Germany wins over 1&1 for spectrum sale deferral plan

The German telecoms regulator is once again consulting on plans to extend certain spectrum usage rights, pushing a competitive process into the next decade, a suggestion that previously incurred the ire of market newcomer 1&1.

Mary Lennighan

May 14, 2024

4 Min Read

The Bundesnetzagentur this week opened a new consultation into its now amended plan to add five years onto the duration of spectrum rights held by Deutsche Telekom, Telefonica and Vodafone in the 800 MHz, 1800 MHz and 2.6 GHz bands that were due to expire at the end of 2025. Essentially, its goal is to kick the auction process down the road and combine it with the sale of rights to 700 MHz, 900 MHz, 1500 MHz and other 1800 MHz frequencies that will lapse in 2033.

That upcoming mega-auction could hit the operators pretty hard in the wallet, but the prospect of not having to shell out for frequencies in the short term is positive. Vodafone just announced a return to growth in Germany, its service revenue creeping up by 0.2% in full-year 2024, but it could still do without a hefty spectrum bill. And its competitors no doubt feel the same.

Except for 1&1, that is, which up to now has objected vociferously to the Bundesnetzagentur's spectrum scheme. The regulator has been working on this plan for a while and its previous consultation, opened in September last year, sent Germany's newest mobile network operator in a tailspin. It commissioned a study in which, amongst other things, it accused the regulator of effectively subsidising the big three MNOs to the tune of billions of euros via the proposal.

And now the Bundesnetzagentur has changed tack slightly. It is still aiming to extend the aforementioned licences, but with some important changes designed to level the playing field, or to appease 1&1, whichever way you look at it.

It proposes requiring the big three to allow 1&1 to share spectrum below 1 GHz on a cooperative basis and that current spectrum leasing arrangements should continue. Should 1&1 not be granted national roaming by one of the three from 2026, the regulator reserves the right to order national roaming.

1&1, which clarified that the Bundesnetzagentur's new plan is linked to a commitment by Telefónica to continue the transfer of 2×10 MHz of mid-band spectrum to it, seems happy enough with the amendments.

"We are open to a co-operative solution. It is important that we can utilise a sufficiently large amount of frequency at market conditions in order to adequately supply our more than 12 million customers," said Ralph Dommermuth, CEO of 1&1, in a statement. "Only then can we fully leverage the advantages of our innovative Open RAN technology and ensure the competitiveness of our daily expanding 5G network."

1&1 launched its network as recently as December last year and has its work cut out when it comes to competing with the established players. Little wonder then that it is so invested in the intricacies of spectrum allocation in the country.

The regulator insists that its plan will be good for competition in the German market, although it's not entirely clear how, aside from the fact that its amended proposal removes the threat to competition that 1&1 identified.

"Our primary objectives are improving coverage for all consumers and boosting competition," said Klaus Müller, President of the Bundesnetzagentur. "The extension of the spectrum usage rights would be accompanied by ambitious coverage obligations. A coverage obligation specifically for rural areas and an obligation relating to surface area would help to promote equivalent standards of living in urban and rural areas."

Those coverage obligations include minimum requirements of 100 Mbps for 99% of households in rural communities in each state from 2029, and 100 Mbps for all federal roads and 50 Mbps for regional roads and inland waterways from the same date.

The regulator has also made it clear that when it does get around to auctioning off all the spectrum – which it has committed to doing "at a later date" – the process will include coverage obligations based on the service quality that end-users can actually experience. It has also mooted the idea of using a reverse auction or other similar means to help improve coverage in rural areas.

We won't know what that auction will look like for some years yet. But if the Bundesnetzagentur gets its way following this consultation, slated to run until 8 July, and with 1&1 seemingly on board there's a good chance it will, Germany's big mobile operators will be spared the pain of significant spectrum spend in the near future.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

Get the latest news straight to your inbox.
Register for the newsletter here.

You May Also Like