Court: Rules for 5G frequency auction worth 6.55 billion are unlawful

Major legal success for the telecommunications companies EWE TEL and Freenet: The rules of the Federal Network Agency for the 2019 mobile frequency auction were unlawful, the Cologne Administrative Court ruled on Monday. The regulatory authority must now decide anew on the conditions for the licensees and issue new notices for the procedure (case numbers: 1 K 1281/22 and 1 K 8531/18).

Deutsche Telekom, Vodafone, Telefónica Deutschland and newcomer 1&1 paid a total of 6.55 billion euros at the auction for 5G frequencies, which ended in mid-2019. Rights of use for frequencies in the 2 GHz and 3.6 GHz ranges, which are particularly suitable for 5G mobile communications, were auctioned off.

Lawsuit by EWE TEL and Freenet

EWE TEL and Freenet offer their own mobile tariffs based on advance services provided by mobile network operators. They filed a lawsuit against the award conditions of the regulator, which they consider to be disadvantageous. In addition to specific coverage requirements for households and traffic routes, these also contain a "service provider regulation". It stipulates that network operators must negotiate the shared use of radio capacities with service providers without their own network infrastructure.

EWE and Freenet consider this negotiation requirement to be insufficient, which is why they are calling for a more extensive service provider obligation. This would mean that Telekom & Co. would have to lease part of their capacity to competitors who do not have their own infrastructure – and not just negotiate.

EWE and Freenet justified their lawsuits with serious errors by the Presidential Chamber of the Federal Network Agency. In particular, the procedure had been unlawfully influenced by the Federal Ministry of Transport and Digital Infrastructure (BMVI) under the leadership of the then head of department Andreas Scheuer (CSU). This was evident from the administrative processes of the BMVI, the Federal Ministry of Economics and Climate Protection and the Chancellery, which were obtained on the basis of the Freedom of Information Act.

The Cologne Administrative Court initially dismissed EWE's lawsuit as inadmissible in 2019. In 2021, however, the Federal Administrative Court partially overturned the decision and referred it back to the Cologne colleagues for a new decision. Among other things, they were asked to clarify whether there were "concerns of bias" and whether the independence of the Federal Network Agency had been safeguarded.

Following a hearing of former members of the presidential chamber at the beginning of June 2024, the Cologne Administrative Court has now issued its far-reaching ruling and overturned their decision from 2018 at – a first. The court is convinced "that the Chamber of Presidents gave in, at least in part, to the massive pressure from the BMVI".

According to the Cologne Administrative Court, the ministry "attempted to exert considerable influence on the decisions of the Chamber of Presidents throughout the entire award procedure in 2018". For example, it had lobbied for stricter supply requirements, but not for a service provider obligation

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Massive scolding of judges for collusion

The judges in Cologne also criticized the various unethical agreements made around the 2018 mobile communications summit. They also see a violation in the fact "that the Federal Network Agency did not sufficiently actively protect its independence by not preventing ministerial attempts to exert influence either at the level of ministerial meetings or at the level of technical work."

Norbert Westfal, CEO of EWE TEL, welcomed the decision. "This not only strengthens an independent Federal Network Agency, but above all competition in the mobile communications market." The regulator must "critically review" its decision on the service provider obligation. Now there is an opportunity to take the massive competition problems into account appropriately in a new award decision.

An EWE spokesperson initially declined to comment to heise online on the question of whether the auction as a whole would have to be repeated. The ball is in the Federal Network Agency's court. The Cologne Administrative Court has not allowed an appeal. However, the parties involved can lodge an appeal against this decision. The Federal Administrative Court would decide on this – if the Cologne judges do not comply with it themselves –.

The Federal Network Agency intends to examine the exact impact of the ruling once the written reasons are available. It will then also deal with the question of an appeal. In the context of the frequency auction, there is another case pending from a mobile network operator. There were a total of 16 lawsuits, almost all of which were rejected , as expected.

(mma)