Q1 2011: Only Telekom and o2 can expand their DSL customer base

In Q1 2011, the top-five largest DSL providers in Germany were able to activate a net total of 140,000 additional fixed-line broadband connections. The overall growth therefore remained on a similar level compared to the previous quarter (+ 177,000 connections). As in Q4 2010, Deutsche Telekom and o2 were the two providers able to continue their customer growth even in the face of a slow market.

Former High-Flyer Vodafone Stagnates

As usual, market leader Telekom scored the highest number of new DSL customers in Q1 2011 and brought its total up by 115,000 to 12 million. Between the alternative DSL providers, however, a marked shift occurred during the last twelve months. Up until the start of 2010, the total of Vodafone customers had regularly increased by a six-figure number, making Vodafone the most important growth motor for the German DSL market behind Deutsche Telekom. Now this remarkable run has ended for the time being. While Vodafone had achieved a 19.6 percent increase in DSL customers during the business year 2010/2011, the following twelve months brought almost zero net growth. In Q1 2011, Vodafone even lost 24.000 DSL subscriptions.

Current Number Three Rapidly Raining Ground

With the diminishing growth of Vodafone DSL, o2 has taken up the mantle of the growth driver among the alternative providers. By the middle of 2010, o2's customer acquisition had kicked into high gear. On a year-to-year basis, o2 was able to grow its customer base by 8 percent and reached a total of 3.26 million DSL subscriptions by the end of Q1 2011. o2 was also more than satisfied by the positive development of its subsidiary Alice, that has had its fair share of struggles with customer churn over the past two years. According to o2, Alice not only managed the turnaround by now, but has also contributed greatly to the good results of the past months.

While Telekom and o2 were able to distribute the entirety of new customers among themselves, 1&1 effectively lost further customers in Q1. All in all, 1&1 lost 20,000 additional DSL subscriptions during the first three months of 2011.

Facing the slowdown on the fixed-line market, the telecommunication providers have been turning their attention to other business segments for quite some time. The best example of this is the provider Versatel that is almost exclusively focusing on the more lucrative business customers right now. As a matter of fact other competitors are also seeing great potential in this field. Vodafone for example calls its business customer segment "a lasting pillar for growth" and puts considerable effort into the attempt to wrestle market shares from Deutsche Telekom in this sector.

Mobile internet services meanwhile are experiencing a real boom phase. o2 for example increased its mobile data revenue by 32 percent compared to the previous year. In the same time span, Vodafone managed to grow its mobile data revenues by 25.6. They now make up 24.7 percent of service revenues in its entire mobile segment.

Long Term Evolution: Taking Mobile Data to the Next Level

The introduction of the new mobile communication standard LTE cast its shadow ahead in Q1 2011. The LTE technology will not only drastically improve the capacity of the mobile networks. The use of new frequencies made availableby the digitalization of broadcast signals will also enable the providers to cost-effectively bring broadband internet to formerly undersupplied regions. The elimination of these still-existing "White Spots" is one of the conditions German Bundesnetzagentur imposed upon the winners of the auction in which Telekom, Vodafone and o2 were able to secure said frequencies for themselves.

In March 2011, Vodafone was the first provider to introduce LTE products onto the market. After the end of Q1 2011, Telekom followed with its first LTE offerings in April. o2, on the other hand, has kept details about its planned LTE tariffs under wraps so far.

For the time being, LTE will mainly be employed as a replacement for non-existing fixed-line broadband connections and as a high-speed solution for mobile use secondly. The conditions issued by the Bundesnetzagentur that have to be fulfilled before LTE can be brought to the urban population centers, however, are not the only reason for this. Another factor is the current lack of LTE-enabled customer devices, although this year will see the release of the first suitable smartphones and tablet PCs.

Each individual market report serves mainly as a snapshot of the current market situation. To provide a fuller picture of long-term developments, DSLWEB also keeps all previous editions of the Broadband Report readily available.

You can access the english-language reports by going to the archive page and clicking on the link in the lower-left corner of each entry or use the direct links below:

DSLWEB Breitband Report Deutschland