Tim Höttges voiced optimism that European tech companies can lay down a strong marker in business-to-business markets by focusing on IoT and 5G. China and the USA are too far ahead in the consumer platform space, he said.

  • DT ups IoT R&D activity through collaborations with IBM and the Industrial Internet Consortium.
  • Group launches smart-parking app in Germany.

Sporting a smart-casual navy blue sweater, Timotheus Höttges, Chief Executive (CEO) of Deutsche Telekom (DT), outlined his vision of Europe’s digital future in a Sunday presentation at the annual Digital, Life, Design (DLD) conference held in Munich. Despite appearances, however, the CEO was not in day-off mode.

Höttges made repeated (and familiar) jabs at European regulators and politicians for what he saw as a lack of action on releasing spectrum and encouraging broadband investment. They are the “world champions of observation”, he bristled. More dramatically, he threw in the towel when it came to Europe competing with business-to-consumer (B2C) online platforms from China and the USA. “Yes, we’ve lost these B2C platforms forever — that’s my belief”, he said bluntly.

Höttges was no doubt acknowledging the marketing heft and scale of the likes of Amazon, Facebook, Google and Chinese big B2C hitters such as Alibaba and Tencent. He argued that Germany and Europe should instead focus their digitisation efforts on 5G and the Internet of Things (IoT), with a particular emphasis on B2B markets.

“ [In] the Internet of Things, in business between companies, this is the strength of Europe. Here we have something to gain. ” — Höttges.

Höttges remains long on 5G ecosystems

In an interview with Bloomberg, on the sidelines of DLD, Höttges emphasised that DT will not be selling B2B data packages alone, but “participating” in the solution space. “Our ecosystem is changing into a model where we participate on the revenue”, he said.

Höttges claimed DT will able to monetise 5G network investments by providing “dedicated software platforms” to customers in industries ranging from automotive to healthcare, and can benefit from revenue-sharing agreements. He cited the sensor-based parking application that has been developed by T-Systems (T-Sys) and rolled out in Hamburg, and which gives DT a cut of the sales (see below).

Banking on 5G-based B2B revival is ambitious

  • While offering a nice gee-up for European industry and directing more pressure towards regulators, Höttges’ presentation did not seemingly address the fact that DT’s main problem area when it comes to generating profit is actually in the B2B space (i.e. margin-lite enterprise service division T-Systems). DT’s most successful business in recent years has been neither in Europe nor heavily into B2B services (T-Mobile US). To Deutsche Telekomwatch‘s mind, neither DT nor rival operators have yet come up with a convincing explanation of how they will be able to change this picture with the advent of next-generation IoT and other 5G services.
  • Another issue is that DT is already playing catchup in some digital B2B services to many of the same US providers that dominate the consumer market, such as Amazon Web Services, Google, and Microsoft. In cloud computing, DT continues to express confidence in the ability of T-Sys’ flagship Open Telekom Cloud IT infrastructure suite to compete with those providers, but has not yet provided detailed uptake figures for the offering, and has had a bumpy ride in cloud revenue overall during recent quarters (Deutsche Telekomwatch, #63 and passim). Pitched firmly as a European alternative to US players, Open Telekom Cloud offers infrastructure-as-a-service, platform-as-a-service, and software-as-a-service capabilities. This “global offering”, as T-Sys now calls it, is used by a number of its flagship clients, including BMW, Disney, and the Switzerland-based European Organisation for Nuclear Research (Deutsche Telekomwatch, #58).

More IoT/B2B tie-up activity; Hamburg and Munich testbeds

Underlining Höttges’ ambition to spearhead an assault by Europe-based players on IoT and digital enterprise markets, DT fired off a battery of related announcements. They ranged from ecosystem building with IBM, to smart-parking and connected-car insurance.

