January 2024

Aetha recently released a study commissioned by 1&1 to assess the spectrum situation in Germany. The study finds that there are good, rational arguments to rethink the currently proposed approach by BNetzA to extend the current licences exclusively for the existing operators and highlights the need for a fair, non-discriminatory approach by raising the option of an alternative, more flexible award process.

Some of the more detailed findings of the study are:

• There is clearly spectrum scarcity in Germany ahead of the upcoming award – this establishes the need for a process that allows all players to gain access to spectrum in a fair and non-discriminatory fashion.
• Whereas the established MNOs in Germany have significantly larger spectrum portfolios than their peers in other 4-player markets, 1&1 finds itself in a unique position for a new entrant operator in that it has a capacity disadvantage already today.
• The study also finds that there are significant differences in how the spectrum in question is used in Germany. Whilst 800MHz and 1800MHz are used extensively, there is much less usage in bands such as 2600MHz.
• The implications for the award are non-trivial. Clearly, an extension would unduly advantage the existing MNOs. At the same time, simply including 800MHz in the award could lead to another highly competitive auction process with unnecessarily high prices.
• The report therefore calls for an alternative, non-discriminatory approach to the award process. It proposes a more flexible approach to awarding the spectrum, along the lines of BNetzA’s 2022 proposal of a spectrum swap – by introducing the idea of a low-band auction with swap rights for the existing operators – allowing them to keep their 800MHz holdings in exchange for alternative low-bands in case they acquire less spectrum than currently held.