28 März Special assets worth billions must not hinder digital infrastructure deployment +++ Concrete recommendations for promoting competition +++ VATM presents the 2030 ZEW Model Report
Berlin, 10.03.2025. As the coalition negotiations approach, the new federal government must set a clear course for Germany’s future to restore its economic leadership among industrialized nations. The recently presented exploratory paper from CDU/CSU and SPD outlines some promising initial steps. VATM welcomes proposals to reduce electricity tax to the European minimum, halve network fees, reform corporate taxation, incentivize investment, and cut unnecessary bureaucracy by up to 25 percent.
However, VATM raises concerns over the significant funds earmarked for transport infrastructure as part of a special asset. “While the package is undoubtedly important for rail, roads, and energy, it will likely drive up construction costs significantly – posing serious challenges for commercial fibre roll-out and slowing down digitalization”, warns VATM Managing Director Dr. Frederic Ufer. The coalition partners must act to counter these effects. Otherwise, the digital infrastructure roll-out risks turning into a collateral damage of this policy, with far-reaching consequences. Now more than ever, Germany needs a competitive, market-driven approach to correct past mistakes in the digitalization policy.
One of Germany’s leading economists, Professor Achim Wambach, President of the Leibniz Centre for European Economic Research (ZEW) and former Chairman of the Monopolies Commission, has outlined the foundations of such a model in an expert report ‘Competition in the Fixed-Line Market – 2030 Vision’.
“New initiatives are needed to unlock billions in private investments, ensure supplier diversity, and prevent market power abuse”, says Ufer. The report highlights structural weaknesses that have led to Germany’s significant delay in fibre deployment and exacerbated competition deficits – putting digitalization, economic prosperity, and jobs at risk. At the same time, Wambach’s 2030 Vision provides a roadmap for political action, helping Germany emerge as a strong digital and economic powerhouse.
“The shift to fibre networks will transform the telecommunications market,” explains Professor Achim Wambach. This makes a competitive regulatory framework even more critical, serving as a guiding principle for policymakers. “That is why this report offers clear regulatory recommendations to strengthen competition in the fixed-line market, protect consumer choice, and curb market dominance,” Wambach emphasizes.
“ZEW’s analysis underscores the urgent need for a regulatory framework that accelerates infrastructure deployment while fostering competition – ensuring innovation affordability, and digitalization progress” Ufer adds. “The new federal government must break away from clientelist politics and artificial competition”.
Neither infrastructure-based competition nor access-based service competition currently functions in a way optimizes economic outcomes. The report highlights critical areas for improvement in the critical fixed-line market, pinpointing four urgent reform priorities.
The report examines the economic impact of overbuilding fibre networks and the complex transition from copper to fibre. It also proposes more effective allocation of public funding by integrating competitive elements – such as demand-side incentives through voucher programs – to counteract the anticipated rise in construction costs driven by government-led infrastructure investment. Additionally, Wambach debunks the misconception that merely offering open access is sufficient to ensure dynamic competition. He further highlights how Telekom strategically limits wholesale access (wholebuy) to suppress rival investments.
“If we fail to make the right regulatory decisions today, we risk missing on the full potential of digitalization.” warns Ufer “A market dominated by a single provider will lead to rising retail prices, declining service quality, and weakened innovation. The report clearly demonstrates these risks. If a dominant player controls a large portion of Germany’s fiber network, the consequences will be severe.
“In the interest of the entire German economy and consumer welfare, politicians, ministries, and the regulators must take decisive action now to safeguard fair, non-discriminatory, and broad competition in the fixed-line market. This report offers a clear roadmap for a more competitive and dynamic digital future” Ufer concludes.
The report ‘Competition in the Fixed-Line Market – 2030 Vision’ is available here.
