Digital infrastructure

5G frequency auction could dial up competition

Opening Day Of The 2018 Mobile World Congress
Darn, can't connect with my competition lawyer. Source: Bloomberg

Germany’s leading competition regulator has called for the establishment of a fourth mobile phone network as part of the country’s 5G frequency auction next year. Speaking Friday, Andreas Mundt, president of the Federal Cartel Office, said only competition could drive the wide-ranging digital innovation needed for Germany to remain competitive.

Mr. Mundt’s intervention will be music to the ears of Ralph Dommermuth, whose internet services group United Internet is pushing hard to become the country’s fourth mobile network operator, alongside the three existing networks: Deutsche Telekom, Vodafone and Telefónica Deutschland. Mr. Mundt did not explicitly mention Mr. Dommermuth’s company, but is widely seen as backing his bid to become a fourth player in the market.

For this to happen, telecoms supervisory authorities will have to mandate what is called “national roaming” or “infrastructure sharing,” forcing the existing networks to rent capacity to newcomers in areas where they do not yet have a presence.

Since it takes many years to build physical infrastructure, a new entrant can only achieve nationwide coverage by partly using existing networks. Although United Internet already has commercial deals to use other network capacity, it wants its rivals to be legally obliged to sign such agreements.

If it ain’t broke, don’t fix it

And the frequencies to be auctioned next year are particularly suitable for the massive data transfers necessary for autonomous driving and digitized industrial production, making them even more lucrative.

Telekom, Vodafone and Telefónica will take a dimmer view of the competition boss’s statement. The heads of the three companies have recently become more vehement in their opposition to Mr. Dommermuth’s scheme, saying it was unfair and would ultimately discourage infrastructure investment.

In the past, Deutsche Telekom boss Tim Hoettges has accused United Internet of being a “free rider,” looking to grab network capacity at knock-down prices. Earlier this month, Telefónica Deutschland boss Markus Haas said a fourth network was not the solution to Germany’s infrastructure problems.

For his part, Mr. Dommermuth denounced the “oligopoly” of the three networks.

While Mr. Mundt’s Cartel Office appears to back Mr. Dommermuth’s claim, the actual decision lies with a different office, the Federal Network Agency, which seems far less sympathetic. A recent confidential report, submitted to the agency’s board, called national roaming “an interference in the rights of existing mobile network operators.”

In the coming weeks, the Federal Network Agency will present its plans for the allocation of the 5G frequencies. Their decision, say many experts, will have a crucial impact on Germany’s digital future, with or without Mr. Dommermuth. Oliver Samwer, a renowned tech investor and a close ally of United Internet, said that “the course for Germany’s future will be set in the next six months.”

Stephan Scheuer is co-head of Handelsblatt’s feature and people’s desk. He was previously China correspondent. Thomas Tuma is a deputy editor in chief at Handelsblatt. To contact the authors: tuma@handelsblatt.com, scheuer@handelsblatt.com

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