eMarketer predicts that Germans will spend over $108 billion online in 2008.

Deutsche Telekom's former monopoly on DSL has given way to dozens of competitors, resulting in more Germans online at high speeds. Internet access is now expected at most schools and many companies: a "Schools on the Internet" initiative has nearly 90 percent of all students online, and internet use is now a requirement for many jobs. The growing ubiquity of the internet carries over into private use as well, making Germany the largest ecommerce market in Western Europe. Use and activity will expand as next-generation fiber networks are installed, changing the way people use the phone, watch TV-- and view ads.

Germans have made the internet an integral part of school and work. Online penetration is over 50 percent for every age group 50 and younger. Comfort with the internet has helped make Germany a nation of active online shoppers, predicted to spend over $108 billion in 2008. Like every Western country, email and research still top the list of online activities, but with the rise of VoIP and IPTV, phoning and watching films will be increasingly common as well. Digital TV adoption in particular will demand innovative marketing, as IPTV provides a free alternative to subscription-based television-- and other content options.

Germany's position as the largest ecommerce market in Europe both supports and overshadows other online changes in the country. Experience with the internet in both personal and business settings has prepared Germans for adoption of other internet-based technologies. VoIP and IPTV are set for rapid growth starting this year, as Deutsche Telekom and other market players spend billions building higher-speed DSL networks.

Germany does not have the highest broadband penetration in Europe, lagging behind the UK, France, Italy and Spain. That said, the country only trails the UK in overall internet penetration, with about a third of the country on ISDN lines. Actual internet use is very high, with over 85 percent of all people under 30 -- and over half of all people under 60 -- using the internet. Widespread internet use has made for a solid base of online shoppers, despite falling sales at retail stores. Online sales, including online travel and content downloads, have tripled since 2001.

The former telephone monopoly, Deutsche Telekom, spun off its internet division, T-Online, a few years ago. However, since the company has recognized VoIP as a competitive threat, it has been trying to re-merge with the firm. So far, this move has been hampered by regulation.

Meanwhile, nimble new competitors are offering the "triple play" of internet service, phone via VoIP, and television service via IPTV to Germany's sophisticated internet population. In a country where unemployment has been high and economic growth slow to stagnant, paying less for these internet-delivered services is as appealing as online bargain shopping. With the switch from over-the-air analog to over-the-air digital signals underway, competition to deliver digital services will also come from multiple sources. In this increasingly crowded market for digital TV service, worthwhile content will determine if the new over-the-air signals keep subscription demand depressed, or if the new services are considered a weak alternative to pay TV.

Germany's broadband access is almost completely via DSL. The country was the largest DSL market in Europe in 2004, according to the European Information Technology Observatory (EITO), with a DSL installation density of 81 for every 1,000 inhabitants. Alternative broadband technologies such as cable modems, satellite and power lines only account for about 3 percent of all German broadband access. In the US, cable modems are ahead of DSL in market share, comprising 60.6 percent of all broadband connections as of 2003, compared to 37.2 percent for DSL.

James Belcher is a senior analyst at eMarketer. This article is drawn from his new report, "Germany Online." Click here to learn more.