  • DT made claim to an “Telekom IoT innovation space” within IBM’s Watson IoT Centre in Munich. IoT teams from DT and IBM are to work “side-by-side” to develop innovative solutions, primarily based on Narrowband Internet of Things (NB-IoT) technology. DT will bring to the table its expertise in connectivity, security and IoT solutions, while IBM adds capabilities in artificial intelligence, big data and “industry-specific” IoT. The innovation space will showcase several IoT applications, including smart-parking, smart-waste and water management, air quality monitoring, and predictive maintenance. The IBM collaboration is the latest in a series of DT moves to bolster IoT research. In November 2017, the Group flagged the establishment of a European Smart Solutions Centre (ESC) in Budapest, Hungary, targeting municipalities with smart-city services. In the same month, DT opened an IoT development centre in partnership with the Fraunhofer-Institute for Material Flow and Logistics (Deutsche Telekomwatch, #68 and #69).
  • As part of its industrial IoT push, DT joined the Industrial Internet Consortium (IIC). The Group said it will bring to the IIC table its “strong position in IoT connectivity, especially NB-IoT and 5G”. Another reason why DT might have finally decided to join the IIC — which was founded back in March 2014 by AT&T, Cisco, GE, IBM, and Intel — is recent “successful” collaboration between the IIC and another grouping called Plattform Industrie 4.0, of which DT has close ties (Deutsche Telekomwatch, #31 and passim). An initiative by the German government, Plattform Industrie 4.0 is focused on improving efficiency and productivity in manufacturing. In March 2017, Telekom Innovation Labs was one of a group of 15 businesses to form an Industry 4.0-focused consortium called Industrial Communication for Factories (Deutsche Telekomwatch. #61).
  • T-Sys started deploying connected-parking sensors for Park and Joy, its smart-parking app, in Hamburg. Using the NB-IoT-connected sensors, the app points users towards vacant parking spaces and offers them the ability to reserve spaces and pay parking fees. In January 2018, T-Sys said it was installing the first 100 sensors in the Wandsbek district, with up to 11, 000 planned in the entire Hamburg downtown area by end-2019. The division operates Park and Joy in collaboration with city authorities and pitches it as a means to reduce congestion and improve safety. A limited version of the parking app, used for billing-by-the-minute, was launched in autumn 2017. T-Sys previously outlined plans to extend Park and Joy to other German cities, although details are still thin (Deutsche Telekomwatch, #61).
  • Also in Hamburg, DT flagged it was set to start 5G-based network-slicing trials with Nokia and the Hamburg Port Authority, as part of the European Union (EU)-backed 5G Monarch project. The trio will explore use-cases such as “traffic lights management, data processing from mobile sensors, and virtual reality applications”, using an 8000m2 area of the city’s port that has been dedicated to 5G research. 5G Monarch is one of several workstreams DT and OTE have been supporting under the EU’s 5G Infrastructure Public Private Partnership, and is described as focusing on “conceptually novel” 5G applications (Deutsche Telekomwatch, #68).

NB-IoT rollout on schedule, assures DT

In January 2018, DT recapped on NB-IoT progress. The technology, it said, was now live across eight European markets and the USA. Plans are afoot to achieve nationwide rollout in the USA by end-2018, along with national coverage in “many” European markets by that time.

In Germany, Telekom Deutschland (TDE) has rolled out NB-IoT to around 600 towns and cities across Germany since it was launched in June 2017 (Deutsche Telekomwatch, #65). More than 200 companies are now trialling the technology with TDE via commercially available test packages.

Nationwide rollout in the Netherlands was completed in May 2017, while DT brought the technology to a further six European markets by end-2017 (Deutsche Telekomwatch, #69). T-Mobile Austria recently became the first operator to roll out NB-IoT commercially in the country, with the city of St. Pölten fully covered, Nationwide rollout is slated by autumn 2018. In Czech Republic, Greece, Hungary, Poland, and Slovakia, DT said NB-IoT networks were now live across “many cities”.

The Group also flagged efforts to stimulate the NB-IoT ecosystem, including the launch of the WARP NB-IoT programme set up by Group incubator hub:raum Kraków and DT in summer 2017. According to DT, the programme provides an industry ecosystem that enables startups, B2B partners and customers to develop NB-IoT applications and solutions at an early stage. WARP NB-IoT was apparently set up following the success of a prior initiative focused on NBIoT Prototyping Hubs, established in July 2016 (Deutsche Telekomwatch, #55). Operated by hub:raum in Bonn and Krakow, the hubs are designed to bring existing and potential customers together with DT’s pool of “specialised and highly skilled IoT developers”. The intention is to cut time-to-market and give business customers “crucial market insight” by testing new applications and sensors on live NB-IoT base stations.

Image: Deutsche Telekom.

