Inexio expands on the German VDSL market, deploys vectoring

Monday 9 March 2015 | 15:53 CET | Background

The German ISP inexio is gradually expanding its reach by rolling out fibre to small towns in the southwest of Germany. The fibre network is terminated in newly constructed street cabinets, from where a connection is made to a Deutsche Telekom street cabinet and the end-user, using DT's copper last-mile network. The launch of vectoring technology, to reduce cross-talk and improve VDSL's performance, introduces a conflict between the incumbent and its wholesale partners, such as inexio. It remains to be seen how this can be resolved, but for now inexio's expansion continues.

Kai Seim, research associate of Telecompaper, explains: "There is a regime in place, regulated by the Bundesnetzagentur (BNA), based on the principle: first come, first serve. Providers have to announce their willingness to deploy, DT has to check and answer whether the operator is the single one to do it or whether others already applied for this location. When the application has been accepted, the operator has one year to deliver. If it fails, it may be banned this particular 'Ortsnetz' (exchange area) for a certain period). BNA also oversees the possibility of DT to cancel all colocations in an exchange area."

Inexio's focus is on small towns, but preferably with at least 3,000 inhabitants. Its fibre network is concentrated in Rhineland-Palatinate and Saarland. Expansion is sought into Baden-Württemberg and Bavaria where villages aren't too far apart (hence middle mile fibre can be laid in an economical way). In some cases, subsidies from both municipalities and states are provided, for example in Saal on the Danube in Bavaria. VDSL2 with vectoring can deliver up to 100 Mbps over a distance of up to 1 km, which makes it a suitable solution for many small towns - but not for very rural areas. Inexio uses equipment from Alcatel-Lucent and Keymile. Kai Seim adds that in state funded projects vectoring is not allowed, as a result of the subsidy rules put in place by the EU DG for Competition.

The problem with vectoring is that it creates a regional monopoly. For technical reasons, only one operator's equipment can be hooked up, meaning that other operators have only one option: to take wholesale bitstream services from the unbundler. Thomas Schommer, head of PR at inexio, explains to Telecompaper that this situation creates a run on unbundling vectored VDSL. However, the regulator added a demand: if an operator wishes to unbundle a certain street cabinet, he should file his plans and follow through on them within 12 months. By putting these rules in place, the regulator tries to prevent re-monopolisation. Kai Seim points out that there is still a form of information asymmetry: DT obviously knows all its own plans, but also those of its competitors, since they need colocation in order to be able to unbundle. The deployment of vectored VDSL wil only be announced when its done, not before. So, all plans are invisible to competitors, but not to DT.

By the end of September 2014, inexio reached a total of 586 towns and in the meantime crossed the 600 level. Currently, inexio serves 45,000 private and 2,000 business customers.

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