October 17, 2017 / 10:18 AM / 5 months ago

Germany must spend 40 bln euros on fiber networks: lobby

FRANKFURT (Reuters) - Germany’s next government should invest 40 billion euros ($47.3 billion) to build out a high-speed, glass-fiber telecoms network or risk a loss of competitiveness, a leading business group said on Tuesday.

FILE PHOTO: Fibre optic cables of Germany's biggest cable operator, Kabel Deutschland, are pictured at the Kabel Deutschland playout center in Frankfurt February 25, 2013. REUTERS/Lisi Niesner

The appeal, by the VDMA engineering lobby, reflects concerns that Europe’s largest economy is falling behind due to slow internet speeds, hampering business efficiency and production automation in its export-oriented industries.

“The new government should factor 40 billion euros in budget spending for the next parliamentary term,” VDMA President Carl Martin Welcker in a speech prepared for reporters.

Many companies in the so-called Mittelstand - typically smaller firms in family ownership - are located outside cities and lack access to ultra-high-speed networks.

“It is in particular these Mittelstand businesses... that urgently need more support from municipalities and from Deutsche Telekom in order to stay on top of the global competition,” Welcker said.

The VDMA has criticized Deutsche Telekom (DTEGn.DE), in which the state still owns a stake of over 30 percent and which has a dominant market position, for being slow to roll out glass-fiber and instead focusing on upgrading its old network.

Deutsche Telekom is relying heavily on vectoring, a technique which improves transmission speeds on the “last mile” of copper wire linking fiber connections at the street cabinet to homes and businesses.

    The VDMA, which represents thousands of firms with combined annual revenue of over $200 billion, regards this as a stop-gap and says fiber connections right to the destination building are the only way to meet the medium-term demands of German industry.

    Chancellor Angela Merkel won a narrow general election victory last month and her conservative party will try to build a new coalition government with the Free Democrats and Green parties, a process that could take weeks or even months.

    The smaller parties want to sell shares in Deutsche Telekom to raise funds to invest in building out high-speed networks, and create a new digital ministry to improve policy coordination.

    Reporting by Douglas Busvine; Editing by Georgina Prodhan

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