Table of Contents

EXECUTIVE BRIEF

GROUP

Deals

DT and Orange linked again as Macron seeks EU revival [p6]

  • Figure 1: Deutsche Telekom and Orange fixed-line and mobile footprint comparison
  • An imbalanced friendship
  • Figure 2: Revenue split by geography, DT and Orange (FY16)
  • Table 2: European operator market capitalisation comparison, February 2018
  • An unrealistic mismatch, but no harm done for DT’s attempts to shape Europe
  • DT and Orange by numbers – they don’t add up, for now
  • Table 1: European operator financial and other metric comparison

Partnerships

Nationalisation plan puts Toll Collect JV future in doubt [p9]

  • Government clears way for a partner refresh
  • DT on or off the hook?
  • Troubles mounting up
  • Table 3: Toll Collect overview, 2018 unless stated

DT trumpets completion of ground network for EAN [p13]

  • EAN part of DT’s strategy to connect everyone everywhere
  • Legal challenges not expected to delay EAN launch
  • EAN timeline

People

Table 4: People movement highlights

Technology & Innovation

Höttges: Forget B2C – EU’s digital future is B2B [p18]

  • Höttges remains long on 5G ecosystems
  • Banking on 5G-based B2B revival is ambitious
  • More IoT/B2B tie-up activity; Hamburg and Munich testbeds
  • NB-IoT rollout on schedule, assures DT

GERMANY

Network

TDE extends testing of FTTH demand to Markkleeberg [p23]

  • Public subsidies and industrial zones

EUROPE

Czech Republic

TMCZ to expand FTTH network [p26]

  • Table 5: T-Mobile Czech Republic and Slovak Telekom, financials and KPIs, Q3 FY17
  • Table 6: Selected DT NatCo mobile-wireline broadband user base weighting, at 30 September 2017 (pre-latest M&A)
  • M&A follow-up?

Hungary

MT obliged to provide passive network access [p29]

SYSTEMS SOLUTIONS

Strategy

New T-Sys chief enters with intent [p32]

  • Shaking Systems: Clemens lieutenants and partnerships to be mixed up
  • Thyssenkrupp breakup illustrates the task Al-Saleh faces

T-Sys strengthens Brazil footing with IoT-led MVNO [p34]

  • Two BRICs laid
  • More power-hungry DT moving beyond stock partnership patterns

USA

Network

TMUS typically bullish over 600MHz progress [p37]

  • Taking the low road
  • AT&T 600MHz snub shrugged off
  • LTE coverage lag is old hat, says Ray
  • Macro facts on the ground
  • Add-on M&A action to continue

TMUS keeps up 5G banter [p40]

  • Ray gets claws out in race for 5G bragging rights
  • Mapping out TMUS’ 5G tilt for air supremacy
  • Table 7: National weighted average of spectrum depth, band class *

TMUS seeks allies for densification drive [p42]

  • Europe in network shade again

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 40

A

Africa 7, 17, 35
– Congo 7
Alcatel-Lucent 15, 35
Alibaba Group Holding Ltd 18
Alphabet
– Google 8, 18, 19
Amazon.com Inc. 18, 19
América Móvil 34
– Claro 34, 35
Americas
– Brazil 17, 34
– Colombia 42
– Latin America 35
– United States of America (USA) 6, 7, 8, 15, 18, 20, 36, 37, 40
– – Federal Communications Commission (FCC) 38, 39, 41
– – States
– – – Califormia 40
– – – Georgia 9
– – – Illinois 39
– – – Iowa 39
– – – Nebraska 39
– – – New York 38
– – – Washington 41
Apple 39
Asia-Pacific 15, 17, 35
– China 18, 34, 35
– Japan 42
– Singapore 42
– South Korea 17
Atos 33
AT&T 19, 38, 40, 41

B

Banco Santander, SA 17
Bango 27
Bloomberg L.P. 18
BMW 19
Boku 27
BOKU Inc. 27
BroadSoft 6
BT Group
– EE 7

C

CenturyLink Inc. 9
China Unicom 34, 35
Cisco Systems 9, 19
Cleverlance 26
Comarch SA 9
Comcast Corp. 41
Crown Castle International Corp. (CCI) 42

