In the first quarter of 2008, the number of DSL connections served by the six leading providers in Germany went up to about 19.21 million. The increase in comparison to the previous quarter thus amounts to about 790,000. It therefore is hard to imagine that a DSL provider could be registering decreasing customer numbers on such a growing market.
However, this is exactly what happened in early 2008. While Freenet still had 1.28 million customers at the end of 2007, the green provider was only used by a mere 1.19 million DSL Internet surfers at the end of March. And 90,000 customers less in three months is quite a significant loss. The reasons given by Freenet for this development are diverse: aside the clearing backlog caused by Telekom, which all alternative providers are complaining about, Freenet also refers to dubious sales partners; however, the company claims it has ended these business relationships. So in the end, good and honest service seems to be just as important as the constant advancement of the own products.
For after the rumours about a takeover of Freenet had constantly grown stronger in the respective period, there no longer seemed to be any real changes to the provider's DSL products either. Which has also changed in the meantime: after lowering its prices, the company now is presenting itself again as serious competition for the other DSL providers.
The fact that existing customers cancelled their contracts also was a central issue at Alice DSL. A report published in the business magazine Capital, which referred to insider information and stated that HanseNet or Alice were struggling with the mass desertion of unsatisfied DSL customers, was denied by the company's management. However, the current quarterly figures suggest otherwise. With customer growth of around 20,000, the growth rates remained clearly below those achieved the year before. It seems quite improbable that a desertion of existing customers does not play any role in this development?
While Alice and Freenet surely cannot be happy about the development of their customer numbers in the first quarter of 2008, their competitor Arcor exhibits more than satisfying growth. With about 170,000 additional connections, the provider is continuously catching up from quarter to quarter with 1&1, who is the current runner-up to Telekom. Since Arcor now has completely returned into the arms of its parent company Vodafone in the 2nd quarter of 2008, it will be interesting to see how this development turns out. According to statements by Vodafone, the Arcor brand will be maintained.
The decision of the Federal Network Agency (Bundesnetzagentur) regarding the IP bit stream is also bound to cause some excitement: Telekom now is obligated to provide unbundled DSL connections to its competitors at fair market prices. Up to now, every DSL connection sold by alternative DSL providers by resale was bound to a telephone connection provided by T-Home - irrespective whether it was actually used or not.
The end to this forced connection could mainly lead to an increased price war and redistributions in rural areas where Telekom is the sole provider of telephone services. However, this is a change which will not have any impact before the 3rd or 4th quarter, since no alternative DSL provider is offering unbundled or "naked" DSL with pure DSL telephony up to now.
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