Between market and regulation: dispute over Open Access

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The digital and fiber optic trade fair Fiberdays 26 is always a good opportunity for network operators to announce new deals. Deutsche GigaNetz, for example, has entered into agreements with the Swedish Internet Service Provider (ISP) Bahnhof and Westconnect. And Plusnet will market its services over OXG's networks in the future. Such access agreements to third-party networks are called Open Access in the fiber optic market.

“Open Access certainly involves further investments in the first step, but without Open Access, no one will be able to utilize their network,” explained Steven Blount, Key Account Manager at EWE Tel, at Fiberdays 26 in Frankfurt am Main. “83 percent of our customers want provider diversity,” adds Frank Rosenberger, CEO of 1&1 Versatel. The network operator specializes in business customers.

Operational Complexity

The industry agrees: Open Access is no longer a question of whether, but how. The challenge lies in market fragmentation. Nearly 300 network operators are currently building fiber optic networks in Germany. “Open Access is a question of implementation,” says Jürgen Rohr, Executive Director Wholesale at Plusnet, pointing to the operational complexity behind the deals between network operators and ISPs.

Nevertheless, the mood in the industry is good. With S/PRI, a common interface has been found. Further standardizations for simpler technical integration of fiber optic networks are to follow.

No Fear of Cannibalization

Blount cannot be convinced by the fear of losing his customers to competitors on his network. According to him, EWE Tel has lost no more than 5 percent of its customers since the network operator began with Open Access in 2018, but has gained 100,000 new customers.

Dieter Lindauer is also not deterred by the cannibalization effect. The managing director of the municipal utility company in Neustadt am Rübenberge is currently building fiber optic networks in cooperation with an investor. Lindauer has agreed with his financier to open the networks to others with Open Access from 2030/2031. “We know the cannibalization effect from the electricity business,” says Lindauer. He expects a 10 percent loss of customers but also a 15 to 20 percent higher utilization of his fiber optic networks.

BNetzA: “Positive examples are not in the majority”

It is therefore no wonder that network operators are not keen on additional regulation. “The networks are mostly built,” says Marc Kahabka, CEO of VSE Net. “It's difficult to impose standards on top of that now.” According to Plusnet manager Rohr, the market will regulate these standards itself. “The market is faster than regulation,” summed up Kai Pigorsch, co-managing director of Glasfaser Nordwest.

Daniela Brönstrup sees it completely differently, however. The Vice President of the Federal Network Agency (BNetzA) also wants competition on the new fiber optic networks. But: “Where Open Access doesn't work, we want to have a bit more leverage,” Brönstrup said at Fiberdays 26. She refers to the debate about Open Access in the Gigabit Forum, which has been ongoing for years. “Unfortunately, our experience is that positive examples are by no means in the majority,” said the BNetzA Vice President.

Mandatory Negotiation Under Discussion

Therefore, she welcomes the mandatory negotiation, as it is stated in the draft bill for the Telecommunications Act (TKG). In regions where the construction of only one fiber optic network is economically viable, the network operator will be obliged to negotiate access to its network with third parties. If no agreement is reached, the BNetzA will step in and can, in turn, set the conditions for network access, which also includes the level of fees.

According to network operators, mandatory negotiation slows down investment in new fiber optic networks. “It cannot be that there is now a risk that the one who invests now will later have to open the passive network,” criticized Westconnect Managing Director Robin Weiand. “Regional monopolies are already being opened up by Open Access today.”

Access to Active and Passive Infrastructure

The fear of many network operators: Even if they offer an active wholesale product in the form of bitstream access, a third party could reject this product and demand access to the passive infrastructure. No agreement is reached, and the BNetzA sets the requirements for access, even though the network operator does not want to open the passive infrastructure.

The fear is not entirely unfounded. “I don't think the law makes this fundamental decision,” said Gertrud Husch, Head of Digital Infrastructures at the Federal Ministry for Digital and Transport (BMDS), at Fiberdays in Frankfurt am Main. Apparently, the TKG draft still needs to be refined here.

(fds)