Extensions to eight years?
Cell phone auctions are to be postponed
October 1, 2023, 8:25 a.m
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Although the auctions of mobile phone licenses bring in a lot of money for the state, the next auctions will not be held as planned. Both politicians and providers see real benefits from this. But the postponement must also be linked to conditions, emphasizes the Federal Network Agency.
In order for the cell phone network in Germany to improve significantly in the long term, the Federal Network Agency is considering waiving a spectrum auction worth billions. In mid-September, the authority proposed extending existing mobile phone usage rights by five years. The operators would be financially relieved because they would only have to pay low fees. In return, Deutsche Telekom, Vodafone and Telefónica (O2) should be obliged to meet new expansion requirements.
Head of the authority Klaus Müller told the dpa: “We will also openly examine an extension of eight years.” A decision should be made in 2024. Regarding the eight years, the former consumer advocate and Green Party politician said: “But one thing is clear: the longer the extension lasts, our demands on improving the quality of care could increase.” He didn’t get any more specific.
Different requirements for different regions
There are different frequency bands in mobile communications that have so far been auctioned at different times. They have different functions – the low bands are good for the countryside with a long range and the high ones are good for cities, where there are many smartphone users in the cells and need enormous amounts of data. The next licenses expire at the end of 2025, after which the next usage rights end in 2030 and then the next ones in 2033. If the usage rights were extended by up to eight years, these three license packages could easily be auctioned together. “This would harmonize the expiry dates of a large part of the mobile radio spectrum in use,” says an O2 spokesman.
Germany’s cell phone networks have improved in recent years, and providers have invested billions of dollars in antenna locations. But there are still problems in some places, especially in rural areas. Müller is pushing for improvements here. In mid-September, he proposed an expansion requirement that would require network operators to reach at least 98 percent of households in sparsely populated areas with a download rate of 100 megabits per second by the end of 2028. So far there is no such rule specifically tailored to the country; it would improve the situation in villages and towns. However, only around 300,000 households would benefit from such an expansion requirement, as figures from the Federal Network Agency show: In sparsely populated areas where fewer than 100 people live per square kilometer, these households have so far no 100 Mbit network or only a network of one or two of the three providers.
If you’re unlucky and are with the wrong provider, you won’t have a good network. For such unlucky people, things could get better in rural areas in the future because every provider has to be almost everywhere – assuming the network agency’s proposal is implemented. The authority also wants to improve cell phone connections on roads. So far there is a proposal on the table, according to which every network operator must have supplied all federal roads with 100 Mbit by the end of 2028. If the usage rights are even extended by eight years, stricter requirements could also be imposed for country roads.
Political approval for the eight-year extension
Politicians and established network operators support the eight-year consideration – this is not surprising, as Telekom, Vodafone and O2 would benefit from it. Such an extension “strengthens planning security and thus investment opportunities for the expanding providers,” says the O2 spokesman. However, this would be a headwind for the new entrant among network operators, 1&1 from Montabaur – it would still have very little of its own spectrum for a long time and would not be able to buy anything else. But he would at least have access to Vodafone’s 5G network, for which he essentially pays rent. A 1&1 spokeswoman emphasized that a decision by the network agency must “fairly take into account the needs of all four network operators”.
Consumer advocates expect 1&1 to provide impetus for competition. “Competition between providers from another network operator can lead to better offers for end customers,” says Felix Flosbach from the North Rhine-Westphalia Consumer Center and warns that 1&1 will be put under additional pressure by the network agency’s decision. “A possible fight between existing network operators against a new network operator must not lead to the disadvantage of consumers.”
The SPD member of the Bundestag Johannes Schätzl believes the eight-year extension makes sense. At the same time, he emphasizes that the expansion obligations should then be significantly tightened. The liberal Reinhard Houben wants to ensure that mobile phone operators actually invest the sums they save by foregoing an auction in their networks. “Hard requirements” are therefore necessary that are clear and verifiable by third parties. “The mobile network operators must fulfill their coverage obligations for rural areas and transport routes not only on paper, but also in reality.”