Internet tycoon challenges D.Telekom to team up on German broadband

FRANKFURT, Mar 11 (Reuters): The billionaire founder of United Internet has urged internet providers to found a joint company to build out Germany's high-speed broadband network, challenging market leader Deutsche Telekom to back the venture.

Ralph Dommermuth said industry should take the lead on laying the glass fibre network in Germany, where just 2.5 per cent of households are directly hooked up to such ultra-fast connections - less than in other developed nations.

The new government formed by Chancellor Angela Merkel has pledged to back broadband investments to the tune of 10-12 billion euros over the course of this parliament as part of an effort to create a 'Gigabit society' by 2025.

That amount, Dommermuth said in an interview with newspaper Welt am Sonntag, would only cover a fraction of the overall cost of providing nationwide glass-fibre coverage that he estimated at 80 billion euros.

German business groups have already cautioned that under-investment in connectivity threatens to sap its export competitiveness as manufacturing processes become increasingly automated.

"Each telecommunications company that wants to participate in this alliance would contribute capital according to its market share," Dommermuth said in the interview, released ahead of publication.

If companies paid in 10 billion euros and a further 10 billion came in the form of state subsidies, it would be possible to borrow a further 10 billion euros, Dommermuth said, creating an overall investment pot of 30 billion euros.