The first places to receive LTE coverage in Germany were not large cities like Berlin or Munich, but towns of 5,000 inhabitants or less. Now that rural areas have been covered, German providers will now start to update urban areas with LTE coverage this year. Overall, over half of German households already have access to LTE, including growing networks in Berlin, Munich, Cologne, Frankfurt and Duesseldorf, according to Germany Trade and Invest, an investment agency of the Federal Republic of Germany.
When Germany auctioned its LTE frequencies in 2010, a stipulation ensured that rural areas lacking high-speed internet access could become the first LTE customers. Under that stipulation, a tiered system was put in place where, first, 5,000 inhabitant towns were covered, followed by 20,000 then 50,000-person communities. This uncommon approach ensured broader access could be provided faster to underserved areas, says the investment agency. Now LTE providers have connected roughly half of the federal states, opening up the gates to reach city customers.
According to Julia Oentrich, investment consulting manager for Information and Communication Technologies at Germany Trade & Invest, this approach could potentially be seen as counterintuitive, but due to Germany's existing infrastructure in urban areas, the plan worked for the country.
“Generally large markets receive cutting-edge technology first due to higher adoption rates and lower cost per customer. Germany already has excellent UMTS coverage in the major urban areas, as well as more Wi-Fi hotspots by providers such as Deutsche Telekom as part of their services,” says Oentrich. “With these preconditions, regulators decided to use the paradigm shift to LTE technology as an opportunity to improve high-speed coverage to rural areas that are underserved by DSL or UMTS.”
But before auctioning off the frequencies, telecom providers were informed of the stipulations and were able to plan accordingly.
“Making this condition known at the time the frequencies were auctioned allowed the calculation to be incorporated into the auction bids,” says Oentrich. “In other words, network operators could anticipate the investments needed to remain profitable in the medium term.”
According to Oentrich, serving smaller, more rural areas with LTE first, gave telecom operators an incentive to work quickly in order to access urban clients and “speed up the profitability of implementation.”
"The LTE implementation strategy reflects the diversity of Germany's economy. The German Mittelstand is dispersed across the country, so it makes sense to take this approach. Businesses aren't constrained to one city or region," says Oentrich.