AFP/Johannes Eisele
Germany’s Broadband Strategy
Its likely impact on the economy and on job creation
This case study looks at the potential impact of investment in broadband technology on jobs and the German
economy. It analyses two investment scenarios: the
Federal Government’s “National Broadband Strategy”,
which is to be completed by 2014; and a subsequent
phase of “ultra-broadband” evolution planned for
2015–2020. It concludes that an investment of close to
EUR 36 billion over a ten-year period (2010–2020) could
generate some 968 000 jobs.
The National Broadband Strategy announced by
the Federal government in 2009 aims to provide 75 per
cent of German households with access to a broadband
connection of at least 50 Mbit/s by 2014. And a subsequent “ultra-broadband” plan aims to raise speeds to at
least 100 Mbit/s for 50 per cent of households and to
50 Mbit/s for another 30 per cent by 2020.
Boosting broadband in households
Germany has a high-level of broadband penetration
when compared to other major economies.
In addition to improving coverage, Germany plans
to increase the access speed of residential broadband
users.
Of the 39.7 million households in Germany, 39 million (or around 98 per cent) have access to some
type of broadband technology. Of these households,
36.7 million have digital subscriber line (DSL) capability, 22.0 million are served by cable television networks
(connecting via cable modems), and 730 000 can access
the Internet via fixed wireless or satellite technology. It is
also estimated that 10.9 million households are able to
connect to the Internet via very high speed DSL (VDSL),
while 240 000 household connections could be based
on fibre-to-the-home (FTTH). These estimates are based
ITU News  5 | 2011  June 2011
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Germany’s Broadband Strategy Broadband and the economy
on announcements made by telecommunication operators and municipalities deploying fibre-optic technology
in their networks.
Around 2.8 million households are in “grey spots”,
meaning that they have broadband access between
384 kbit/s and 1 Mbit/s. The remaining “white spots”,
which comprise 2 per cent of unserved households (or
730 000), are either located in less densely populated
areas or near the outer boundaries of already connected
areas.
Faster speeds
The Federal Government defined two targets in its
National Broadband Strategy:
 to provide broadband access (1 Mbit/s) nationwide
no later than the end of 2010;
 to ensure that 75 per cent of German households
have access to a broadband connection of at least
50 Mbit/s by 2014, with the goal that such access lines should be available as soon as possible
throughout the country.
To meet these targets, the 730 000 unserved households (“white spots”) will be covered by a mix of wireless and wired technology with investment estimated at
EUR 924 million (see Table 1). The 2.8 million so-called
“grey spot” households will be upgraded to broadband
access of at least 1 Mbit/s.
Given that VDSL technology deployed in densely
populated cities is limited to 50 Mbit/s, it is assumed that
9.92 million households (representing 25 per cent of the
total number of German households) will be upgraded
to FTTH. Since the current number of households served
by VDSL is 10.9 million and given that these households
are located in the 50 major German cities, it is assumed
that the majority of them will be migrating from VDSL
to FTTH. It is further assumed that households with DSL
will be upgraded to VDSL.
Ways for achieving these objectives include encouraging operators to seek synergies through joint infrastructure deployments; using the digital dividend; formulating regulation that fosters investment and growth;
and financial support.
The study estimates that fulfilling the National
Broadband Strategy will require an investment of EUR
20.2 billion up to 2014 (see Table 2). It adds that deployment of ultra-broadband infrastructure in subsequent years (2015–2020) would require an estimated
EUR 15.7 billion of additional investment.
Table 1 — Investment required to cover unserved households
Technology
Number of
households
Cost per line
EUR
Total investment
(EUR in millions)
DSL
250 000
1200
300
Wireless
480 000
1300
624
Total
730 000
Source: Katz et al. (2010a).
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ITU News  5 | 2011  June 2011
924
AFP/Innocenti & Lee CM / Image Source
Broadband and the economy Germany’s Broadband Strategy
More employment
Fulfilling the 2014 objectives of the National
Broadband Strategy will generate an estimated
304 000 jobs over five years (between 2010 and 2014).
In terms of direct employment related to the construction of broadband networks, 158 000 jobs will be created in equipment manufacturing, construction and telecommunications. It is estimated that job creation will
be apportioned among the sectors as follows: construction will benefit the most with 125 000 jobs, followed
by telecommunications (28 400) and electronics equipment manufacturing (4700).
Total indirect jobs generated by sector interrelationships are estimated at 71 000. The key sectors that will
benefit from the indirect effects of broadband network
construction are distribution (10 700), other services
(17 000), and metal products (3200). Household spending, generated directly and indirectly, is likely to result in
75 000 induced jobs.
In addition, implementation of the “ultra-broadband” goal would generate an estimated 237 000 jobs
between 2015 and 2020. This figure comprises
123 000 direct jobs, 55 000 indirect jobs and 59 000 induced jobs.
Table 2 — Total investment required to achieve objectives for 2014
Target
Amount
(EUR in millions)
Address the unserved 730 000 households (“white spots”)*
924
Upgrade the “grey spots”
336
Deploy FTTH to 25 per cent of households
12,236
Deploy VDSL to 50 per cent of households
6,747
Total
20,243
*See details in Table 1.
Source: Adapted from Katz et al. (2010a).
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Germany’s Broadband Strategy Broadband and the economy
What it all means
The study concludes that over the ten-year period between 2010 and 2020, the National Broadband Strategy
and the evolution to an ultra-broadband infrastructure
will have a significant impact on jobs and the German
economy. It is estimated that investment of close to EUR
36 billion over the ten-year period would generate some
968 000 jobs, of which 541 000 would be derived from
network construction and 427 000 would be generated
after the network is deployed, as a result of enhanced
innovation and new business creation.
Network construction would yield EUR 33.4 billion
in terms of additional GDP, while network externalities
would result in an additional EUR 137.5 billion over
the ten-year period. In total, this would result in EUR
170.9 billion of additional GDP (0.60 per cent annual
GDP growth) in Germany, as shown in Table 3. These
economic returns on broadband investment amply justify moving ahead, in particular to ensure a policy and
regulatory framework that is geared to growth and
innovation.
Table 3 — Germany: Employment and economic impact per annum
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Total
Network
Construction
Employment (in thousands)
National strategy
60.8
60.8
60.8
60.8
60.8
Ultra broadband
Total
60.8
60.8
Network externalities
Total
60.8
60.8
304.0
39.5
39.5
39.5
39.5
39.5
39.5
237.0
60.8
60.8
60.8
39.5
39.5
39.5
39.5
39.5
39.5
541.0
24.0
35.0
44.0
54.0
54.0
54.0
54.0
54.0
54.0
427.0
84.8
95.8
104.8
93.5
93.5
93.5
93.5
93.5
93.5
968.0
Network
Construction
Gross domestic product (in billion euros)
National strategy
3.8
3.8
3.8
3.8
Ultra broadband
Total
3.8
3.8
Network externalities
Total
3.8
Source: Adapted from Katz et al. (2009a)
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3.8
ITU News  5 | 2011  June 2011
3.8
18.8
2.4
2.4
2.4
2.4
2.4
2.4
14.6
3.8
3.8
3.8
2.4
2.4
2.4
2.4
2.4
2.4
33.4
13.9
14.5
14.9
15.7
15.7
15.7
15.7
15.7
15.7
137.5
17.7
18.3
18.7
18.1
18.1
18.1
18.1
18.1
18.1
170.9