Telekom, Telefonica intensify fixed network cooperation

2 May 2013

Deutsche Telekom (DT), which provides fixed and mobile services in its domestic market under the brand Telekom Deutschland, and Telefonica Germany have jointly announced the signing of memorandum of understanding, under which the pair intend to expand their cooperation regarding fixed network infrastructure. Spanish-owned Telefonica is looking to increase its use of DT’s new high speed infrastructure for fixed network products in the future, to help it achieve the transition from its own ADSL infrastructure to a future-proof next generation access (NGA) platform. To achieve this, Telefonica is seeking to use DT’s VDSL and vectoring wholesale products. The process will be realised in phases, with completion scheduled for 2019. With this cooperation, DT says it will be able to share the risks of investment and accelerate further upgrades. The cooperation will be submitted to telecoms regulator the Federal Network Agency (FNA) and the Federal Cartel Office for approval, ahead of a planned launch for the coming year.

Commenting on the deal, Niek Jan van Damme, head of Telekom’s business activities in Germany, said: ‘DT is prepared to make massive investments in Germany’s fixed line network. But we need partners to share investment risks and accelerate the upgrade of high performance networks.’ Telefonica, which operates under the O2 brand, said a major factor for the firm was DT’s decision to deploy vectoring, which could boost downstream broadband speeds available over its network to up to 100Mbps, helping it to compete on more even terms with cable network operators. DT and Telefonica already cooperate within the framework of a VDSL ‘contingent model’, through which competitors can purchase a certain number of discounted VDSL lines from the incumbent, while the two companies have also previously agreed that DT would connect Telefonica’s mobile communications stations with fibre-optics.