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No network: The upcoming auction may be cancelled

Photo: Karl-Josef Hildenbrand / dpa

Actually, there would soon be another auction of mobile radio frequencies in Germany, but the Federal Network Agency now wants to do without the billion-dollar auction for the time being. Instead, the network operators Deutsche Telekom, Vodafone and Telefónica (O2) will be allowed to continue using certain frequencies for five years, according to the regulator. The companies would pay relatively low fees for this. The last spectrum auction in 2019 had brought the state around 6.6 billion euros.

The reason for the decision is that the available spectrum would probably not have been sufficient for four good networks. So far, the frequencies are used by three operators. However, the newcomer 2026&1 would also take part in an auction on its use from 1. So there would be four companies bidding, one of which would come away empty-handed – this would then have very poor chances on the market because its network quality would be low. Due to the extension, 1&1 does not get its own extra spectrum. However, since the company is allowed to use the Vodafone network, this is not too problematic from the authorities' point of view.

Decision to be made in 2024

The Federal Network Agency's proposal is now undergoing a consultation process in which market participants can have their say. The decision is expected to be made in early 2024.

In return for the extension, Telekom, Vodafone and Telefónica are to commit to improving their network in sparsely populated areas and along transport routes. "We want to put better mobile phone coverage in rural areas at the center of our requirements," said Klaus Müller, head of the authority. With the extension of the rights of use, which is now being considered, companies will be given planning and investment security.

The three companies had campaigned for an extension of the rights of use. 1&1 CEO Ralph Dommermuth said in an interview with SPIEGEL in July that as long as an extension of 5G spectra would be fair, for example according to the French model, he had nothing against it. "In the run-up to the event, three network operators also became four, and the newcomer was also taken into account. I have confidence in our country and the network agency," Dommermuth said at the time: "The three who shout the loudest – and who would prefer to keep to themselves – will not prevail." Now, for the time being, 1&1 is publicly holding back and announcing that it will examine the paper.

The incumbents have long argued that spectrum auctions do not make sense. After all, the companies could not put the money they have to put on the table at the auction into a better network.

Authority wants to impose conditions

By means of a package of conditions, the authority wants to ensure that companies continue to invest a lot of money in their network in the future and that consumers get good connections.

According to the expansion obligations from the 2019 auction, Deutsche Telekom, Vodafone and Telefónica (O2) have had to cover the motorways and important federal highways with their antennas with a download speed of 100 megabits per second since the beginning of the year. In fact, care has improved in recent years, but the mandatory 100 percent referred to the industry as a whole. If one network operator had not supplied one section, but another had, then the requirement was deemed to have been fulfilled – even though the customers of the first provider did not have a network in between on their journey via the motorway in question. According to the Network Agency's plans, this eligibility is to be eliminated by 2029.

In the case of rails, on the other hand, there will be no new strict requirement. It is said that "cooperation between mobile network operators,
railway infrastructure companies and train operators" is required. The vague wording is due to the fact that a poor network on the train is not always due to deficits on the part of the network operators, but can also be due to shielding train windows and other factors.

Focus on sparsely populated areas

In another point, the network agency also wants to improve the situation of mobile phone users. In areas with fewer than 100 inhabitants per square kilometre, 98 percent of households are to be supplied with 100 megabits per second. Such a 98 percent regulation already exists, but it refers to the households of a federal state as a whole – the very sparsely populated areas often have poor networks with such a requirement, because antennas in small towns are relatively expensive for the network operators and the companies concentrate on the areas with more people when expanding.

If you look at Baden-Württemberg, for example, only roughly 90 percent of households in sparsely populated areas are reached by antennas at 100-megabit speed. In Rhineland-Palatinate, the figure is only about 93 percent. There, reception in small towns is expected to improve significantly in the coming years.

It would not be the first time that rights of use for grid frequencies have been extended. In 2005, this had already happened. In 2000, 2010, 2015 and 2019, on the other hand, there were auctions of different frequency ranges.

On another controversial point in mobile communications, the network agency remains vague: it leaves open the question of whether there will be a so-called service provider obligation. This would strengthen the position of small competitors of the large network operators.