Networking without a network
How well is Germany faring when it comes to internet broadband access, especially for small and medium-sized enterprises? Answer: It’s middling! We’re standing on the sidelines when they crown the broadband champions and the gap is widening, simply because the cable network is not being expanded quickly enough. Why is it taking Germany so long to expand its broadband network, and what impact is this having on the economy and the huge number of SMEs in the country – the German Mittelstand? Stefan Odenbach, a project manager at the Steinbeis Transfer Center Technology – Organization – Human Resources, provides the answers.
According to recent studies conducted by BITKOM and statistics websites like STATISTA or the website of the Federal Ministry of Transport and Digital Infrastructure (BMVI), there’s one thing everyone agrees on: Germany has a lot of catching up to do compared to the international competition, even versus non-EU countries. The main reason for this is the technology being used. Rather than investing in the much more futureready technology of fiber-optic networks, Germany is channeling more time and energy into expanding VDSL technology. This is for cost reasons and because the starting point is still the existing infrastructure.
As of 2016, under ten percent of German firms with fewer than 500 employees had internet access of more than 50 Mbit/s. This is like a millstone around the neck of enterprises investing more time in digital transformation. An example: An innovative technology firm based in the Black Forest or a rural area somewhere in the hills of the Swabian Alb (well away from cities) would like to market its products or data services internationally. Not a problem in a world of global digital technology, or so you’d think. But even attempts to reach out to potential partners or carry out video/telephone conferencing via the internet (with clients or suppliers in the United States, India, China, or France) is extremely difficult if you only have 3 to 6 Mbit/s. It’s also inefficient with all the interruptions or waiting for data to load. In fact it’s actually embarrassing for a company that wants to portray itself as a technology leader.
Often, technology leaders have fewer than 50 employees, and they’re not in a position to uproot and ask staff to travel an extra 50 or even 100 kilometers to work every day. Relocating a company may sound like the logical thing to do in such circumstances – so it can enjoy the full benefits of modern, digital business – but in financial and logistical terms, it’s a nightmare. If doing business on the telephone is already a stumbling block, then migrating IT services or ERP software to the cloud – or setting up connections for salesmen and service operators to work from home – is almost inconceivable. In summary then: The limited availability of broadband internet is seriously hampering innovation!
A key technology at the moment is the new broadband cellphone standard, which is designed specially for digital solutions and is rapidly gaining in importance. Most of the cellphone providers are currently upgrading their networks to 4G. The new technology makes it possible to surf or download data via smartphone or tablet with speeds of between 100 and 300 megabits per second. With 5G technology, data speeds will rise to between 1 and 10 gigabits per second (Gbit/s). Aside from significantly improving data transfer (tenfold), 5G offers a solid foundation for new applications due to the extremely low lag times of under one millisecond. This makes it possible to connect a large number of end devices to each other. Quick reaction times could be a life-safer for some solutions to enter mass production, especially when it comes to driverless vehicles.
Overall, this brings us back to a familiar problem with the chicken and the egg: Is the German Mittelstand so under-digitalized because the internet is like the slow lane on a data highway, or are digital business models simply inconceivable under such technical conditions – so people keep traveling on the analog highway? The fact of the matter is, this situation must not become permanent. There are suitable alternatives to the traditional cable-based networks. It’s a silver-bullet answer: a 5G cellphone network!
Stefan Odenbach is a project manager in the field of digital solutions at the Steinbeis Transfer Center for Technology – Organization – Human resources. The Steinbeis Enterprise helps companies and organizations to: raise productivity, reduce costs, and analyze, evaluate, and turn around businesses; manage and monitor the finances of partnerships, investments, and company divestments; analyze, evaluate, and run training instruments; analyze management accounting instruments and process cost controls in companies and organizations.