After the auction is before the auction: When it comes to the allocation of mobile radio frequencies, the German regulatory authority usually relies on an auction – this is one of the options that the Telecommunications Act (TKG) also prefers. After the 5G auction in 2019, the spectrum that was auctioned off in 2010 and whose usage rights will expire in 2025 will be reassigned in the coming years. One can speculate: The Federal Network Agency should swing the hammer again.
However, according to a legal opinion, the preference given to auctions as an award procedure for scarce frequencies, which is laid down in the TKG and also provided for in the ongoing amendment to the Telecommunications Act, is not compatible with EU law. This is the conclusion reached by Professor Christian König from the Center for European Integration Research (ZEI) at the University of Bonn, who Assessment for the network operator Telefónica Deutschland.
Spectrum is a scarce resource
The “pre-stamping” in favor of an auction narrow the discretion of the Federal Network Agency and is therefore not in conformity with Union law, says König. In addition, the draft of the federal government for the TKG amendment inadmissibly restricts the extension of frequency usage rights, writes König. The EU legal expert recommends adapting the TKG on these points in order to avoid possible infringement proceedings.
With regard to frequency allocation, German telecommunications law stipulates that the Federal Network Agency carries out an allocation procedure for scarce spectrum such as mobile radio frequencies – either as a tender or auction. According to the law, the auction procedure should be chosen “in principle”, unless other important reasons speak against it.
“From the Federal Government’s point of view, the auction procedure is basically the most suitable procedure for determining an allocation holder when there is a shortage of frequencies,” explains a spokesman for the Federal Ministry of Transport and Infrastructure (BMVI), which is responsible for this part of the TKG amendment. “This does not rule out that the contracting authority, as an exception, carries out a different selection process.”
Everything comes under the hammer
In line with this requirement, the Federal Network Agency has been auctioning new and free mobile radio frequencies since 2000. The first auction in which the UMTS frequencies in the 2.1 GHz band went under the hammer was particularly spectacular. Network operators and those who want to become one put the equivalent of around 50 billion euros on the table for the promise of the future of the mobile Internet.
There has never been such a gold rush atmosphere again, nevertheless the industry has spent around 66 billion euros on frequency auctions over the past twenty years; Most recently it was a good 6.5 billion euros at the 5G auction in summer 2019. That is money that will then be missing from other vendors, say the network operators: “The frequency auctions in Germany have cost the mobile network operators billions”, says a Vodafone- Speaker. “Billions that are missing from the urgently needed network expansion, especially in rural areas.”
Do not restrict scope for action
The definition by law unnecessarily restricts the discretion of the regulatory authority, says Valentina Daiber, who is responsible for law and corporate affairs on the board of Telefónica Deutschland: “Only if there is no statutory pre-determination for the auction, the Federal Network Agency really has all options for action on an equal footing a prudent frequency regulation available. “
The report supports this view. “From my point of view, it is especially important that the Federal Network Agency’s scope for decision-making is not restricted by the legislature,” explains König. “On the basis of the competitive situation and the technical and economic realities of the market, the authority must be able to determine the best method in each case in order to serve the regulatory objectives of the TKG.”