German altnets aim to avoid overbuild with shared fibre networks

DNS:NET, Deutsche GigaNetz, Eurofiber Netz, and Infrafibre Germany (IFG) – which offers services through three subsidiaries, called Leonet, BBV Deutschland, and Infrafibre Networks – have signed a memorandum of understanding (MoU) under which they will establish the Open Access Alliance.

Members of this new group will be permitted to market Gigabit Internet and telephony services via the respective partners' fibre networks. Sharing will be enabled via layer 2 bitstream access, and connections will be ordered and managed using the industry standard supplier/partner requisition interface (S/PRI). The group will also explore the potential of adopting standardised processes and product specifications.

"The new Open Access Alliance is sending a strong signal for the promotion of the open access model and consensus-based industry standards," said a joint statement from the altnets. "Promoting and establishing free mutual access is essential in order to advance the urgently-needed, rapid and comprehensive expansion in a targeted and economically sensible manner."

Indeed, through this alliance these operators hope to prevent fibre overbuild, and by extension mitigate the risk of mutual destruction through intense competition.

DNS:NET is the largest altnet in Brandenburg, and also operates in Saxony-Anhalt. It is engaged in targeted deployments in underserved regions and rural areas. IFG, which is backed by European infrastructure investor Infracapital, is ploughing €1.5 billion into fibre networks in Baden-Württemberg, Bavaria, Rhineland-Palatinate, and Thuringia.

Deutsche GigaNetz is based in Hamburg, and specialises in rolling out municipal open access FTTP networks. Finally, Eurofiber Netz is rolling out an open access FTTH/B network in Berlin, and has set a target of covering more than half a million homes and businesses.

As you can see, these footprints and strategies complement rather than compete with one another, underscoring the rationale behind the Open Access Alliance.

It stands in sharp contrast to the situation that is bubbling up in the UK altnet scene.

Research firm Point Topic pointed out earlier this month that 20.4 million premises had been passed by fibre at the end of March, and 7 million of those had been passed by two or more networks. 778,000 had a choice of three or more.

Competition is great for keeping prices in check and fostering innovation, but it can be damaging to a telco's ROI. All that money spent on digging fibre could go to waste if it subsequently goes unused because all your prospective customers are being served by a competing network. Telcos that lack the funding or scale to compete sustainably on price could find themselves out of pocket, particularly in the current economic climate.

In the UK, some of the smaller altnets, like Community Fibre, are already hurting, while others, like Lit Fibre, are being swallowed up by bigger rivals.

It stands to reason then that altnets might prefer to temper their competitive urges in pursuit of mutual gain.

"There are no arguments whatsoever for economically and ecologically senseless double expansion of fibre optic networks," said the Open Access Alliance members. "Rather, this will allow freed-up investment funds to be brought into regions that do not yet have a state-of-the-art fibre optic infrastructure."

It will be interesting to see if this new model in Germany is adopted by altnets in other markets.