskartellamt (Federal Cartel Office) 19
– Greece 8, 13, 24
– Hungary 8, 13, 23, 25, 30
– Italy 13, 14, 25
– Netherlands 13, 26
– Poland 23, 26, 27
– – Urząd Komunikacji Elektronicznej (UKE) 27
– Portugal 13
– Romania 8, 13, 24, 25
– Russia 13
– Slovakia 23
– Spain 13, 14
– Sweden 23
– United Kingdom (UK) 7, 13, 19, 23, 30
European Telecommunications Network Operators’ Association (ETNO) 9
European Union 30
– European Commission 6, 7, 9
Eurosport 19
EZWIM 26

F

Facebook 12, 42
– Telecom Infra Project 12
Fon 12, 13, 14, 15, 16
France Télécom
– Orange 9, 10
– – France 10

G

Giesecke & Devrient 31
Giga Information Group 7, 8
Gogo 40
Google 12, 13, 35, 40, 42, 43, 44
– Android 26
– YouTube 42, 43, 44
Gowex 12, 13
GSM Association
– Mobile World Congress 7

H

Hamburg Port Authority 25
Hellman & Friedman 9
Hewlett-Packard 32
High Tech Computer Corp. (HTC) 35
Home Box Office 42
Host Europe Group 9
Hrvatski Telekom (see DT, Croatia) 8, 10, 13, 25

I

IBM 32
Inexio 10
Intel 12

J

Juniper Networks 12

K

KfW Bankengruppe 9
Kiunsys 25
KPN 9, 13

L

Lanxess 6
LG Electronics 35
Liberty Global Inc. 7
– Unitymedia GmbH 7
– UPC Broadband
– – Germany (Unitymedia) 7

M

Magyar Telekom (see DT) 8, 13, 26
– Macedonia (Makedonski Telekom/T-Mobile) 8
– Montenegro (Crnogorski Telekom) 8
– T-Systems Hungary 10, 25, 30
Market segments
– Machine-to-machine (M2M) 36
– Multinational corporations (MNCs) 23
MetroPCS Communications Inc.
– Carter, Braxton 27
Microsoft 12, 13, 26, 30, 31, 35
– Skype 13
MobileIron 30
Mojio 10
Motorola Mobility Holdings Inc. 35
MTN 12

N

National Association of Broadcasters 35
Netflix 42, 44
Nexmo 10
Nokia 12
Numerex Corp. 36

O

Open Handset Alliance (OHA)
– Android 26
Oriflame 23
OTE (Hellenic Telecom. Org. SA, see DT) 8, 10, 13, 24
– OTE TV 24
– Romania (Romtelecom) 13

P

Phoenix Tower International 45
Pinger 10
Providence Equity Partners
– KDG Holding GmbH (Kabel Deutschland) 7
PT Excelcomindo Pratama Tbk (XL) 26

Q

Qualcomm 12, 13

R

Research In Motion 35
– BlackBerry 35
Ruckus Wireless 10

S

Salesforce 30
Samsung 26, 35
SAP 25, 30
secunet Security Networks 31
ServiceNow 30
Sistema
– Mobile TeleSystems 13
Sky
– Sky Deutschland 19, 30
Slovak Telekom (see DT, Slovakia) 8
SOFTBANK CORP. 13
Sony Corp. 26
Sprint Nextel 9, 10, 35, 37, 38, 45
Standard Life 30
Starbucks Corp. 10
Supreme Court 27

T

Target Corporation 8, 10
Technischer Überwachungs Verein (TÜV) 31
Technische Werke Friedrichshafen 25
Technology
– 2G 36
– – GSM 36
– 3G
– – Evolved HSPA (HSPA+/I-HSPA)
– – – MIMO 8
– 4G 26, 37
– – Long Term Evolution (LTE) 8, 26, 36, 37, 38
– 5G 7, 8, 15, 36, 37
– DSL 24
– Fibre 6, 7, 8, 10, 20
– FTTH 8
– IP 8, 12, 26
– Java 14
– M2M 36
– MMS 27
– SDN 8
– Smartphone 26, 35
– SMS 27
– Spectrum
– – 700 MHz 36, 37
– – 1000 MHz 35, 36, 37
– Telemedicine 25
– VDSL 8
– W-LAN 8, 12, 13, 14, 15, 16, 24, 25, 26, 27, 38, 40
Tele Columbus 7
Telecom Italia 7, 10
Telefónica Group 12
Telekom Austria 9
Telemar Norte Leste S.A. (Oi) 13
Telstra 10, 13
Time Warner 45

U

United States Cellular Corp. (US Cellular) 45

V

Verizon Communications 35, 36, 37, 38, 39
– Verizon Wireless 35, 36, 37, 38
Viber Media 40
Vivendi
– SFR (Société Française de Radiotéléphone) 13
Vodafone 6, 7, 8, 12, 13, 14, 15, 16
– Europe Region
– – Germany 7, 8
– – Spain 16

W

Warburg Pincus LLC 10
WhatsApp Inc. 40

Y

Yahoo! 10

About

About Deutsche Telekomwatch

Report: #53
Covering: June 2016
Published: June 2016
Next report: July 2016
For more information visit: Deutsche Telekomwatch