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Summary

The CEO of Deutsche Telekom (DT), Tim Hoettges, has announced a “master plan for the digitization of Europe.” The plan, outlined at MWC 2015 in Barcelona, puts consumer and enterprise telecoms on two different tracks, although in both cases the German operator is taking on global OTT players. Ovum believes that enterprise users could benefit most from DT’s new master plan.

Significant VPN investment

On its 2014 annual results call DT announced a common platform for a single European IP infrastructure based on LTE plus FTTC and vectoring. It planned a €6.5bn investment over the period 2014–17, covering 24 million households in Germany by 2016 and 9 million households in European markets. Orange proposed a pan-European IP network on the same day (also on its results call), prompting speculation that a joint effort would be forthcoming. However, no such collaboration has occurred; DT has stuck to its plan. At MWC 2015 it announced the launch of its Cloud VPN service for business users, which will provide a single secure virtual enterprise network across Germany, Croatia, Hungary, and Slovakia.

Like Tata Communications, with its IZO global federated network, DT is challenging OTT players with a VPN-based networking solution that has robust SLAs and levels of managed security that support end-to-end multinational enterprise networking. Other service providers and some enterprise users will argue that they already have enterprise VPN in the cloud, combining the resources of Amazon or Google with telco providers in a hybrid solution. DT is saying that there should be nothing “hybrid” about managing enterprise network resources, IT, and applications, and is offering the USP of a consistently-engineered IP network for enterprises that want assured consistency.

Other telcos with dedicated enterprise network operations will protest that they already offer seamless network services across borders, but DT’s enterprise division, T-Systems, will probably argue that it is the only provider that can offer single SLAs with complete integrity. Hybrid networks are acceptable; hybrid SLAs are not. The German operator will, however, need to push Cloud VPN quickly if it is to gain credibility with MNCs. In particular, it needs to move beyond its central European regional footprint; it should start by targeting France and Spain, where it has a major enterprise and regional government customer base.

Appendix

Author

David Molony, Principal Analyst, Enterprise

david.molony@ovum.com

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