D

Daimler AG 9, 11
Deutsche Telekom 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18, 19, 20, 23, 24, 26, 27, 28, 29, 32, 33, 34, 35, 37, 38, 39, 40, 41, 42
– Corporate
– – Headquarters 20
– Deutsche Telekom Capital Partners 10
– – Deutsche Telekom Strategic Investments 6
– – – Swyx (see separate) 6
– – Mojio (see separate) 34
– – Next Generation Enterprise Network Alliance (ngena) 9, 35
– Europe
– – Austria 17, 20, 26, 27, 28, 34
– – Croatia (Hrvatski Telekom) 28
– – Czech Republic 16, 26, 27, 28, 34
– – Greece (see OTE) 28
– – Hungary (see Magyar Telekom) 16, 28, 29
– – Netherlands 27, 28
– – Poland (Polska Telefonia Cyfrowa/PTC) 27, 28
– – Slovakia (Slovak Telekom/T-Mobile) 16, 26, 27, 28
– – UK (EE) 7
– European Aviation Network 13
– Executives
– – Binder, Jeff 16, 37
– – Boni, Bill 16
– – Bush, Ken 16
– – Camuso, Stefano 17
– – Clemens, Reinhard 33
– – Fazakas, Andras 16
– – Fleutiaux, Francois 33
– – Gedrovics, Alexander 16
– – Höttges, Timotheus 18, 24
– – Katz, Mike 16
– – Kemal, Kosemehmetoglu 16
– – Kimberger, Michael 17
– – Klose, Fabian 17
– – Konya, Laszlo 17
– – Kralova, Ursula 16
– – Legere, John 40
– – Lenz, Peter 11
– – Ray, Neville 37, 40
– – Salm, Olaf 16
– – Schlaberg, Steffen 17
– – Sievert, Mike 16
– – Slooten, Erik 16
– – Thygesen, Dan 16
– – Vacek, Jiri 16
– – Vasina, Milan 26
– – Wittig, Hannes 42
– Ex-executives
– – Rubim, Camillo 17
– – Zamani, Phil 17
– Germany 6, 17, 20, 23, 24, 26, 27, 28, 34
– Investments
– – Magyar Telekom (see separate) 16, 28, 29
– – OTE (see separate) 15, 16, 20
– Product and Innovation
– – hubraum 20
– Products and services
– – T-Mobile TV 16, 37
– Systems Solutions 31
– – T-Systems 7, 9, 17, 18, 19, 32, 33, 34, 35, 37
– – – Satellic 11
– – – Telekom Security 32
– – – Toll4Europe 11
– Toll Collect 9, 10, 11
– USA 6, 7, 15, 16, 17, 19, 28, 34, 35, 37, 38, 39, 40, 41, 42
Deutsche Telekom Capital Partners 10
Dr. Ing. h.c. F. Porsche AG 17

E

EADS
– Airbus 15
eBay
– PayPal 27
EchoStar Communications Corp. 14
Ericsson 18, 41, 42
Europe
– Albania 7
– Austria 7, 8, 9, 14, 17, 26
– Belgium 7, 11, 33
– Croatia 7
– Czech Republic 7, 20, 26, 27, 28
– Estonia 27
– Finland 13
– France 6, 7, 8, 9, 13, 14, 15, 42
– Germany 6, 7, 8, 9, 10, 13, 14, 15, 17, 18, 19, 20, 22, 24, 26, 32, 33, 35, 42
– – Government 19
– Greece 7, 15, 20
– Hungary 7, 16, 19, 20, 29
– – Gazdasági Versenyhivatal (Hungarian Competition Authority/GVH) 29
– – National Media and Communications Authority (NMHH) 29
– Ireland 42
– Italy 9, 14
– Luxembourg 7
– Macedonia 7
– Montenegro 7
– Netherlands 6, 7, 8, 9, 20
– Norway 13
– Poland 7, 20
– Portugal 9, 13
– Romania 7, 17, 27, 28
– Russia 9
– Slovakia 7, 20, 27
– Spain 7, 9
– Switzerland 13, 17, 19, 33, 34
– Ukraine 9
– United Kingdom (UK) 6, 7, 9, 13, 15, 35, 42
– – Office of Communications (Ofcom) 14, 15
European Organisation for Nuclear Research 19
European Union 6, 13, 18, 20
– European Commission 14, 15
– European Court of Justice 14, 15
Eutelsat Communications 14

F

Facebook 18
Fortumo 27
France Télécom
– Orange 6, 7, 8, 28
– – Poland (see Telekomunikacja Polska) 28
– – UK (see EE, DT) 7
FreeMove Alliance (DT-FT-TeliaSonera-TI) 35

