While BNetzA has changed tack in its approach to the assignment of key bands, neither established mobile operators nor the new entrant are fully on side
Extended spectrum usage rights from 2025 to 2030
On 13 May 2024, BNetzA published a consultation on a draft decision to extend usage rights for spectrum in the 800MHz, 1800MHz and 2.6GHz bands by five years to the end of 2030. The proposal comes after pushback from some operators on initial plans to reallocate the frequencies by way of an auction, which would have also involved the country’s new entrant operator 1&1 acquiring some of the 800MHz band via a spectrum swap. Both Markus Haas (CEO, O2) and Tim Höttges (CEO, Deutsche Telekom) had publicly stated opposition to the prospect of another – potentially costly – auction, which they considered would impact network rollouts and sits at the heart of debates about policy reform in Europe at the moment. The bands in question are currently being used by the three established mobile network operators (Deutsche Telekom, O2, Vodafone). With usage rights set to expire in 2025, the regulator is looking to bring them in line with those that are due to expire at a later date. BNetzA considers this would avoid regulation-induced scarcity and offer more opportunities to access spectrum, and would allow the regulator to account for market developments over the medium term – including the development of 1&1. The proposal reflects a compromise between the regulator and industry, with the big three operators critical of the relatively high spectrum prices paid in the 2019 5G auction, which they sought to delay by launching legal action against the “onerous” coverage requirements attached to the 2GHz and 3.6GHz licences. Licence revocation and reallocation by auction has been equally problematic in other markets at the end of licence terms.
New coverage obligations is the trade-off for a longer licence term
According to the regulator, the extension of 800MHz, 1800MHz and 2.6GHz usage rights would be accompanied by “ambitious but reasonable” rollout obligations, which aim to strengthen mobile networks in rural areas and ensure uninterrupted coverage along transport routes. Deutsche Telekom, O2 and Vodafone would be required to provide the following minimum coverage levels:
50Mbps for 99.5% of the surface (i.e. geographic) area of Germany from 2030;
100Mbps for 99% of households in rural communities in each federal state from 2029;
100Mbps for all federal roads from 2029;
50Mbps for all regional roads and inland waterways from 2029; and
50Mbps for all district roads from 2030.
In BNetzA’s view, coordinated action in rolling out public mobile networks and the new railway mobile communications system will be key to achieving gigabit coverage along railway lines. To facilitate that, mobile and railway network operators would be subject to a cooperation requirement, while mobile operators would also be required to report regularly on their deployment plans and progress against them.
To protect competition, incumbent operators would be required to support new entrant 1&1 as well as MVNOs
According to Klaus Müller (President, BNetzA), to strengthen competition in the mobile market, the extension of spectrum usage rights would be combined with “special arrangements” to support 1&1 and a requirement for the three incumbent operators to negotiate with MVNOs. The regulator considers the latter obligation to be “necessary but reasonable”, stating that negotiations should not be restricted to certain services, mobile technologies or applications. With respect to 1&1, BNetzA proposes that Deutsche Telekom, O2 and Vodafone allow the new entrant to share spectrum below 1GHz on a cooperative basis. If one established network operator enables cooperative spectrum sharing, this can be credited to the others. It is also proposing a requirement for current spectrum leasing arrangements to be continued, while considering imposing a negotiation requirement intended to benefit 1&1 (presumably related to access to the incumbents’ infrastructure). Should 1&1 not be granted national roaming by a rival network operator by 2026, BNetzA states that it reserves the right to mandate national roaming.
Both Deutsche Telekom and 1&1 have voiced concerns over the draft decision
BNetzA plans to carry out “competitive proceedings” for the 800MHz, 1800MHz and 2.6GHz bands (which would expire in 2030) together with spectrum at 700MHz, 900MHz, 1500MHz and 1800MHz (for which usage rights will be expiring in 2033). The regulator states that future coverage obligations will be linked more closely to quality of experience, including within buildings and vehicles, and that it may use a “negative auction” as a tool to improve coverage in rural areas. However, its proposals appear to have drawn criticism from all sides. While they could potentially save the three incumbents hundreds of millions of Euros (by avoiding a costly spectrum auction), Höttges has described the coverage obligations as disproportionate, expensive and unrealistic. He contends that 1&1 continues to receive preferential treatment from policymakers, including access to spectrum already in use. 1&1, meanwhile, considers a potential licence extension “unconstitutional” and “without consideration of the fourth network operator”. Responses to the consultation can be submitted until 8 July 2024.
