Attack on Telekom, Vodafone and O2: Fourth German cell phone network from 1&1 starts

Cellular
Attack on Telekom, Vodafone and O2: Fourth German cell phone network from 1&1 starts – albeit small at first

For a long time there were only three networks in Germany – 1&1 now wants to change that.

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Which cell phone network is best for me – Telekom, Vodafone or O2? Consumers ask themselves this question every now and then. In the future you can add an option to the list.

After a significant delay in expansion, the fourth German cell phone network is finally in the starting blocks. The telecommunications provider 1&1 wants to officially launch its mobile services on Friday afternoon, and Federal Transport Minister Volker Wissing is expected as a guest. The network initially only exists in a mini format: at the end of September, 60 antenna locations were ready for cell phone connections, and 200 are expected to be activated at the beginning of 2024. Radio broadcasts take place in cities such as Montabaur, Düsseldorf and Frankfurt. For comparison: O2 has more than 28,000 locations nationwide – so 1&1 still has a long way to go.

So far there are cell phone networks in this country from Deutsche Telekom, Vodafone and Telefónica Deutschland. Wherever 1&1 has no antennas – i.e. in most areas of Germany – new customers are connected to the O2 network. Existing customers, in turn, get the O2 network anyway, as the company previously only worked as a virtual mobile phone network operator. Capacity from competitors was rented for its own business, primarily from O2.

Billion dollar auction participation

In 2019, company boss Ralph Dommermuth decided to have his own network in order to be able to meet the three established mobile phone network operators Deutsche Telekom, Vodafone and Telefónica Deutschland (O2) on an equal footing. At that time, 1&1 bought frequency usage rights for the first time for around 1.1 billion euros. There are also expansion costs – all in all, 1&1 is planning five billion euros for the network project by 2030.

If you are already a 1&1 customer, nothing will change for the time being. With the start of the network, new customers will have access to the antennas, but the existing number of around 12 million contract customers will only be gradually transferred to the new network by the end of 2025. In summer or autumn 2024, a Vodafone contract for national roaming, i.e. radio connections away from the 1&1 locations, will also apply. That means, to put it simply: Wherever it says 1&1 today, there is a lot of O2 in it. And in the future there will be a lot of Vodafone in it.

1&1 relies on an open radio access network (Open Ran). The competition also sees great potential in this concept: In contrast to the closed systems previously used by the industry, which are tied to individual manufacturers, Open Ran standards and interfaces are open. This means that components from different companies can be used. The innovative network should have a very low response time (latency).

Positive consequences for consumers expected

Transport Minister Wissing sees the launch of 1&1’s mobile phone network as positive. “The entry of a fourth network operator into the market is very good news for consumers and companies,” he says. “That means: more choice, increasing network quality and attractive prices.” He expects that the expansion of mobile networks will receive an additional boost.

Consumer advocates also have their thumb pointing up. “Although the existing networks of the three providers are constantly being improved and more powerful, consumers are still exposed to dead spots and, more recently, slightly rising prices from some providers,” says Felix Flosbach from the NRW consumer advice center. “The launch of another network can lead to new competition in an established market, which can result in better networks and cheaper prices for consumers.”

Jens-Uwe Theumer from the comparison portal Verivox says that the fourth network operator will bring a breath of fresh air and more competition into the market. For a long time there were four cell phone networks in Germany, but in 2014 O2 and E-Plus merged. Now the number of cell phone networks has increased again to four. “For almost ten years there were three providers of roughly the same size who had no interest in major disruptions,” says industry expert Theumer. “1&1 is breaking this down now.” The market will become more dynamic, with more choices for consumers. “This is urgently desired: Germany is currently the third most expensive mobile Internet provider in Europe with an average gigabyte price of 2.50 euros.”

Expansion has been slow so far

The network expansion has not yet been a success story for 1&1. According to a government regulation, the company should have activated 1,000 5G sites by the end of 2022, but there were only five. 1&1 justified this with delivery difficulties from expansion partners. Because of the delay, the company faces a fine from the Federal Network Agency.

In order to comply with another regulation, 1&1 put its few antennas into operation for a landline replacement product almost a year ago: households near the locations could get mobile communications and therefore did not need a landline contract. Anyone who walked past the antennas with their smartphone was not connected. The mobile phone network launch was initially planned for the summer quarter of 2023, but was then postponed. Now the time has come.

Looking forward

After the difficulties, the expansion is expected to gain momentum next year. According to the requirements of the Federal Network Agency, the company’s antennas must reach at least 25 percent of German households by the end of 2025 and at least 50 percent by the end of 2030. The remaining households should have a network with roaming.

The question of whether another mobile phone auction will take place next year is also extremely important. So far, the company has only used frequency blocks in two radio bands, but additional blocks in other bands are necessary for an optimal, comprehensive network. Therefore 1&1 wants to buy more. According to the Federal Network Agency’s preliminary plans, the auction should be canceled and existing usage rights should be extended – then 1&1 would be left out and the previous top dogs Telekom, Vodafone and 1&1 would be strengthened. In Montabaur, these authorities’ plans are viewed very critically.

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DPA

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