Redistribution and growth were the two trends that defined the German market for DSL in 2006. According to the Federal Telecommunications Agency, the number of DSL customers jumped by 37% for the year 2006 in Germany to reach a total of 14.17 million (2005: 10.38 million). This growth also highlights the penetration rate among households – which shot up from just 27% in 2005 to 36% in 2006.
The market share also saw redistribution among providers. The supremacy of the market leader, Deutsche Telekom, shows signs of crumbling as it dropped below the 50% mark in 2006 for the first time. T-Com’s 7.07 million customers are complemented by 3.21 million T-DSL resale connections and 3.89 DSL connections of other competitors. However, if one counts the T-DSL resale users as direct Telekom customers, the resulting 73% market share clearly underscores Telekom’s solid technological dominance.
Although one encounters regionally active companies of notable size, such as Netcologne with 300,000 customers and new entrants from the cell phone sector (Vodafone and O2), the market is basically shared by a few major providers. The big players are T-Com, United Internet (1&1), HanseNet (Alice), Arcor, Freenet, and Versatel, who together serve over 90% of all DSL customers. The figures just released for Q1 of 2007 highlight the respective shares of the pie held by these dominant providers:
As expected, T-Com lost another piece of the pie. It dropped from a market share of 49.89% in 2006 to just 48.20% at the beginning of 2007. This is a consequence of noticeable consolidation of providers in the market, since smaller firms are increasingly disappearing and passing on their customers to the top players. For instance, HanseNet took over AOL’s DSL customers and Freenet pulled in the German base of Tiscali. In contrast, United Internet saw internal shifts: GMX DSL and Schlund + Partner disappeared and DSL products are now being offered solely via the 1&1 brand.
T-Com claims a declining trend for resale connections. This trend is quite apparent, since T-Com’s competitors are focusing on gaining customers mainly for their own networks, thus utilizing the T-DSL resale segment as an alternative solution for regions where they lack presence. Alice followed the footsteps of Arcor and Freenet by taking over AOL customers, and 1&1 has announced the same strategy for the 3rd quarter. Hence, there is little doubt that Versatel, the smallest among the big players, will soon be the only one operating exclusively with its own telecommunications network.
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