Germany , with more than 80m inhabitants and 40m households has one of the lowest rates of property ownership in Europe ¹ . 54 % ² of households live in rented apartments and buildings ( 70 % ³ for one-person households ). German real estate companies and developers of new dwellings , the housing industry , are important telco clients with their ~ 24m apartment and building portfolio .

Despite the immense and unique market opportunity the housing market offers , telcos thus far have missed the chance to strategically tackle the B2C and B2B market to obtain a successful long-term position in the German housing market .

Increasingly competitive market , influenced by regulatory changes

This paper covers all telcos including cable network operators . Increasing competition in Germany leads to declining ARPUs in the connectivity segment , limiting the available capital for needed infrastructure expansions ( e . g ., fiber and 5G rollout ). Additionally , competitive playing fields are changed by ongoing consolidation efforts that can be observed in the market , as companies try to increase their efficiency ( e . g ., Vodafone - Unitymedia ).

Furthermore , the ancillary cost privilege (“ Nebenkostenprivileg ”) in Germany will be significantly altered and will lead to market changes . Around 12m cable TV households are affected by multiuser contracts that cover complete buildings ( long term ≥ 10 years concession agreements between housing corporations and telcos ), while costs are passed on to all tenants with utility bills . Telcos face the risk of losing these plannable revenues , as the switching barrier disappears for customers .

With an average of € 5-8 per month , experts expect a ~ 25 % customer churn , resulting in a revenue loss of € 200 –

300m . ⁴ Therefore , to keep customers , telcos need to improve their B2C market approach , especially as substitution products such as IPTV ( e . g ., MagentaTV ) and OTT offers ( e . g ., Netflix , Joyn ) are also continuing to gain traction with customers .

Spreading beyond connectivity

However , it is not only about an improved B2C market approach . The figure below indicates a platform business model that enables telcos to strategically operate in markets beyond pure connectivity , by systematically targeting B2B , B2C and B2B2C market potentials .

Consequently , the suggested platform business model enables telcos to secure profitable growth in the housing market .

PLATFORM BUSINESS MODEL FOR TELCOS

INFRASTRUCTURE & ACCESS

HOUSING PRODUCT : BASIC TV SERVICES

SMART PLATFORM

SMART PROPERTY

FIXED LINE VOICE & INTERNET SERVICES

SMART BUILDING

QUAD PLAY BUNDLES

1 ) Deutsche Bundesbank ( German Federal Bank ); 2 ) Statistisches Bundesamt ( German Federal Statistical Office ); 3 ) Bundeszentrale für politische Bildung ( Federal Agency for Civic Education ); 4 ) goetzpartners research