Federal Cartel Office Criticizes Plan to Skip 1&1’s 4G and 5G Frequency Auction

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Federal Cartel Office Criticizes Plan to Skip 1&1's 4G and 5G Frequency Auction
(Image: Bundesnetzagentur)

The Federal Cartel Office has criticized the move by the Federal Network Agency to forego a frequency auction. The new network operator, 1&1, would then not acquire new frequencies for its 4G and 5G network, which is in the early stages of development.

In a statement on November 9, 2023, the Federal Cartel Office welcomed “from a competitive standpoint the intended entry of a fourth network operator.” It was noted that it is encouraging that the “intended network launch by 1&1 has increasingly become more concrete since the frequency allocation in 2019, despite generally challenging economic conditions and delays.”

The next scheduled frequency auction was supposed to take place in 2023 or 2024. Frequency usage rights in the 800 MHz, 1,800 MHz, and 2.6 GHz bands are set to expire at the end of 2025, which are currently predominantly used for LTE.

The 1,800 MHz band is not entirely up for reallocation due to a redistribution. In Germany, the 800 MHz band is the LTE coverage layer with crucial frequencies for rural coverage. The 1.8 GHz band serves as the GSM/LTE capacity layer, and the 2.6 GHz band is also a capacity layer. Usage rights for additional frequencies expire in 2030 and 2033.

If the usage rights were extended by up to eight years, the three license packages could be bundled. However, this would mean that 1&1 would be unable to acquire its own spectrum for a long time.

More competition through 1&1?

Tim Höttges, CEO of Deutsche Telekom, stated on November 9 after announcing quarterly results: “1&1 cannot utilize new frequencies because they have no network.” However, if a frequency allocation comes with too many conditions, Telekom would prefer an auction. Höttges said, “Then we’ll just go into an auction; we are prepared for that.”

In contrast, the Federal Cartel Office emphasized, “The intended and already largely realized market entry by 1&1 may, for a longer period, offer the last chance to disrupt the existing market structure with three network operators.” After years of a noticeably subdued competitive situation in the wholesale sector, the upcoming decision could be used to achieve sustainable revitalization through suitable conditions.

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Ronald Peart
As an AI and machine learning aficionado, Ronald Peart unravels the complexities of artificial intelligence, offering comprehensive insights and updates on the tech landscape.