Fiber optic: The expansion of fast internet is progressing – with a catch

A milestone in digitalization will soon be reached: By the end of the year, the 10 million mark for superfast fiber optic connections will be reached. However, it will still be some time before full coverage is achieved. Gigabit technology is still the exception, especially in apartment buildings. This is the result of a study by the consulting firm Dialog Consult, which was made available to the RedaktionsNetzwerk Deutschland (RND). A major obstacle is the enormously complex cabling within the buildings.

The target is quite ambitious: The federal government has set itself the goal of supplying all households with fiber optics by 2030. "This means that every household should have the opportunity to receive a fiber optic connection, regardless of its location," according to the Digital Ministry.

At least the study, commissioned by the industry associations Anga and VATM, shows that progress is being made. By the end of 2024, only 8.8 million fiber optic connections had been completed. Projections predict that this number will rise to 9.9 million by the end of this year. Rivals of the former monopolist Deutsche Telekom are ahead, with a share of almost two-thirds.

However, the pure high-speed fiber optic connection will only be available to a total of 7.6 million households; the rest will be FTTB solutions (Fiber To The Building): high-speed connections end at the home connection. From there, the bits are transported via good-old copper wires, also known as bell wires. This significantly slows down the data flow.

True fiber optic connections that reach the home (FTTH - Fiber To The Home) offer speeds of more than 1,000 megabits per second, while current standard connections only offer 100 to 200 megabits. This high speed comes at a price. It's often even higher than standard DSL rates.

Real fiber optic connections that reach into the home offer more than 1000 megabits per second.

Source: Jan Woitas/dpa

This also has to do with the monetary differences: Dialog-Consult expects that only one in three households eligible for a fiber optic connection will actually pay for it this year—this is the take-up rate. Nevertheless, experts are clear that FTTH will prevail in the coming years, and that prices will fall significantly as the number of connections increases.

For the lines laid by Telekom, the study authors predict a take-up rate of only 16 percent. This is due to different expansion strategies, the associations say. Telekom is focusing on "homes passed." This means the company is primarily building "bypassing homes." The lines are laid in the streets, but residential buildings are not connected to keep competitors at bay.

The distribution across building types is astonishing. A third of single-family homes have already been connected. Of the approximately 30.5 million apartments in Germany's multi-family buildings, where people predominantly rent, fiber optics has only reached 5.2 million. Cooperation with the housing industry is necessary here. And generally speaking, the larger a property, the more complicated the expansion within the building.

This is where things often get stuck. For example, the Lower Saxony Consumer Advice Center reports that installing a fiber optic connection can take well over a year because, in a typical case, the all-important "home handover point" is installed late after the connection has been laid. Then it turns out that the in-house cabling—contrary to the homeowner's expectations—was not included in the original offer, resulting in complicated renegotiations.

Dialog-Consult also investigated failures and mishaps, specifically "for the failed FTTH expansion." In two out of three cases, the problem was, among other things, the availability of construction companies. In one-quarter of the failed projects, legal difficulties such as monument protection or "difficult building structures" were the cause.

Also not entirely unimportant is the fact that financing failed in almost 13 percent of cases. Depending on the type of building, the expansion costs between €600 and €1,400 per residential unit. However, Telekom rivals cover the costs in just over half of the cases. The study cites a shortage of skilled workers and time constraints as further obstacles: Homeowners often want to coordinate fiber optic installation with remodeling or renovations.

To accelerate the expansion, the two association heads, Frederic Ufer (VATM) and Philipp Müller (ANGA), are calling above all for clear framework conditions. Above all, they demand "immediate transparency regarding the copper shutdown." This refers to Telekom's network, which is used to switch on DSL connections. The Federal Network Agency must take a more active role: "The industry needs rules regarding when and where which connections will be switched over," Ufer and Müller told RND. This means a kind of long-term timetable. Telekom rejects this.