On February 18, 2009, the German Federal Cabinet announced its Broadband Strategy, which is sponsored by the Federal Ministry of Economics (Bundesministerium für Wirtschaft - BMWi). The strategy aims to enhance availability of broadband Internet access in rural areas. It addresses municipalities in the first place, as well as providing incentives for private enterprises. On March 4, 2009, a first specific step followed, when the Cabinet issued a decision on the use of the “Digital Dividend” spectrum.  

Aims

According to the Federal Government, inexpensive and high-capacity broadband Internet access is a precondition for economic and employment growth, increased prosperity, and the country’s global competitiveness as a location for business. Currently, there are numerous socalled “white spots” (areas with insufficient broadband Internet access), especially in the eastern parts of the country. The German Government has thus set two ambitious goals:

  • By the end of 2010, high-capacity (at least 1 MBit/s) broadband Internet access shall be available to all German households; and  
  • By the end of 2014, 75 per cent of all German households shall be able to access the Internet with 50 MBit/s or faster.  

Content

The German Broadband Strategy suggests four different initiatives to achieve these aims:

  1. Using Synergies to Develop the Broadband Infrastructure

According to the BMWi, 70 per cent of the cost of developing a broadband infrastructure will be allotted for underground works. Existing infrastructures and facilities will be used to build broadband networks. In particular, the BMWi suggests to use empty conduits, drains and radio towers, as well as active infrastructure, such as glass fiber- and backbone-nets, which already cross certain rural areas. Federal and state authorities shall cooperate in using these infrastructures for broadband technology, but also telecommunications and energy providers as well as private network operators and public authorities. An infrastructure map and a specific database of infrastructure construction works will be made available to inform private network operators of current road plannings so that they can lay their cables concurrently. Furthermore, existing transmitter facilities will be opened for third parties against payment, and tax reductions for in-house wiring are planned.  

  1. Spectrum Policy

The roll-out of a fixed network broadband technology shall be supported by corresponding spectrum measures. On the one hand, this includes the allocation of further 270 MHz in the GHz band. The Federal Network Agency (Bundesnetzagentur – BNetzA) plans to auction this spectrum in 2010. Due to their specific technical characteristics, however, these frequencies are not the best option for broadband Internet access in rural areas. Therefore, using the “Digital Dividend” i.e. those frequencies which are abandoned as a consequence of the analog to digital broadcasting switch-over will become even more important. Unlike the GHz-spectrum, these former broadcast frequencies provide a great deal of coverage with only a few transmitters, and achieve a good penetration of buildings. It appears there will be a compromise on the allocation of the “Digital Dividend”: the 470 MHz to 790 MHz spectrum will continue to be available for broadcast services, but the spectrum between 790 MHz and 862 MHz will be designated for mobile broadband services. Accordingly, the German Federal Cabinet decided on a revised frequency plan on March 4, 2009. A soon as the federal states approve this plan, which is expected to happen in May 2009, the BNetzA can proceed with the actual frequency assignments.  

  1. Financial support

The German government’s Broadband Strategy provides various financial measures to support the broadband development.  

Municipalities will receive more than €150 million in total, especially for the rollout of broadband infrastructures in rural areas. This funding already is available and will be extended to support projects like laying empty conduits. The European Regional Development Fund and the European Agricultural Fund for Rural Development also may be tapped. According to a communication of the European Commission of January 28, 2009, the latter fund shall provide €1 billion for the erasure of “white spots” in Europe.  

These measures will be complemented by a special KfW program for small and medium sized enterprises, special loans from the European Investment Bank up to half of the project volume, and federal as well as state guarantees. “Economically reasonable broadband projects” must not fail due to a lack of funding. Federal and state authorities are thus willing to assume up to 90 per cent of the contingency risk.

  1. Regulation based on Growth and Innovation

The Broadband Strategy also fosters a regulation based on the goals of growth and innovation. The German government believes that the current legal framework is already flexible enough to allow for sufficient planning reliability for investments in new broadband structures. Additionally, however, the Government intends to increase planning reliability by raising the validity period of BNetzA’s current market analyses from two to three years. Furthermore, the Federal Cartel Office and BNetzA must examine cooperation agreements between different market players, e.g. owners of infrastructure, without undue delay, and thus provide for sufficient clarity on the acceptance of such cooperative arrangements under competition law.  

Outlook

Different branches of the economy – underground work enterprises, operators of fixed and mobile broadband networks – can benefit from the Broadband Strategy, as well as service providers and end users. Although financial support measures under the broadband strategy primarily address German municipalities, there are significant chances for private enterprises to benefit from the initiative. As broadband Internet must be deployed in a technologically neutral way, one expects that all kinds of network operators will be able to participate, including mobile radio companies and DSL providers or cable network operators. For example, the Federal Government especially emphasizes the use of broadband cable for fast Internet access.  

Implementing the strategy will raise several legal issues. The European Commission has made clear that member states must observe EU state aid laws when subsidizing broadband infrastructures. Moreover, public procurement law issues arise when municipalities contract with private enterprises on infrastructure projects. One also has to wait and see how BNetzA and the Federal Cartel Office will respond to the government’s request to encourage joint infrastructure projects between private enterprises, and how legal certainty will be enhanced in this respect. The allocation of frequencies in the gigahertz band, and the “Digital Dividend” resources, also raise special question under telecommunications law.