The Chairman of the Advisory Board, Olaf Lies (SPD), explained: “Reliable, nationwide mobile phone coverage is of fundamental importance both for the economy and for equivalent living conditions in Germany.” “. He did not rule out that “the design of future frequency awards” could be tightened.
The Federal Network Agency wants to find out why Telekom, Vodafone and Telefónica have not set up as many masts as they were told. The authority also does not want to simply wave the fact that the newcomer 1&1 did not set up the first 1000 masts of its new 5G network as specified.
If it is their own fault, the providers face fines of 50,000 euros per mast. “At some point the fun will end,” said Advisory Board member Reinhard Houben (FDP) to the Handelsblatt. As it was said, some advisory councils are said to have demanded even higher penalties. But these shouldn’t be the biggest problem.
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The next frequency allocation has long been in sight. This year, for example, the Federal Network Agency wants to award so-called area frequencies with a large range in an auction, which companies can use to further expand their networks from 2025. So far, the plan was simply to auction off the frequencies and put conditions on them. But that could change this time.
The digital politician of the FDP, Advisory Board member Maximilian Funke-Kaiser, brought a combined auction process into play. “We need the frequency auction for areas that can be developed privately and a negative auction to close the gaps in areas that are not or underserved,” he said. Both together enable comprehensive network coverage. “At the same time, we need fair competition between market participants. A service provider obligation takes care of that.”
Such a regulation would force network operators to also open up their 5G networks to third-party providers such as Freenet at competitive prices. So far they are only obliged to negotiate with interested parties. It was different with 3G or 5G. Hope lies mainly in the negative auction. The federal government is currently trying to eliminate the so-called “blank spots” on the mobile communications map with conditions for frequency licenses and with a funding program. But the funding is rarely used.
“Negative auctions” are to be used as a possible way out, as stated in the coalition agreement between the SPD, the Greens and the FDP. Every network operator has to bid for frequencies – and for expansion in uneconomical areas. Whoever has the lowest subsidy requirement is awarded the contract. Service provider obligations such as negative auctions would hit the large, established providers much harder than one-off fines. If only because they would set a precedent for future frequency awards.
The fear of returning to the oligopoly
The newcomer 1&1 is causing particular concern. In order to promote competition, the agency had already suggested at the upcoming auction of expiring licenses for the 800 megahertz area frequencies that the 900 megahertz frequencies, which actually run until 2033, be awarded instead. They offer enough capacity for four providers. In this way, there is no risk of a potentially ruinous bidding dispute at an auction, in which a bidder could drop out. The current use of the 900 megahertz frequencies for so-called GSM services is no longer necessary to the same extent as it used to be.
However, the exchange only makes sense if there is a powerful fourth provider. 1&1 has had problems building its wireless network up until now. According to the conditions, the company should put 1,000 mobile phone masts into operation; so far there are only five.
>>Read also: 5G network initially only for the home – 1&1 reports only three active locations
The chairwoman of the digital committee, Tabea Rößner (Greens), is therefore even threatening the worst-case scenario for the industry in view of the clearly missed requirements. “One consequence could be that given the problems of 1&1 there will be no exchange of frequencies.” Paradoxically, 1&1 would use this, because the newcomer would prefer an auction anyway. “1&1 welcomes the retention of the auction process that has been common in Germany for many years,” it said on request.
At the competitor Telefónica, however, one warns that an auction would endanger “the gigabit strategy of the federal government with its ambitious expansion goals”. But it’s not that far yet. It was said that this was not discussed at the advisory board meeting. However, the politicians are very frustrated that the companies did not meet the requirements and that 1&1 in particular has not yet been able to stimulate competition as hoped.
If the frequencies are not exchanged as proposed by the network agency, there is a risk of a return to oligopoly. The agency has two goals: On the one hand, consumers should be able to use a good mobile network. This requires companies to have sufficient funds to expand their networks. On the other hand, it wants to use competition to ensure cheap mobile phone tariffs.
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