Germany can make the leap into the world’s top broadband nations

Credits: Gettyimages
Photo: gettyimages
The coming weeks will see the political course being set for the development of the future mobile broadband infrastructure in Germany. Depending on the framework conditions for the forthcoming 5G frequency allocation, Germany can either take a giant leap towards digitisation through investments by the three network providers – or it can miss out on an enormous opportunity. At a meeting scheduled for 26 November, the advisory committee of the Federal Network Agency (FNA) will set the final regulations and framework conditions for the allocation of frequency-usage rights for the new mobile standard 5G. Since the beginning of the year, this subject has been passionately debated among state and local governments, interest groups and the telecoms industry. And quite rightly – after all, it’s about nothing less than Germany’s aspiration, as Europe’s economic powerhouse, to also lead the way in terms of digital infrastructure for businesses and consumers. This is the foundation for the increasing digitisation of all areas of life and the economy, and thus for future prosperity. “Telefónica Deutschland has played a leading role in this debate from the very beginning and has incited numerous initiatives and proposed solutions. Germany can manage the leap into world-class digital infrastructure. However, that does mean that everyone involved needs to pull together – and in the same direction – instead of having ideological debatesˮ, insists Markus Haas, CEO Telefónica Deutschland.

Economic framework conditions must be right for expansion of digital infrastructure

Credits: Telefónica Deutschland
Markus Haas (2nd from right)
The telecommunications market has been run by the private sector since the early ’90s – for good reason and with great success and added value for consumers. Framework conditions need to encourage investment in order to enable an ambitious infrastructure expansion and the accomplishment of the rightly desired expansion targets of the government. These have been pledged by, among others, Andreas Scheuer, Minister for Infrastructure, in a pact with the mobile providers. “Unfortunately, there is very little evidence of these improved framework conditions in neither the regulations put forward by the Federal Network Agency for the frequency allocation nor in the current political discussionˮ, says Markus Haas. The expansion requirements, compared with previous frequency allocations, have been stepped up again and the minimum bids as well as the bid increments in the auction design are significantly higher –than in comparable frequency blocks in past auctions; incidentally up to ten times higher than in any other European country. The promised improvements are only vaguely considered in the discussion. At the same time, the spectrum that is actually available for nationwide 5G networks is artificially restricted because the FNA has reserved frequencies for local or regional interests without ascertaining the actual need in advance. The FNA now wants to allocate these local frequencies as part of an application process instead of in the course of the auction. And last but not least, the legally unclear definition of possible obligations when dealing with non-investing service providers is causing uncertainty, which fundamentally inhibits business decisions to invest.

Every available euro should directly go into the actual network expansion, not into the auction process

Credits: Telefónica Deutschland
Markus Haas
“We want to and will continue to invest massively in expanding the mobile data network. Like any company, we can only spend a euro once. And I would rather invest in expanding the network in the interests of our customers and the legitimate demands of government and industry, than in licence papers whose proceeds only bolster the state coffersˮ, explains the Telefónica Deutschland CEO. 5 clear decisions and framework conditions could liberate Germany to provide both high-speed, area-wide Internet and innovative mobile data applications for consumers and industry. Telefónica Deutschland is addressing these points as part of the current consultation on the auction conditions put forward by the FNA:
-Payment conditions: Instead of having to pay for the spectrum in full, shortly after the auction, the frequencies should only have to be paid for once they are available to the mobile network operators. Individual blocks will not be usable until 2025. It should also be possible to pay in staggered instalments. There is no need for the federal government to collect all the proceeds from the auction in one go. This easy-to-implement, investment-promoting facility would save the companies several million euros in capital commitment costs, which can then directly flow into the actual network expansion.
-Expansion obligations: The expansion obligations must be economical and physically feasible. However, the capacity frequencies available for allocation next year are not suitable for area coverage and thus for closing all the supply gaps due to their physical expansion properties. The current 4G spectrum is more suitable for this and meets the necessary requirements. To provide planning certainty for more investments in coverage expansion, the maturity of existing low-band spectrum at 700 and 800 MHz has to be extended in a timely manner. New low-band spectrum below 700 MHz has to be made available going forward.
-Auction design: The allocation process should be geared towards promoting investment, instead of maximising proceeds. Therefore, there should be no excessive entry bids or dynamic bid increments.
-Regional spectrum: There should be no fragmenting of the available spectrum by generously reserving spectrum for local or regional providers. This would lead to less powerful national networks. Nationally available high-speed 5G requires every available 5G frequency.
-Service providers: Legal grey areas in the definition of dealing with non-investing service providers are a barrier to investment for the network operators. Legal access obligations devalue their investments and lead to less instead of more investment in the mobile infrastructure.

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