To date, only about a quarter of the funds the federal government has made available for this purpose in recent years have been used to rapidly expand fixed-line Internet. As the Federal Digital Ministry announced on request, a total of almost 16 billion euros has been approved for broadband expansion in various funding programs since 2015. According to the information, only a little over four billion euros have been accessed.
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According to the ministry, the remaining funds, i.e. more than eleven billion euros, are currently being used and are being continuously used by applicants. “We assume that the funds approved so far will also be paid out in the amount approved.” According to one of the federal government’s goals, there should be a fiber optic connection everywhere where people live and work by 2030. However, we are still a long way from that. Providers such as Deutsche Telekom and Deutsche Glasfaser are expanding significantly. However, the companies avoid some sparsely populated areas because it is not economically viable for them there. To ensure that such rural areas are not deprived of proper digital participation, the federal government is providing funding.
Fiber optics is supported in the house or apartment (FTTH, fiber to the home). This is considered the best technology for fast and stable data connections. Internet via telephone lines (DSL/VDSL) is a closed model in the future, and networks via television cables (HFC, hybrid fiber coax) cannot technically keep up with pure fiber optics. According to the Federal Ministry of Transport and Digital, led by Volker Wissing (FDP), federal funds will be paid according to the construction progress. “This is why the majority of approved funds flow only several years after approval.” Before the funds can be paid out, various procedural steps must be completed. Municipalities must first complete the so-called market investigation procedure and can only then apply for funds. Once approved, tendering follows and only after the contract has been awarded can a company submit an application for building construction.
Invoices are raised based on construction progress
These are in turn checked and approved, after which construction work can begin – the latter is not a sure success given the limited construction capacity. Depending on the progress of construction, invoices are submitted and then paid. According to the ministry, it usually takes two to four years between approval and the first cash flow. The federal government is currently funding more than 3,000 expansion projects, resulting in four million new fibre optic connections. The federal ministry says the gigabit funding is aimed at supporting particularly rural, less densely populated or structurally weak areas. We are on the right track; fibre optic connections are already available for around a third of German households, and this trend is increasing rapidly. 90 percent of expansion is self-financing, i.e. without funding. “The current funding concept improves the balance between the private sector and the subsidised expansion of telecommunications networks.”
State funding is not without controversy; many telecommunications companies view it critically. “Due to the high bureaucratic barriers, the implementation of state-funded expansion projects takes considerably longer than self-financed fibre optic expansion; up to seven years are not uncommon here,” says Sven Knapp of the Federal Association of Broadband Communications (Breco). “Nevertheless, subsidised fibre optic expansion is important for supplying areas where self-financed expansion is not possible.” The federal government has recently cut subsidies for fibre optic expansion. This year, only two billion euros will be provided instead of three billion euros. The reason for the cut is the federal government’s current budget difficulties.
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