Free choice for tenants – and Vodafone customers are running away
In Germany, Vodafone is primarily struggling with the fixed network.
Those: pa/dpa/Federico Gambarini
For Vodafone, the meager investments in the TV cable network are taking revenge. There is a risk that in the future the connection can no longer be settled via the ancillary rental costs. Telekom wants to benefit. At the same time, there is an opportunity for customers.
Dhe telecommunications provider Vodafone has a problem with its expensive German TV cable network. Many customers are still billed for the cable connection via the ancillary rental costs – but the amendment to the Telecommunications Act (TKG), which was passed in 2021, will apply from next year the so-called “ancillary cost privilege” no longer applies. By then at the latest, tenants will be able to freely choose how they want to receive television.
Since broadband Internet usually comes into the house with the cable connection, there is a risk Vodafone dwindling among these customers. The future changes in the law can already be felt: In the fourth quarter of 2022 alone, the company lost a good two percent of its fixed-network sales in Germany compared to the previous year, as Vodafone announced in its annual balance sheet in the middle of the month. The group lost more than 400,000 cable connections and over 120,000 broadband cable Internet customers in 2022.
“These declines are mainly due to higher shutdowns of broadband bundles,” the group explains in its balance sheet. These are packages consisting of television and internet connections. Vodafone speaks of “challenges” in connection with the Telecommunications Act.
Because many landlords are already making the technical changes and are offering alternative connections from competitors. especially the Deutsche Telekom had successfully lobbied for the abolition of the ancillary cost privilege and is now marketing its broadband connections including TV box via VDSL or fiber optic cable to housing associations and landlords as an alternative to coaxial copper cable, i.e. the classic cable connection.
Net groans under onslaught
Especially during the corona pandemic, when customers mainly worked from home, many consumers were dissatisfied with their cable connections. Complaints about unreliable internet connections were piling up on fault reporting sites. Thanks to notice periods of up to two years for broadband contracts, this is reflected in the providers’ balance sheets with a delay.
“During Corona, our network did not always provide the performance that our customers and we wanted,” says Vodafone spokesman Alexander Leinhos. “Especially because it was originally designed for high download rates through streaming and the like in the evening hours – and not for a home office-related full load through video conferences and much more throughout the day.”
A technical feature of the cable network contributes to this: down to the street level, the data is transmitted via fiber optics, but then it is distributed via copper cables, the bandwidth of which is limited. If many customers use the network at the same time, the performance collapses.
In order to eliminate the problem, Vodafone has to segment it, i.e. install additional fiber optic nodes. In 2020, at the beginning of the pandemic, Vodafone was still hesitating, but in view of the many layoffs, the group is now investing heavily: “In 2021 there were still around 1,000 construction measures across Germany, and in the past twelve months there have already been 2,600,” says Leinhos. “In the next twelve months there will be around 4,000 capacity expansions.
The group is now trying to completely replace the cable network in metropolitan areas: “We are actually building our own cable network,” said Vodafone Germany boss Philippe Rogge this week. Wherever possible, he wants to replace the copper cables in the houses and apartments with fiber optics.
To this end, Vodafone, together with the specialist Altice, has founded a new subsidiary called OXG, through which the two companies want to invest more than seven billion euros in fiber optic expansion. Up to seven million new connections are to be added in the next six years. However, 80 percent of these arise where Vodafone already has cable connections.
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