5G auction ruling: major concern about political influence on the regulator

Parts of the telecommunications industry are complaining that the collusion, particularly between the former Federal Ministry of Transport and Digital Infrastructure (BMVI) under Andreas Scheuer (CSU), the Federal Network Agency and large network operators, which the Administrative Court of Cologne found in unusually harsh terms, is not an isolated case. "We are observing the political influence on important market decisions by the Federal Network Agency with great concern," Frederic Ufer explained, Managing Director of the industry association VATM, on Tuesday. With its ruling that the award and auction rules established by the regulatory authority's presidential chamber for the 2019 auction of 5G frequencies are unlawful, the court has "above all clearly put politics in its place".

"The Federal Network Agency is not the vicarious agent of politics – neither in the allocation of frequencies nor in decisions on empty conduits," emphasizes Ufer. The regulatory authority's expertise as a competition watchdog is indispensable. "Unfortunately, we are seeing that there is a great temptation for politicians to intervene," criticizes the industry representative. From the perspective of Deutsche Telekom's competitors, the actions of the current Federal Ministry of Digital Affairs in the spring on the occasion of the interim report of the monitoring body on the strategic superstructure, which is managed by the Federal Network Agency, were also "very unfortunate".

Politicians are not doing anyone any favors by influencing regulatory decision-making, Ufer noted. The independence of the Federal Network Agency is a valuable asset, as competition in the industry has to be "defended every day anew". Six years after the 5G mobile communications award, there is now a threat that the regulatory chapter will have to be reopened. Legal certainty for all parties involved looks different.

"A resounding slap in the face" for the regulator

Stephan Albers, Managing Director of the German Broadband Communications Association (Breko), described the announcement from Cologne as a "resounding slap in the face for the Federal Network Agency". Apparently, the management of the regulatory authority at the time was "biased, prejudiced against pro-competitive measures and anything but independent". In light of the ruling, the service provider obligation, which was unlawfully prevented in 2019, should finally be introduced in the upcoming decision on frequency extension this year to enable real competition in mobile communications. This would mean that Telekom & Co. would have to lease some of their capacity to competitors who do not have their own infrastructure.

The decisions on the DSL turbo vectoring and the acceptance of mere promises by Telekom lead Albers to fear that the cheating that has now been established by the courts was not limited to mobile telephony, but also affected the fixed network sector. The new management of the Federal Network Agency must now prove its independence and, above all, put a stop to the Magenta Group's strategic fiber optic dual expansion.

The plaintiffs EWE TEL and Freenet agree that there is a great need for action for the regulator. A Freenet spokesperson told heise online that the court had documented that the pure negotiation requirement between the major network operators and service providers "only found its way into the Presidential Chamber's decision due to unlawful influences", expressing her satisfaction with the clarity that now prevails. The annulment of the 5G award decision could not undo the years lost to competition. But now "nothing stands in the way of a decision in the interests of consumers".

Mere negotiation is not enough

According to the spokesperson, Freenet is now "also counting on the Federal Network Agency following the court's request in a timely manner against the background of the ongoing frequency allocation procedure". The regulator must replace the now finally "burnt-out negotiation requirement with effective competition regulation", for example with a service provider obligation.

"The negotiation requirement didn't work for us either," a spokesperson for 1&1 told heise online. The newcomer also won spectrum in the 2019 auction, but to a much lesser extent than Telekom, Vodafone and Telefónica Deutschland. "It took us over five years to conclude a national roaming contract last week – on the Vodafone network," 1&1 continued. "In the interim, we had to make do with discriminatory national roaming from Telefónica, which was based on EU merger requirements from 2014." The company, whose 5G network expansion has repeatedly encountered obstacles, therefore wants to carefully examine the reasons for the ruling, which are not yet available, before taking any further potential steps.

(vat)