^^Overview

Germany's broadband (BB) Internet market is heavily dominated by DSL.

DSL subscribers, millions
| end of period | 2001 | 2002 | 2003 | 2004 | Q1 2005 |
| Total DSL | 1,865 | 3,160 | 4,400 | 6,723 | 7,555 |
| thereof Deutsche Telekom | 1,809 | 2,974 | 3,900 | 5,557 | 5,920 |
| Resale DSL | 0 | 0 | 0 | 0,246 | 0,465 |
| LLU-based | 0,056 | 0,186 | 0,500 | 0,920 | 1,170 |

Other non-DSL technologies
Additionally, at the end of Q1 2005, approx. 0.6 million non-DSL BB connections existed (e.g., cable, satellite, powerline). Wireless BB is insignificant until today.

^^History

Upon its mass market introduction in 1999, DSL access lines and DSL Internet connectivity (ISP tariff) were jointly marketed but two separate contracts for the consumer with Deutsche Telekom's wireline unit (T-Com) and its ISP (T-Online) respectively. The products were available through Deutsche Telekom's sales channels only.

In 2000, first alternative ISPs (like AOL, freenet) started introducing DSL Internet connectivity as well. However, consumers were first required to have a DSL access line from Deutsche Telekom before, only available from Deutsche Telekom's sales channels.

Early 2003 then saw Deutsche Telekom signing up alternative ISPs as indirect sales channels, allowing consumers a one-stop shopping experience for DSL access line and DSL Internet connectivity, while still obtaining two separate contracts with two different providers.

In July 2004 1&1 was the first alternative ISP to offer bundled DSL resale (consumer obtains one contract for DSL access line and DSL Internet connectivity from one provider, while still in need for a PSTN line from Deutsche Telekom). All major ISPs followed soon (e.g., freenet, AOL; even T-Online) while prices started to erode drastically.

Price decreases and the resulting strong growth in BB have accelerated since October 2004, when Arcor (largest German LLU-based attacker) strongly cut DSL prices. Prices are expected to erode further, enabling strong BB growth until at least 2008.

^^Key Broadband Players

^^^Deutsche Telekom (Incumbent telco)

• Deutsche Telekom's wireline unit, T-Com (www.t-com.de). Dominates the DSL market. Provides currently DSL access lines at speeds of 1, 2, and 6 MBit/s; trials with 25 Mbit/s (ADSL2+/ VDSL) in some areas. Trials WiMax and FTTH/FTTC in a few major cities. Recent financial information at www.telekom3.de/en-p/inve/home/cc-startseite.html.

• Deutsche Telekom's ISP, T-Online (www.t-online.de). Historically dominated the DSL Internet connectivity market, market share has been slipping below 50% recently due to emergence of alternative ISPs and LLU-based attackers. Recent financial information at www.t-online.net/c/05/70/16/570164.html.

LLU-based attackers

• Arcor (www.arcor.de). Historically, part of Mannesmann group, after takeover by Vodafone still held but constant rumours about being for sale. Largest LLU-based customer base in Germany. PSTN and DSL products offered in 200+ larger cities. Recent financial information at www.arcor.de/content/ueberarcor/datenfakten/index.html (German).

• Hansenet/Alice (www.alice-dsl.de). Historically part of Hamburg's (2nd largest German city) electricity utility. Now owned by Telecom Italia, meanwhile available in most German areas. Recent financial information at www.alice-dsl.de/opencms/export/de/ueber_uns/ (German).

• Versatel (www.versatel.de). Swedish Telco Tele2 has taken over 77 percent of Versatels shares. Once the deal is finalised, Versatel Deutschland is supposed to be sold to APAX Partners, which is already majority shareholder of Germanys biggest CATV firm, Kabel Deutschland (KDG, www.kabeldeutschland.de), and of Tropolys. Versatel has about 180.000 broadband customers (June 2005, www.portel.de), offering speeds up to 20 Mbit/s.

• Tropolys (www.tropolys.de). Tropolys is an alliance of 14 city and regional carriers. Majority shareholder is APAX Europe (63 percent).

• QSC (www.qsc.de).

ISPs

• United Internet - 1&1, GMX, Schlund+Partner (www.united-internet.de). Most aggressive, fastest grwing alternative DSL ISP in Germany. 1,34 million DSL customers already.

• freenet (www.freenet.de). 525.000 DSL customers (June 2005, www.portel.de). Reintegrated into Mobilcom. ADSL2+ trials with up to 16 Mbit/s together with Telefonica Deutschland.

• AOL (www.aol.de). 900.000 DSL customers (June 2005, www.portel.de). T-DSL.

• Tiscali (www.tiscali.de). 380.000 DSL customers (June 2005, www.portel.de). T-DSL.

Cable operators

• Kabel Deutschland - (www.kabeldeutschland.com/cgi-bin/investor_relations.pl?LANG=EN) - 10 million CATV subscribers, 10.000 for internet access services (September 2005), max. download 8,2 Mbit/s. Shareholders are Apax Partners, Providence Equity Partners, and Goldman Sachs.

• Unity Media GmbH, holding for CATV operators Ish (North Rhine-Westphalia) and Iesy (Hesse) - (www.ish.de), (www.iesy.de) - combined, these two operators have 5.2 million CATV subscribers, 27.500 of those were using their internet access services as of August 2005, max. download 5 Mbit/s. In August 2005, Unity Media aquired Telecolumbus, the largest Level 4 (local loop) operator in Germany. Major shareholders of Unity Media are the Private-Equity companies Apollo Management LP and Golden Tree.

• Kabel Baden-Württemberg (http://www.kabelbw.de/), 2,3 million CATV subscribers; max. download 20 Mbit/s (189,90/ month). Majority shareholder is Blackstone Group.

^^Average Speeds available and Price of bandwidth

DSL offerings based on Deutsche Telekom's DSL product (DT, 1&1, freenet, AOL, ...)

Current retail pricing (EUR incl. 16% VAT), as of October 2005
| DSL downlink speed | 1 Mbit/s | 2 Mbit/s | 6 Mbit/s |
| Total DSL package | 22 - 27 | 25 - 30 | 30 - 35 |
| DSL access line | 17 | 20 | 25 |
| DSL flatrate Internet connectivity | 5 - 10 | 5 - 10 | 5 - 10 |
(Ranges based on standard products, predominantly sourced by consumers)

DSL offerings from LLU-based attackers

Current retail pricing (EUR incl. 16% VAT), as of October 2005
| DSL downlink speed | 1 Mbit/s | 2 Mbit/s | 6 Mbit/s | 16 Mbit/s |
| Total DSL package | 15 - 20 | 15 - 20 | 30 | 60 |
| DSL access line | 10 - 15 | 15 - 20 | 25 | |
| DSL flatrate Internet connectivity | 0 - 10 | 0 - 5 | 5 | |
(Lower than DT-based offerings due to cross-subsidization from LLU-based PSTN access, costing additional approx. 20 EUR per month; also, certain requirements for upfront fees and bundles with voice flatrates apply)

^^Official data

An annual update of official information on broadband (BB) Internet is available on the German Telecom regulator's (Bundesnetzagentur, formerly RegTP) website at http://www.bundesnetzagentur.de.