Fibre overbuild – Economic Analysis and Legal Assessment © Photo Credit: maho -

Fibre overbuild – Economic Analysis and Legal Assessment

Study for the Federal Ministry for Digital and Transport

With the dynamic development of fibre roll-out in Germany, there are increasing reports from network operators, associations and local authorities about parallel fibre roll-outs, commonly referred to by market participants as overbuilds. WIK-Consult was commissioned by the Federal Ministry for Digital and Transport to conduct an economic and legal analysis on this topic.

Market participants assess the economic effects of the publicly discussed cases of overbuilding very differently. On the one hand, they point to the infrastructure and innovation competition desired by the legislator. On the other hand, it is argued that overbuilding leads to a squeezing out of market participants if it takes place in municipalities in which, from an economic point of view, only one network infrastructure is viable (in the long term).

In order to provide an economic and legal assessment of this discussion, roll-out costs, demand and addressable markets are analysed against the background of heterogeneous roll-out conditions with the help of fibre roll-out models, which contribute to assessing the viability of infrastructure competition in Germany.

Based on concrete cases of overbuild, typical scenarios are identified and classified in the framework of the models. The cases themselves are, however, not examined in detail.

This approach allows to address the questions of where infrastructure competition accelerates the roll-out, where it can be seen as a driver of migration to fibre networks and a welfare-promoting step towards self-sustaining competition, and whether and under what conditions overbuilding could possibly be seen as an abuse of a dominant position within the meaning of competition law, where it is possibly incompatible with the regulatory objectives, runs counter to the objectives of the federal government's ‘Gigabitstrategie”, or reduces the scope of private FTTB/H roll-out, which might imply that public funding required for nationwide coverage of gigabit connections would have to be expanded.

Finally, options for action are presented. The legal analysis and the presentation of the regulatory options for action was carried out by IRNIK GbR as a subcontractor.