German Regulator Study Finds Advertised Internet Speeds Not Being Met

By Peter Bernstein April 15, 2013

A study released by the German telecommunications regulator, the Bundesnetzagentur, has just been released, and it should serve as a warning for regulators around the world. Regulators used both a Germany-wide measuring platform, where results were generated in a controlled test environment, and a software application that provided end users via the internet ("Power Quality Initiative") a means to self-test their Internet speeds on their fixed and wireless connections.

The test ran between June and December of 2012 and over 250,000 consumers complied. This constitutes what is believed to be the largest review of broadband service anywhere.

The results are illuminating as well as discouraging. They showed that:

  • Only 15.7 percent of those using fixed telephone lines achieved the maximum advertised speeds.
  • 21 percent using mobile devices did so.
  • Nearly 50 percent of German consumers using Long Term Evolution (LTE) wireless, the supposedly fastest wireless broadband networks, had speeds that were no more than half as fast as the advertised maximum.

This study is believed to mirror the results of a broader study being compiled by the European Commission (EC) on broadband performance across its 27-nation members, which is in the final review stages. Rumors are that as in Germany, service providers are not delivering on their promises when it comes to access speeds. The study has special significance because Germany was one of the first European countries to adopt a nationwide LTE service.  

The challenges of Internet access promises versus performance

What the German study and the EU initiative highlight is the global challenge regulators are facing with regard to user expectations and the industry’s ability to deliver on what is advertising. In fact, this has been a hot topic for a while in the United States where there has even been legislation introduced, but never acted on, that in essence calls for service providers to stop what the sponsors believe is false advertising. 

Thus far, in the U.S. as well as in Europe, operators have been against any regulations that would force them to provide a legal “minimum speed.” Universally, operators have said that such legally binding obligations would be a burden because the nature and uncertainty of Internet traffic puts them in a position where the speeds actually experienced by individual end users makes it virtually impossible to guarantee a specific speed at any given point in time. 

What the study highlights is how seldom the maximum speeds are achieved which leads to real concerns about how often end users are really getting what they paid for. Jochen Homann, the Bundesnetzagentur president, said he planned to begin a “dialogue” with operators to improve the accuracy of their advertising claims.

As reported in The New York Times, the German situation shows the challenges regulators face in getting operators to commit to anything more than promises to do better. For example, it cites points made by Philipp Blank, a Deutsche Telekom spokesman in Bonn, who says the speed of a landline connection to a given user is influenced not just in traffic, but things like the length of the last mile connection the subscribers premise. 

With mobile, on the other hand, the amount of traffic on the local base station means consumers can only be offered a range of speeds and no guarantees.  

The article also extensively quotes Michael Bobrowski, a spokesman for the Verbraucherzentral Bundesverband, the Federation of German Consumer Organizations. Along with saying he doubted regulators could change business as usual in regard to getting operators to better price their offerings, and conceded the technical challenges, he noted, “It’s the competitive situation…They are all trying to win customers by promising very enticing speeds. The problem is that consumers cannot verify in advance what kind of speeds they will ultimately receive.”

Whether regulators anywhere in the world will be able to extract even voluntary actions by the industry to narrow the range of speeds in their broadband advertising may be a case of wishful thinking. Bobrowski accurately observes that customers have no way of taking services out for a test drive before they make a service commitment, and operators have little incentive in hotly contested markets to advertise anything less than the top speeds. 

Germany is going to make for a possibly precedent setting test of wills. Under recently revised laws, regulators have been given broader powers to improve the “transparency” of telecommunications products. As he pointed out, whether this will let the regulator impose “minimum speed” obligations for the first time in any country, is unclear yet sure to generate industry lawsuits.

As a practical matter, while I appreciate the advertising issue, my preference as a consumer would be if the industry provided a “pay-as-go” service. In other words, there are rates associated with various speeds for various time frames and I get billed only for what is actually delivered. 

Unfortunately, that’s probably wishful thinking as well.

Edited by Braden Becker
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