Letter from Germany: Fiber is coming! — Entner

optical network
By 2030, Deutsche Telekom plans to provide fiber to the home to 60% of households. (shulz via Getty Images)
Roger Entner

As some of you may know, I am splitting my time between the United States and Germany. This gives me a good overview of what consumer broadband solutions are available in Germany because I am living it and working in it rather than glorifying it from thousands of miles away.

The following depicts the standard offers across the country from which I can choose. What no one seems to realize is that Deutsche Telekom only provides fiber to 5% of German homes. So high speed broadband in Germany is not a “fiber only” solution.

Entner chart
 

Readers should note that the equipment price is included in these offers. While that might seem wonderful, the price points increase dramatically after six months when consumers are forced to take the fixed telephony offer.

Alternatively, I could get the same offers from Vodafone, but 5€ cheaper. I have the 39.95€ ($50 at $1.21/€) option for 50 Mbps download and 10 Mbps upload. It is sufficient for work, recording podcasts, video calls with clients, 4k video streaming, and massive multi-player online gaming. I was actually surprised how unencumbered I am in Germany with only 50/10 versus Gigabit service in the United States. My personal usage pattern is not that different. The only inconvenience is the downloading of large updates or new files.

By comparison, here is what Verizon offers in the U.S. to new customers. On their face, it looks like these are much more expensive plans; however, these plans reflect a price point that averages the costs across the entire life of the plan versus in Germany where the upfront cost is small but the money owed balloons after a few months.

Entner chart 2

Verizon also charges $15 for the router, which needs to be added to the total cost. Annoyingly, as a 15-year customer of Verizon FiOS, the best price Verizon offers me for a gigabit connection is $89.99 and none of the incentives like router rental are included. I guess that's the price of loyalty.

Comcast provides service options at price points similar to what Verizon offers if I chose a contract . Absent a long-term contract, Comcast’s offers are roughly $10 higher than Verizon. 

As you can see, the slowest Verizon plan is about as fast as the fastest Deutsche Telekom and Vodafone plans but is about $15 cheaper. I am actually tempted to downgrade my service in the U.S. as I don’t really see a significant difference in capabilities but could save $400 per year.

RELATED: Learn the No. 1 reason some Americans don't use the internet — Entner

What’s happening in Germany?

Germany is Europe’s largest economy, the engine of prosperity, when it comes to high speed broadband. Here is Deutsche Telekom’s plans for broadband for Germany (roughly the size of Montana with a quarter of the population of the United States):

Entner 3

FTTC is fiber to the curb, which gets you close but not close enough. My connection in Germany is driven by FTTC, but limited to 250 Mbps. By 2030, Deutsche Telekom plans to provide fiber to the home to 60% of households. It is also excited to announce that the first major cities that get fiber are Berlin, Düsseldorf, Hamburg and Frankfurt. That isn’t exactly ubiquitous coverage. And it’s not exactly super fast broadband. And it’s not cheaper than in the U.S. once you factor in the price escalations built into most plans.

You can appreciate why I am confused by the constant “broadband is so much better in Europe” mantra coming from Pennsylvania Avenue.

Deutsche Telekom defends its strategy of building a vectorized, DSL-based network (which includes FTTC) as the only way it could provide sufficient internet speeds to most Germans versus high speed broadband to just a few Germans.

RELATED: Deutsche Telekom boosts it fiber build-outs

Just like ISPs in the U.S., Deutsche Telekom also points to the expensive build-out and permitting as two issues holding back its build-out strategy; however, it has stated that it is confident it will be able to add 1.3 million households in 2021, and adding 2.5 million households per year beginning in 2024. 

As you can see, the EU’s largest country and biggest economy is getting fiber, just at not a terribly fast pace. Why would the U.S. want to model its broadband policies on Germany?

When we read stories about the broadband nirvana, in Europe, I find that the stories are authored by people who do not actually live there or experience it first-hand. Similar to a Monet painting, it looks much better from a distance than close up.

Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.

"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.