For better development in the countryside
Network agency foregoes mobile phone auction
September 13, 2023, 3:32 p.m
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The mobile phone frequencies are currently distributed between Deutsche Telekom, Vodafone and O2; 1&1 uses Telekom’s spectrum. In order to avoid injustice, the Federal Network Agency wants to leave it at this distribution and forego billions. However, conditions are planned for this.
The Federal Network Agency wants to forego a mobile phone auction worth billions. Instead, the network operators Deutsche Telekom, Vodafone and Telefónica (O2) should be allowed to continue using certain frequencies for five years, as the regulatory authority announced. The companies would pay relatively low fees for this. The last frequency auction in 2019 brought in around 6.6 billion euros for the state.
The reason for the decision is that the spectrum available would probably not have been enough for four good networks. So far the frequencies are used by three operators. The newcomer 1&1 would also take part in an auction for use from 2026. So there would be four companies bidding, one of which would come away empty-handed – this would then have very bad cards on the market because its network quality would be low. The extension does not give 1&1 its own extra spectrum. Since the company is allowed to use the Vodafone network, this is not too problematic from the authorities’ point of view.
The Federal Network Agency’s proposal is now going through a consultation process in which market participants can have their say. A decision is expected to be made at the beginning of 2024. In return for the extension, Telekom, Vodafone and Telefónica should commit to improving their network in sparsely populated areas and on transport routes. “We want to put better mobile phone coverage in rural areas at the center of our requirements,” said authority boss Klaus Müller. The extension of the usage rights that is now being considered will give companies planning and investment security.
Simple extension last in 2005
The three companies had campaigned for an extension of the usage rights. 1&1, however, viewed this critically. Incumbent operators have long argued that spectrum auctions do not make sense. After all, the companies couldn’t put the money they have to put on the table at the auction into a better network. Now your worry lines should smooth out a bit.
The authority wants to use a package of requirements to ensure that companies continue to invest a lot of money in their network in the future and that consumers have good connections. It would not be the first time that usage rights for network frequencies have been extended. This had already happened once in 2005. In 2000, 2010, 2015 and 2019, however, there were auctions of different frequency ranges.
The network agency remains vague on another controversial point in mobile communications: 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.