Telekom′s planned data limit meets with protest | Business| Economy and finance news from a German perspective | DW | 25.04.2013
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Telekom's planned data limit meets with protest

Deutsche Telekom’s plans to introduce data throttling for landline contracts have been met with indignation from many sides. Critics fear that the internet community could be split into two classes.

With its announcement of plans to limit broadband speed after a monthly data volume limit has been reached, German telecommunications giant Deutsche Telekom has triggered a storm of protest - not just in social networks like Facebook and Twitter, but also among politicians. German Economics Minister Philip Rösler wrote a personal letter to Telekom's CEO René Obermann, urging him to stick to net neutrality. And Ilse Aigner, Minister for Consumer Protection, critized the planned Telekom contracts as "not consumer-friendly."

"As you know, the German government has committed itself to protecting net neutrality," wrote Rösler. The commitment, he continued, allowed for "intervention," when necessary, to protect net neutrality and competition - a reminder that the Federal Network Agency could intervene if that was deemed necessary.

Data throttling from 2016?

On Monday (22.04.2013), Telekom announced that from May onwards, new landline contracts would come with a limit to the amount of high-speed data transfer per month: ADSL broadband lines with a bandwidth of up to 16 Mbit/s would be reduced to 384 kbit/s after clients had reached 75 gigabytes of transfer volume. VDSL with a bandwidth of up to 50 Mbit/s would be reduced after 100 gigabytes. The plans exclude Telekom's own internet services, such as its video portal T-Entertain, as well as the services of its content partners, such as Spotify. According to Telekom's plans, the limits would be made part of the contracts now but would only come into effect from 2016 onwards.

Spotify pictured on laptop screen Photo: Antti Aimo-Koivisto

Telekom's partners, like Spotify, will be privileged over other content providers

The announcement kicked off a wave of protest. "That means your internet access will effectively be switched off when you reach your transfer volume," said Professor Hartwig Tauber, director of the optical-fiber initiative Fibre to the Home Council Europe. "At 384 kbit/s it's difficult to access normal websites already today."

Representatives from the trade organization Bitkom, on the other hand, say they don't think limiting data transfer is such a bad idea. "New tariff models for the internet don't endanger Germany as an attractive business location. Similar volume contingents exist in mobile communication. And mobile communication has been booming for ten years," said Bitkom's CEO Bernhard Rohleder.

Tired of being the bit-deliverer

Telekom tries to parry accusations. The lowest planned limit, a company spokesman said, was still generous enough for clients to watch ten films in normal resolution as well as three films in HD, plus listen to 60 hours of internet radio, access 400 photos and play online games for 16 hours.

Critics aren't convinced and say it's a hypocritical calculation. A limit of 75 gigabyte is quickly reached, they argue, especially for families with children. Their data consumption is often high because family members' individual transfer volumes add up. When surfing online at home using their landline contracts, the critics said, consumers are used to not keeping a close eye on the watch or on the volume counter. Now, Telekom wants to move back in time, they complain.

What many have singled out in their criticism is the fact that the data limit would not count for Telekom's own offers. "Any carrier can offer premium services," said Hartwig Tauber, "provided that free internet access continues to be guaranteed for everybody. If it isn't, we risk establishing a society of two classes."

Critics say they know the true reasons for Telekom's plans: the company wants to get rid of its role as data provider only. Telekom wants to control what gets transmitted via its networks, they say. Telekom plans either to profit by charging both sides of the market - both content providers and clients - or else, by offering its own services. It's high time, argues Telekom, because it has to invest some 80 billion euros to upgrade the entire network to broadband capacity.

Money for network expansion

An optical fiber cable dpa 2522796

Telekom says it has to invest billions to bring optical fiber to everyone

Telekom CEO René Obermann says what's vital for the lasting success of internet development is to invest billions into a network upgrade in Europe and around the world. "To manage the network properly, we need, amongst other things, the option of treating individual online services differently: a video conference, for example, or a telemedical surgery," Obermann told DW in an interview in early March. "When setting our prices we must have the option of distinguishing between our clients who offer their services online. Or else our investments won't pay off." An email can arrive a minute late, but a video conference mustn't be interrupted.

But observers have their doubts that Telekom really intends to invest 80 billion euros to make sure that every household in Germany is connected to the optical fiber network. Telekom's own copper cable network, that many had long written off, could be made faster again with the help of new technologies, such as vectoring. And it would cost a fraction of 80 billion euros.

Telekom's critics sum it up like this: We don't build any new roads, but we will sell you a car that slows down if the potholes become too big.

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