After court defeat: Federal Network Agency restarts 5G frequency procedure

The Federal Network Agency (Bundesnetzagentur, BNetzA) is re-opening the procedure for awarding important 5G frequencies after the Federal Administrative Court declared it invalid. The regulatory authority will kick things off on Monday with an initial written hearing, where interested parties can state their views on how to proceed.

The Federal Network Agency must re-establish the rules for awarding frequencies in the 2 GHz and 3.6 GHz bands. The background to this is lawsuits filed by EWE Tel and Freenet against the framework conditions of the 2019 frequency auction. The companies felt disadvantaged because network operators were not clearly obliged to take service providers onto their networks.

The Cologne Administrative Court initially dismissed the lawsuits. In a process that was unprecedented at the time, the Federal Administrative Court saw clear indications of government influence on the Federal Network Agency's decision and referred the case back to Cologne for a new decision.

In the second round, the Cologne Administrative Court also came to the conclusion that the Federal Network Agency had "at least partially given in to the massive pressure from the Federal Ministry of Transport and Infrastructure" at the time, and declared the award procedure invalid. The Federal Network Agency's appeal was recently rejected by the Federal Administrative Court, making the decision legally binding.

"Frequency allocations remain valid"

"We are re-opening the 5G procedure," explained Klaus Müller, President of the Federal Network Agency, emphasizing: "The 5G award decision and the frequency allocations to the companies remain valid and unchanged as long as they are not revoked and reissued by the Federal Network Agency." It is important that mobile networks in Germany continue to be expanded rapidly.

With the consultation, the Federal Network Agency aims to create clarity about the further course of action as quickly as possible. According to its own statements, the regulator is closely following the court's directives. The authority is therefore obliged to revoke the original decisions and re-examine the applicants' requests, taking into account the court's legal opinion as well as the current factual and legal situation. A continuous mobile network supply must be ensured.

The crucial question of whether an auction will be held again to award the frequencies following the new decisions is currently still open. Deutsche Telekom, Vodafone, Telefónica, and for the first time also 1&1 Drillisch engaged in a bidding war in 2019, at the end of which they paid 6.55 billion euros.

The Federal Network Agency is now presenting two options: If the changes within the scope of the new decision are not substantial or if remedies can be found through compensatory measures, the usage rights could be adjusted without conducting a new auction.

Is a new auction necessary?

The second option would be more consequential: If substantial changes to the frequency usage regulations are required, the allocation and price-finding function of the 2019 auction could be disrupted, the paper states. This would necessitate a new award.

As part of the consultation, the regulator wants to clarify, for example, whether the demand for frequencies in the 2 GHz and 3.6 GHz bands has changed significantly since the 2018/19 award. It primarily asks whether the existing allocation reflects the current demand situation in the mobile infrastructure market – also with a view to companies that do not yet have frequency usage rights in this area.

At the same time, the authority requests a new assessment of the competitive situation. It is interested, for example, in whether there is new experience with the controversial negotiation mandate in favor of service providers in the upstream market. According to competitors of the major operators, this is not sufficient. It also hopes for new findings on national roaming.

The regulator also requests information on which facts should be considered in the renewed decision on specific points such as the duration of usage rights, coverage obligations, reporting obligations, service provider regulations, co-use, and infrastructure sharing. It should be kept in mind that coverage obligations have largely been met and investments have been made. Interest groups can submit their statements in writing or electronically until January 12.

(mki)