Discussion Papers

Ralf G. Schäfer, Andrej Schöbel

Stand der Backbone-Infrastruktur in Deutschland – Eine Markt- und Wettbewerbsanalyse
Nr. 265 / Juli 2005

Summary

The study deals with fiber optic backbone infrastructure in Germany and focuses on long distance lines beyond local access networks. Backbone infrastructure is supplied on different marketing levels: duct capacities, dark fiber, managed fiber, wavelengths, leased lines. Unlit fiber optic infrastructure (dark fiber, managed fiber) and duct capacities, respectively, are the essential inputs for all kind of services based on data transmission and represent the focus of the study.

Less than 20 suppliers are active on the national level, the most important of which are gas network operators, telecommunications network operators and energy suppliers. There is a larger number of suppliers with a regional focus (utilities, city carrier). Most often the backbone infrastructure suppliers are marketing long-term rights of use to their customers. The demand side is dominated by different types of carriers (fixed network, mobile operators, ISP, cable network). Additionally, although only to a limited extent, a small number of end users like companies from other sectors of the economy and scientific institutions demand backbone infrastructure.

The intensity of competition for unlit fiber optic infrastructure differs regionally. Indeed, there are regions with strong competition and those with quasi monopolistic market structures. Within the biggest metropolitan areas and along the "racetracks" between those areas strong competition is the rule with high excess capacities. The intensity of demand and supply decreases on routes to smaller or medium large cities and shrinks further on routes which connect rural areas. Some rural or provincial regions are not supplied at all ("white spots"). But in these regions there is also only a very limited demand. We estimate the share of "white spots" at 10% to 20% of the entire German area. Moreover, less than 10% of all current telephone and broadband interconnection points are presumably located within "white spots".

The expansion of backbone routes of energy suppliers is mainly driven by their own communication needs. The relevant gas and telecommunications network operators follow a strict demand driven expansion strategy of their fiber optic networks. From a demand side perspective, there is virtually only a regionally focused demand on specific routes. Thus, even in the mid-term perspective an expansion of backbone infrastructure across all regions seems to be very unlikely.

On an aggregated view across all regions we don’t find substantial market imbalances. In areas with a sufficient demand for unlit fiber infrastructure usually there is also a respective supply. We don’t expect a pro active deployment of backbone infrastructure to the "white spots" in the short- or mid-term. Yet, a stimulus for a further general expansion of backbone infrastructure may emanate from increasing broadband penetration over the next years. Overall, from the point of view of market players the availability of unlit fiber optic backbone infrastructure does not exhibit a critical bottleneck. [Full text available in German only]

Diskussion Paper is available for download.

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