Summary
This present discussion paper aims two-fold. Firstly, it deals with the quantitative empirical study of the development and structural features of the funding landscape for broadband deployment in Germany, using the analysis of extensive data collection of publicly funded broadband projects during the time period 2008 – 2012. Based on the detailed case studies, this paper furthermore explores the evidences on the current implementation of the state aid conditions of broadband funding with a view to deriving their regulatory implications. The results exhibit substantial regional differences in the distribution of individual funding instruments as well as from an aggregated view of all funding measures. Alongside the development over time and the regional focused funding measures adapted to the local needs, the funding specific factors and the region-specific funding factors have been contributed to the distinctive heterogeneity of the funding structure in der federal states. The development of the broadband funding, including an annual financial structure of subsidies, was due in particular to the broadband funding schemes at the federal and state levels and their state aid approvals by the EU-Commission. The low concentration of the funding at the level of local authorities reveals that, in the period considered and in the context of the funding programs, the broadband deployment have been occurred rather within the individual municipalities (rural cities and communities) than based on the districts and thus more fragmented. The assessment of the effects of the subsidy-intensive operators on the structure of the funding landscape for broadband deployment shows that the Telekom Deutschland GmbH continues to play a weighted role in the broadband development and through the subsidies to the network operators the dominant position of the national provider has tended to be further strengthened. Moreover, the providing the funding to the network operators indicates a high concentration of funding, both within the states and at the aggregate state-level. Thereby, the funding of broadband deployment within a state focused so far on up to three subsidy-intensive network operators whose local non-overlapping activities include the fiber-optic network roll-out and the operation of the broadband network in different municipalities. Thus, single, regional and local suppliers act in each rural region as a fiber-optic network provider. As in these regions doubling of a fiber network is economically inefficient and virtually impossible the subsidized broadband infrastructure roll-out and network operating in rural areas currently tend to inducing a (quasi-) monopolization of the fragmented fiber access in a regionally defined area. The observed, current lack of demand for the network access is driven by the fact that the market for broadband infrastructure deployment is yet in development. To what extent further market potential for access to the broadband network will reveal that appears economically viable for the joint network activity of the current network operator and third operator as well as the service provider highly depends on the existence and creation of potential economies of scale and network effects, which can be realized by merging of the (previously separately constructed) broadband infrastructure networks.
Discussion Paper is available for download.
