The German DSL Market in Q3 / 2008
DSLWEB Special, November 2008
During the last quarter, the six leading broadband providers were able to activate 416.600 new connections. After the noticeable slump in the course of the last two quarters, the number of new DSL customers has slightly stabilized - albeit on a relatively low level. Looking at the individual results, however, it becomes apparent that only two providers acted as a real driving force in the market. Others even had to struggle with continued customer attrition.
The real driving engine for the growth in the third quarter turned out to be T-Home. With 344.000 thousand new broadband connections the provider was even able to top the results of the preceding quarter. Another positive development for the market leader: Some 50.000 customers were won back from competing network or resale providers.
The new product line T-Home Entertain - which combines modern VDSL connections bundled with T-Home's own IP-TV service -, on the other hand, turned out to be somewhat of a disappointment. The original prognosis of one million customers for the end of 2008 couldn't hold water. Since the start of the Entertain line in the fall of 2006 this estimation has already been cut in half. But even this goal may be hard to accomplish - at the end of the third quarter, T-Home Entertain had only 330.000 subscribers.
With a total of 107.000 new customers, Vodafone and its subsidiary Arcor managed to further cement their position as the new number two in the german broadband market. In the struggle to endure as an individual brand, Arcor has achieved at least a partial success: after the company could only sell 16.000 new connections during the second quarter, this number more than doubled in the last quarter.
For the last few months, 1&1 has had a hard time attracting new customers. Customer acquisition was already dwindling during the second quarter of this year, but with only 20.000 new customers, growth has further decreased by two thirds. Substantially more successful were 1&1’s efforts to transfer existing resale customers to so-called complete packages. Their number has risen by 190.000 to 560.000 during the third quarter. Ralph Dommermuth, CEO of United Internet, sees some profound changes in store for the DSL market. He predicts that approximately 3.7 million customers will change their broadband provider next year. Until now, broadband providers have been focusing on the acquisition of new customers. If Dommermuth’s prediction turns out to be accurate, the providers will be forced to reassess their strategy.
Meanwhile, the long-planned sale of Freenet’s DSL branch is plagued by further delays. In the face of the current financial crisis, it seems impossible for Freenet to reach an acceptable price for the division that is already officially described as abandoned. Which companies Freenet is still in talks with is not publically know. United Internet, however, announced that they have left the circle of potential buyers back in October. In the meantime, the costumer attrition at Freenet continued: After another net loss of 50.000 connections, a total of 230.000 DSL customers have turned its back on Freenet in this year alone.
For the second time in a row, Alice DSL has also had to announce a net loss in customers. With 18.000 cancelled subscriptions and over 2.3 million remaining customers, however, this loss is significantly less dramatic. It remains to be seen if this merely constitutes a temporary stagnation, or if this downward trend will continue over the next few months. According to representatives of Alice DSL, their free IP-TV service Alice Home TV is supposed to play a key role in turning the tide during the Christmas season. But in light of the weak start for T-Home Entertain it seems doubtful whether this particular service is fit to provide the necessary boost.
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