The overwhelming majority of broadband internet connections in Germany are still based on the DSL technology. This market segment, however, has seemingly reached its growth limit by now. On the already saturated fixed-line market new customers and suppliers changer increasingly opt for other technologies, especially cable Internet. While the major German cable providers were up by more 177,000 broadband customers at the end of the quarter, the four major DSL providers have lost a sum total of 79,000 DSL contracts during Q3 2012.
DSL providers: New technologies and additional services prop up fixed-network business
With just over 12.4 million DSL subscribers, Deutsche Telekom remains the undisputed leader in the German broadband market. The strong position of Deutsche Telekom is reflected in the fact that the line losses it had to compensate for have continued to decrease in Q2 2012. With a total of 236,000, their number remained 20 percent below last year's. The influx of new DSL customers, however, has also decreased, leading to a comparatively low number of net additions to the existing Telekom DSL subscriptions. Overall, Telekom has acquired 47,000 additional DSL customers between April and the end of July, which represents a marked decrease from the 84,000 net additions in Q2 2011.
While Telekom could easily compensate for its own line losses, the resulting net additions weren't enough to obscure the general market trend: The market leader's DSL customer gains were now outweighed by equally high losses at the other DSL providers. As a result, the total number of DSL connections with the leading providers have effectively decreased for the second time after the first small net loss in Q3 2011 (see also DSLWEB Broadband Report Germany Q3 2011).
Vodafone, the current number two in the German DSL market, lost a total of 43,000 DSL subscriptions in Q2 2012, which about equals the number of effective line losses from the previous quarter. Like Vodafone, o2 also could not put an end to the continuing customer attrition in the DSL segment - the number of o2 DSL subscriptions declined by an additional 56,000 to a total of 2.49 million in Q2 2012.
The subscription losses in the fixed-line segment, however, do not mean that Vodafone and o2 are not making any progress in marketing internet solutions for home use. Both companies have introduced - as has Deutsche Telekom - internet and telephone packages that are not based on landline access but are implemented via UMTS or the newly introduced LTE mobile network standard. This way, mobile carriers are able to reach new customer groups in previously underserved regions with relative ease. In order to avoid the fees for accessing parts of Telekom's infrastructure, Vodafone is really pushing mobile solutions in this vein as a substitution for conventional fixed-line DSL connections.
The positive development at 1&1, meanwhile shows that a downturn in the fixed-line business may very well be reversible. After a long period of zero growth, the fourth largest German DSL provider was able to announce a slight net increase by 10,000 DSL subscriptions for Q1 2012 and managed to build on this positive result in Q2 with a net total of 20,000 new DSL customers.
The integration of Unitymedia and Kabel BW has proceeded since the takeover of Kabel BW by Liberty Global last year. The two cable companies are now operating under the new name of Unitymedia KabelBW. The restructuring, meanwhile, has not put a damper on the continued growth of the two brands: together they were able to win 98,900 additional cable internet customers in Q2 2012 and provided just over 2 million cable internet connections at the end of the quarter.
The number of cable internet subscriptions at Kabel Deutschland has risen by an additional 64,700 to 1.58 million in Q2 2012. Kabel Deutschland, too, may be able to expand its customer base via an acquistion in the forseeable future. The Federal Cartell Office will announce its decision about the planned take-over of the Tele Columbus Group by Kabel Deutschland at the end of the year.
In total, the three major cable operators reached 3.59 million internet subscribers and a combined market share of more than 13 percent at the end of Q2 2012, shifting the balance of power in the German broadband market further in their favor.
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