Since Monday this week, a hot discussion develops in Germany, when ISP Telekom declared that starting on May 2nd new DSL contracts will contain speed limits (see press release – German language only). So if new customers provided with the slowest DSL speed „up to 16Mbit/s“ reach a maximum of 75 GB transfer volume, they will have to cope with 384kbit/s until the end of the month – unless they pay extra. The limitation goes up to 400GB/month for the few ones having a „up to 200Mbit/s“ contract.
A fundamental change in business models – or a stategic move? Let’s look at the facts.
There were first rumours about the plans in March. But Telekom CEO René Obermann already gave hints about a possible change in business models six months ago during the summit discussion opening the Medientage München. Addressing Google’s YouTube and others he demanded, that content providers causing heavy traffic on the net must contribute to the costs of infrastructure expansion. 300 billion Euros will be necessary within the next 5 years in order to make net infrastructure fit for rising demands of bandwidth.
The situation in Europe presently might not to be very different from the one analysed by Sandvine last November in the Global Internet Phenomena Report: In the US 65% of data traffic are already due to audio and video streaming. Customers of IPTV provider Netflix cause one third of the whole of the fixed network traffic at peak. Average monthly data consumption went up 120% from 23GB to51GB within one year.
Certainly these facts are crucial. Yet a few more observations help to form a more detailed picture. Germany’s Federal Association for Information Technology, Telecommunications and New Media BITKOM stated last December that 82% of German households are connected to fixed high speed internet. As growth rates went down to less 1 million new customers during the last two years, market saturation seems to be reached. Claims are staked. The price war can be declared over. So economically speaking, it’s time to tighten reins and cash up.
Hitting the headroom – or not?
384Kbit/s seem to be a fallback into the late 1990’s. But obiously no one with a running contract with Telekom has to worry about, because they are not drwan into consideration – until now.And even if, today ona a fiarly small percentage would really hit the max headroom of 75 GB monthly. Not to mention, that technically they won’t be able to realize this before 2016, Telekom admits themselves.
But of course Telekom, claiming that they offer “the best of the all networks”, doesn’t want to scare off anybody to sign. Therefore, in the new schemes all data transfer resulting from using Telekom’s own IPTV platform Entertain will not count into the volume limits (as well as WLAN TO GO, a joint venture with Fonic to multiply wireless access points coverage). Pretty sure Telekom’s marketing department will soon get special package offers out of their cupboards.
Net neutrality back on the agenda?
Yet, these exclusions cause upheaval throughout politics and economy, as Telekom thus attacks the principles of net neutrality, brought into public discussion a few years ago but petering out recently. Only two European countries – Norway and the Netherlands – have implemented net neutrality up to now, whereas the European Commission sticks to market self-regulation. If other ISP follow Telekom, new scenarios become likely: Certain internet services might be available or even be promoted, others might not be accessible. At present, this is already true for HbbTV. This standard supported by the majority of European public service and commercial broadcasters, as well the consumer electronic industry is not implemented on Telekom Entertain.
Unfortunately the reality of broadband dissemination feels somehow different at the end of the line. Apart from vast rural areas and even quite a few suburban areas around big cities like Munich being still far away from high speed internet, a recent report of the Federal Network Agency Bundesnetzagentur confirmed, that having a slow DSL connection is not just a feeling (press release in English). 226.000 users participated in a reality-check online measurement. Results: One third of customers receive only up to 50% of the maximum speed stated in their tariff scheme. But actually only 20% get the bandwidth they think they pay for.