The German DSL Market in Q3 / 2007
DSLWEB Special, November 2007
T-Home DSL seems to have found its footing. After the slow decline in the last quarter was stooped, its market share headed upwards in Q3. Among the big six German providers, T-Home boosted its share from 48.28% in the last quarter to 48.60% in the 3rd quarter. In other words, almost every second household in Germany now has a DSL connection provided directly by the former monopolist.
This development is somewhat surprising, since the competition has intensified its effort to offer cheaper full-service deals in new networks under expansion. It seems that many Germans consider their Telekom line as something sacred and valuable – or are we simply looking at ignorance and the inconvenience of making a change?
Nevertheless, competitors vying for the second spot behind Telekom appear generally satisfied. Mr. Dommermuth, CEO of United Internet, is confident that they will reach this year’s target of 500,000 new DSL customers. Arcor, on the other hand, signed up 140,000 new households for the second fastest growth this quarter after T-Home. Arcor managed this by collaborating on sales with Vodafone, and is now planning more strategic partnerships. HanseNet is voicing an ongoing success story, although it locked in only 60,000 Alice DSL customers this quarter versus 80,000 in the last one.
As the smallest of the top six providers with the smallest network, Versatel racked in another 50,000 new customers. This equals what Freenet managed, although the latter is much more accessible than Versatel. Freenet claims to be furthering its success, but complains of "procedural problems in connecting full-service customers through the Deutsche Telekom."
This is precisely the issue being raised by BREKO, a German association of landline competitors. It claims that for over 50% of all customers switching from Telekom to alternative providers, Telekom is not sticking to its agreement to switch them over within a period of one week. Waiting periods of up to three weeks are not unusual – and this is damaging the image of BREKO's members and resulting in contract cancellations.
Such statements seem to underscore the suspicion that attractive deals for connections, ignorance, the inconvenience of making a change, or the strategy of concentrated growth had little to do with Telekom’s ability to turn around its decline. Instead, BREKO’s impression is that “Deutsche Telekom AG is being revitalized on the backs of its competitors.”
Another relevant factor is that T-Home is only offering minimum terms of 24 months. Previously, under the T-Com name, DSL customers had more flexible cancellation options. However, this is barely a reason to criticize T-Home, since for a long time lengthy contractual terms has been a common practice among other DSL providers.
The 4th quarter offers a ray of hope for Freenet: after assuming the 40,000 DSL customers of Lycos, its growth rates will be much higher than in this 3rd quarter. But that is naturally only if Freenet is not taken over – a rumor that does seem to have some substance.
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