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Angela Merkel's Coalition Seeks $15 Billion to Modernize Germany's Internet Grid

  • Other plans in coalition agreement involve 5G, blockchain
  • Seeks to create German-French artificial intelligence center

Chancellor Angela Merkel’s coalition wants to spend as much as $15 billion modernizing the nation’s broadband network with fiberoptic cables to boost internet speeds, after years lagging behind countries including Spain and Portugal.

Merkel’s coalition wants to cover the country with "gigabit" speed internet networks by 2025 and plans to put 10 billion euros ($12 billion) to 12 billion euros in a special fund to help supply underserved regions with fiber lines, ideally directly to the home, according to a copy of the coalition agreement obtained by Bloomberg.

Germany needs a "comprehensive, world-class digital infrastructure,” the parties said in the agreement. "We want the shift to fiber.”

Merkel has in the past repeatedly called for a build-out of Germany’s high-speed internet infrastructure to satisfy consumer demands and protect the industry in Europe’s biggest economy. Whether the plan succeeds will depend on whether Deutsche Telekom AG, which has in the past modernized its copper-based infrastructure, will increase the share of fiber lines that run directly to homes, which are challenging to build and expensive.

Read this for more on Merkel’s coalition agreement

The former monopoly has said it wants to add 60,000 kilometers (37,283 miles) of fiber lines this year, without specifying how many of those connections would link directly to homes. Vodafone Group Plc plans to invest an incremental 2 billion euros by 2021 on fiber lines in Germany through a partnership with fiber specialist Deutsche Glasfaser Holding GmbH.

Here are some more plans from the agreement:

  • The coalition is seeking to take the lead in 5G by giving out new frequencies only in return for investment commitments
  • Plans to create an artificial intelligence research center with France
  • Wants to make it easier for startups to be created by reducing bureaucracy and reforming the insolvency law
  • Wants to develop a comprehensive blockchain strategy and lobby for "appropriate" regulation of crypto-currency trading to benefit from the opportunities created by those technologies while preventing misuse

To reach all those goals, the coalition is considering creating a "digital agency” that would help the government implement its plans -- an institution Deutsche Telekom Chief Executive Officer Tim Hoettges called for in an interview with Bloomberg TV last month.

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