Deutsche Telekom has received conditional regulatory approval to upgrade its copper network via a process called vectoring, or VDSL2, in order to offer faster Internet.
The German federal network agency said on Tuesday in a draft decision that Deutsche Telekom (Bonn, Germany) would have to give its competitors access to the new technology but it could deny access in areas where alternative networks are available.
In the next 20-25 years as much as 80 billion euros ($104 billion) is needed to roll out a fiber optic network in Germany, investment that will need to be shared among the local telecoms operators.
In the meantime Deutsche Telekom wants to upgrade its copper network via vectoring, or VDSL2. This cheaper alternative will enable it to offer Internet speeds of up to 100 megabits per second, up from current levels of 16 Mbit/s.
Cable companies at the moment offer 50 Mbit/s Internet for the same price or less than Deutsche Telekom's current speeds, and can already supply up to 150 Mbit/s.
Vectoring is a technology which makes it possible to double bandwidth by cancelling electromagnetic interference between lines in so-called distribution boxes.
To make it work the technology can only be installed by one operator in the boxes.
After that the new infrastructure can be used by all operators.
Deutsche Telekom, which said on Tuesday it welcomed the decision, owns about 330,000 such boxes in Germany, while its competitors have connected to about 8,200 of these boxes with their own lines.
In Germany cable operators such as Kabel Deutschland (Unterfoehring, Germany) and Liberty Global's Unity Media (Koln, Germany) are chipping away at Deutsche Telekom's share of the broadband market with faster, cheaper offerings.
Their cable lines, designed to deliver TV to homes, have been upgraded to carry voice calls and Internet at speeds often five times faster than competing services from the telcos.
Deutsche Telekom controls more than 40 percent of the broadband market. Vodafone (Dusseldorf, Germany) has about 12 percent.
Kabel Deutschland, the largest cable operator with about 15 million of the 28 million homes served by cable, said in December the market penetration of it and its rivals in fixed-line broadband was below 15 percent.
($1 = 0.7682 euros)
(Reporting by Harro ten Wolde an Peter Maushagen; Editing by Mark Potter)