Before cell phone network start
Mobile operator 1&1 closes deal with competitor O2
With the new deal, 1&1 is able to secure 5G roaming from a competitor in the initial phase of its mobile phone network. photo
© Thomas Frey/dpa
In the middle of the last decade, E-Plus, the fourth German cell phone network, said goodbye, and soon there will be a number four again: the telecommunications group 1&1 is in the starting blocks.
Before the start of the fourth German Mobile phone network, the telecommunications group 1&1 has concluded a deal with its competitor Telefónica Deutschland (O2) and sees its market position improved as a result.
The company in Montabaur announced that the existing national roaming contract had been expanded to include the 5G radio standard, and at the same time announced the start date for the new mobile phone network: the switch should be flipped on December 8th and the network should be “fully functional”. Then Germany will have another cell phone network; so far only antennas from Telekom, Vodafone and O2 are transmitting. Competition is likely to intensify.
Where 1&1 does not yet have its own antennas, customers are connected to the O2 network. According to an older contract between 1&1 and O2, only O2’s 4G network was available for this purpose, and now 5G is being added. No information was provided about the new contract terms. When it comes to attracting customer favor, 1&1 will likely have better cards than was previously foreseeable thanks to its soon access to 5G roaming.
1&1 is currently only a so-called virtual network operator
With the new deal, 1&1 is able to secure 5G roaming from a competitor in the initial phase of its mobile phone network. Roaming means that customers can get a connection even where their provider has not set up antennas – in the case of 1&1’s still very small network, this is the vast majority of Germany, which is why good roaming is so important for newcomers. A roaming contract with Vodafone will take effect in summer or autumn 2024 – from then on 1&1 will be in a relatively good position anyway, and the partnership with O2 is gradually coming to an end.
1&1 is currently just a so-called virtual network operator that uses competitors’ networks for its mobile communications business and pays rent for it. With the new cell phone network, the company is able to stand on its own two feet. That has its price: At the 2019 frequency auction, the United Internet subsidiary bought frequency usage rights for around 1.1 billion euros. In addition, there are expansion costs of several billion euros. When it came to expansion, the group fell behind, which it attributed to delivery difficulties from partner companies.
At the end of 2022, 1&1 should have already activated 1,000 5G locations, but in fact there were only five. At the end of September there were 60. A company spokeswoman emphasized that the pace of expansion was increasing: “The network is growing day by day.”
Consumer advocates expect more competition on the market
The company has so far only used the activated locations for a landline replacement product that has a niche existence: households get internet via nearby antennas and can therefore do without a landline contract. However, 1&1 customers who walk past the antennas with their smartphones have not yet been connected. With the activation of mobile services, the cell phone network is scheduled to start on December 8th, which new customers can use afterwards. Existing 1&1 customers, however, will remain on the O2 network for the time being and will be transferred to the 1&1 network by the end of 2025.
Consumer advocates expect the fourth German cell phone network to bring more competition on the market, more choice and a better price-performance ratio for Internet customers.