G

Global M2M Assocation (GMA) 35
Gogo 15
GSM Association
– Mobile World Congress 35
GTS Central Europe 16

H

Hamburg Port Authority 20
Hitachi 17
Hrvatski Telekom (see DT, Croatia) 28
Huawei Technologies 11, 26, 28, 32

I

IBM 17, 18, 19, 32
Inmarsat 9, 13, 14, 15
Intel 11, 19, 41
International Airlines Group SA
– British Airways 13, 15
– Vueling Airlines SA 15

K

Kohlberg Kravis Roberts 33
KPN 8, 9

L

Lebara Group 17
LG Electronics 39
Liberty Global
– UPC Austria 26, 28
Liberty Global Inc. 8
– UPC Broadband 26, 28
Lufthansa 13, 15

M

Magyar Telekom (see DT) 16, 28, 29
– Macedonia (Makedonski Telekom/T-Mobile) 16
Market segments
– Machine-to-machine (M2M) 34
– Mobile virtual network operator (MVNO) 34, 35
– Multinational corporations (MNCs) 34
– Value-added services (VAS) 34
MetroPCS Communications Inc.
– Carter, Braxton 42
Microsoft 6, 19
Middle East 7, 17
– Egypt 7
– Iraq 7
– Israel 42
Mojio 34
mopay 27

N

NFON 6
Nokia 13, 15, 20, 35, 38, 41, 42
Northgate Information Solutions Ltd 32

O

OTE (Hellenic Telecom. Org. SA, see DT) 15, 16, 20
– Cosmote 28
– – Albania (Telekom Albania) 28
– – Greece 28

P

PCCW 9
Portugal Telecom 9

R

Reliance-Anil Dhirubhai Ambani Group
– Reliance Communications (RCom) 9
Royal Dutch Shell plc 37

S

Samsung 39
SAP 17, 32
SES S.A. 14
– SES Astra S.A. 14
SK Telecom 9, 35
Slovak Telekom (see DT, Slovakia) 16, 26, 27, 28
Sprint Corporation 40, 41
Swisscom 17
Swyx 6

T

Technology
– 2.5G 40, 41
– 2G 39, 40, 41
– 3G 41
– – Evolved HSPA (HSPA+/I-HSPA)
– – – MIMO 11
– 4G 39
– – Long Term Evolution (LTE) 13, 15, 26, 27, 28, 37, 38, 39, 41
– 5G 11, 18, 19, 20, 37, 38, 40, 41, 42
– DSL 10, 26, 27
– Fibre 7, 10, 23, 24, 26, 27, 29, 42
– Fixed-mobile convergence (FMC) 14
– FTTH 7, 23, 24, 26
– IP 16, 26, 35
– IPTV 37
– M2M 34
– Narrowband Internet of Things (NB-IoT) 19, 20
– OpenStack 32
– R&D 7, 18
– RF 17
– SaaS 19, 33
– Smartphone 38, 40
– Spectrum 39, 41, 42
– – 700 MHz 38, 39, 41
– – 1000 MHz 38
– – 1900 MHz 41
– – 2300 MHz 41
– – 3500 MHz 41
– – Advanced Wireless Spectrum 41
– VDSL 28
– WAN 9
– W-LAN 13
Tele2 28
– Netherlands 28
Telecom Italia 35
– Telecom Italia Mobile 35
Telefonica Group 8
– Europe 26, 28
Telekom Austria 9, 28
– Austria
– – A1 9, 28
Telenor ASA 29
– Hungary 29
Telstra 9
Telus 9
Tencent Holdings Ltd 18
Thales Group 13, 14, 15
Twitter Inc. 40

U

United States Cellular Corp. (US Cellular) 41

V

Value-added services 37
Verizon Communications 38, 39, 40, 41
– Verizon Wireless 40, 41
ViaSat 14, 15
VINCI Group
– Cofiroute, S.A. 9, 10, 11
Vivendi
– SFR (Société Française de Radiotéléphone) 9
Vodafone 8, 26, 29, 35
– Europe Region
– – Czech Republic 26
– – Hungary 29

W

Walt Disney Company, The 19
Wells Fargo 38

About

About Deutsche Telekomwatch

Report: #70
Published: February 2018
Next report: March 2018
For more information visit: Deutsche Telekomwatch