telecommunications
The federal government is aiming for nationwide cell phone networks
With Deutsche Telekom, O2 Telefónica and Vodafone, there are three established network operators and, 1&1, recently also became a number four. photo
© Jens Büttner/dpa
A good cell phone network is becoming increasingly important in the digital age – whether for work or private purposes. An authority now wants to significantly accelerate network expansion.
What is it about?
Every four to five years, the federal government auctions usage rights for various frequency bands that are fundamental to a good cell phone network. This puts billions into the federal government’s coffers; in 2019 it was around 6.5 billion euros for around twenty years of use. At the first major auction in 2000 it was even more than 50 billion euros. The auction should actually take place again this year, and important frequencies will become available at the beginning of 2026. But this auction should now be canceled.
Instead, the usage rights will be extended by five years. In a few years there will be another auction in which other frequencies will be included. The network operators should only pay relatively low fees for the extension – over five years that would be around 600 million euros in total. Compared to the 2019 auction costs, the fees are roughly a third lower.
Why is the federal government forgoing billions?
With Deutsche Telekom, O2 Telefónica and Vodafone, there are three established network operators in Germany and 1&1 has recently become number four. The company from Montabaur is gradually expanding its still very small cell phone network. Where it does not yet have its own antennas – i.e. in most areas of Germany – customers are still connected to the O2 network and soon to the Vodafone network. 1&1 wanted to take part in a new auction to secure additional frequency blocks. But this time there won’t be enough spectrum freed up to cover the needs of four companies, not just three. The authority therefore decided against the auction and in favor of an extension.
Why are the regulations important for consumers?
If the usage rights are extended, the network operators must undertake to comply with requirements. In this way, the state wants to ensure that nationwide coverage gradually becomes a reality and that telecommunications companies do not just build where there is the most data traffic and where it is economically worthwhile.
What requirements are in place?
At the beginning of 2030, every network operator will have to supply 99.5 percent of Germany with at least 50 megabits per second. According to the Federal Network Agency, the average value is currently just under 99 percent. So there really is only a bad cell phone network in a good one percent of the area? What sounds like it’s too good to be true is even raising eyebrows in industry circles: In fact, there is no serious coverage over a much larger area, says a telecommunications industry representative who does not want to be named. Depending on the measurement parameters, the values were different – the laxer the criteria, the higher the coverage value.
According to the network agency’s website, Deutsche Telekom covered 91.6 percent of the area with 4G mobile communications in January, Vodafone 91.3 percent and O2 86.4 percent. It is clear that the area coverage should improve – but how much is unclear even to industry representatives. Other regulations are also intended to improve the cell phone network in rural areas; by 2029, at least 99 percent of households in sparsely populated areas should have cell phone reception of at least 100 megabits per second. The same applies to all federal highways.
The requirements apply to each network operator and not to the industry as a whole. This is also good news for consumers: they should be sure that their provider consistently offers a good connection. So far, only one industry requirement applies: If only provider A is present on one kilometer of federal road and only provider B is present on the next kilometer, the current coverage requirement is considered to have been met – even though the customers of A and B each have no network for one kilometer. This creditability will no longer apply in the future.
What happens to 1&1?
When the usage rights are extended, the new network operator 1&1 is left out. With special rules, the authority is trying to minimize the resulting disadvantage for the Internet company from Rhineland-Palatinate. The three established network operators are to be obliged to grant 1&1 “cooperative use” of frequencies with a long range.
What else is controversial?
Another sticking point is the question of how to deal with telecommunications providers without their own cell phone network. Freenet and other small competitors insist on an obligation that network operators must allow them onto their network. The top dogs are resisting this – they want to be free to decide whether they want to take Freenet on their network as a subtenant or not. The regulator did not comply with Freenet & Co’s demands, and the network agency is not planning any such obligation. A Freenet spokesman expressed his disappointment: The authority was losing sight of effectively promoting competition.
What are the reactions?
Politicians agreed with the planned obligation to provide land. The established network operators, however, reacted cautiously – they would have preferred an extension of eight years and not just five years. A Telekom spokeswoman was annoyed that the new network operator 1&1 was being “protected” by the authorities, even though it had clearly missed an important expansion requirement. The Federal Cartel Office emphasized the importance of effective measures to promote competition – last year the competition authorities criticized a possible extension.
What’s next?
Authority chief Müller presented a draft decision that companies, associations and politicians can comment on in the coming months. The final decision should be made in the fall. Until then, changes are possible, but a radical change of course is considered unlikely. The next auction may take place in 2028.