Patrick Anell, Dieter Elixmann, Ralf G. Schäfer
Market Structure and Competition in the German Fixed-Link Market: Status Quo and Trends
No. 313 / December 2008
Summary
Since several years, technological and economic conditions in the German telecommunications market have undergone diverse and sustainable changes. New technologies, increasing intra- and inter-modal competition as well as changes in consumer behaviour caused by new communications services and new modes of communication are major challenges for providers in the fixed network market. The present study addresses the following issues: (1) Which "groups" of players can be identified? (2) How do market participants (groups) in Germany react to the challenges caused by new technologies and/or market changes (competition, user preferences)? (3) Which trends can be identified regarding the positioning of market participants (groups) in Germany? The study focuses on fixed network market participants. The methodological approach primarily rests on an empirical analysis of actual market conditions while a generic analytical dimension is only marginal. The period under observation is the current situation and strategic options in a 3–5 year perspective. The study adopts a market perspective; case studies of individual market players are not intended.
The German fixed network market comprises mainly the following types of providers: national full-range service providers, local/regional full-range service providers, carriers with a focus on business customers, carrier selection/preselection (CS/CPS) providers, value-added-service-providers, Internet service providers, application service providers, cable operators and fixed wireless access providers. With the exception of one all of these currently nine types of providers will keep their market relevance in the short or medium term. Only the CS/CPS providers will significantly lose importance in view of the progressive migration to Next Generation Networks (NGN). All groups of market players will (have to) change their business models in a more or less sustainable manner. Incidentally, consolidation is expected across all types. In particular, this development will include city carriers, Internet service providers and cable operators.
In a fixed network market shaped by NGN the parallel presence of infrastructure and service-based market players will cause different competitive dynamics. In the field of provision and operation of network infrastructure increasing regionalization of competition and oligopolization can be expected. In the field of service provision intensified competition in a growing market is foreseeable. Major options for (future) action to meet market changes as well as technological and regulatory changes in the German fixed network market are the improvement of cost structures, the development of new business segments and the improvement of the market position (customer loyalty, Customer Relationship Management).
(Full version only available in German language)
Discussion Paper is available for download.