Issuing of mobile radio licenses: next time no auction?

Status: 11/29/2021 3:06 p.m.

A turning point is becoming apparent with the award of the mobile radio frequencies that will become available in 2025: The providers can hope that their expiring licenses will be extended without expensive auctions.

The last auction of German mobile radio frequencies in the summer of 2019 lasted 497 rounds and twelve weeks. It brought in around 6.6 billion euros for the state. Now the procedure could change, at least for the licenses that will become available in 2025: Today, the political advisory board will be presented with different options on how these mobile phone licenses should be dealt with.

Thereafter, the expensive auction process could be omitted for three packages that expire in four years. Jochen Homann, President of the Federal Network Agency, told the “Frankfurter Allgemeine Zeitung”: “I can imagine a procedure to extend the frequencies at short notice and conditionally and to provide them with additional area frequencies at a later point in time in an award procedure.” The current operators would then be able to continue to use the licenses under certain conditions until further mobile radio licenses become available and they are reissued in a bundle.

A decision has not yet been made

But nothing has been decided yet, as Homann emphasized: “The question is currently open and not yet ready for a decision. A large number of procedural questions still need to be clarified before a decision can be made.” The network operator will be informed of a decision in good time.

The sticking point in the negotiations could be dealing with new providers. Because the newcomer 1 & 1 has also expressed interest. The company also wants to build its own fourth cellular network. Whether 1 & 1 can simply be thrown out of the running remains to be checked.

Telekom is breaking new ground in expanding its network

The corporations Deutsche Telekom, Vodafone and Telefónica Deutschland have been campaigning for a long time not to issue licenses via auctions, as this increases the costs. The providers complain that this money is then missing in the expansion of the networks.

In order to finance the expansion of the fiber optic network, Telekom is now taking a similar path as its competitor Telefonica. She is looking for investors for joint ventures to finance the expansion in various EU countries. Because the group has to renew the infrastructure, but financially it is tight: With more than 130 billion euros in net financial liabilities, the debt level is higher than ever.

As the “Handelsblatt” found out, a joint venture is now in progress in Austria, among others, to which Telekom and a partner will each contribute 150 million euros. In Germany there is already such a joint venture with the Australian company IFM to further expand the fiber optic network. In this way, Deutsche Telekom wants to push ahead with the expansion without having to bear the costs alone.

Auctions are unlikely to go away in the long term

In addition to the telecommunications companies, politicians also criticize the current auction solution for the allocation of licenses that will become free in 2025: “With these 800 frequencies, it is necessary to carefully check whether a legally secure, limited-term extension might not be a better solution,” said the North Rhine-Westphalian Minister of Economic Affairs Andreas Pinkwart the “FAZ”. The FDP politician headed the digital work group in the Ampel coalition negotiations. The three-party alliance made up of the SPD, the Greens and the FDP wants to link the allocation of frequencies more closely to requirements for area coverage.

The auction solutions are unlikely to cease to exist in the long term: As the Federal Network Agency emphasized, when considering suspending awarding via auctions, it is only about the three packages that will become available in 2025. Thus, the corporations should not face any long-term savings. Due to the competition from 1 & 1, the opposite is feared.

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