Germany's smaller operators plan lawsuit over 800MHz auction
Published: 25 November, 2009
READ MORE: Spectrum | Germany | E-Plus | O2 | Regulator | UMTS
The two smallest cellcos in Germany, E-Plus and O2, are increasingly working together to try to narrow the wide gap with T-Mobile and Vodafone. They are discussing a joint bid in forthcoming 800MHz spectrum auctions, and possibly RAN sharing, and now they are supporting one another in taking legal action against the digital dividend auction process.
Talking of the new licenses, Ad Scheepbouwer, CEO of E-Plus's parent company, Holland's KPN, commented: "Telefonica O2 and ourselves will look at this jointly, because we are in the same boat. We both are being discriminated in the spectrum process and we need to look at all of our options."
Germany will be the first major European economy to conduct an auction of the former broadcast TV bands around 800MHz, which are being earmarked for 3G, LTE and rural broadband expansion in most countries. But the smaller operators believe the rules will play to the advantage of the big two, enabling them to secure two-thirds of German spectrum below 1GHz, which is most suited to rural and low cost deployments. This is because Deutsche Telekom's T-Mobile and Vodafone mainly use frequencies in the 900MHz band for 2G, while E-Plus and O2 operate mainly in the 1.8GHz band.
E-Plus and O2 said they will sue the regulator, Federal Network Agency (FNA) Bundesnetzagentur for failing to heed their calls for the largest cellcos to have their bidding rights limited. They are also concerned that only three licenses will be auctioned, meaning one of the four cellcos will lose out - and analysts believe the unlucky company might well exit the market altogether because it will be disadvantaged in spectrum terms, especially for rural coverage and 4G. Germany has already conducted several LTE trials in the digital dividend band, the most prominent being Vodafone's.
The European Union - which is pushing for a harmonized approach to this band, almost entirely focused on mobile broadband - has already threatened legal action against the German process. Last month, the FNA received a letter from European Commissioner Viviane Reding expressing concern that the sale would favor the larger players.
The EC's telecoms spokesman Martin Selmayr said that the Commission would now consider legal recourse, since it was "deeply concerned" about the German decision to ignore its advice on how to ensure fair competition. If the Commission finds EU laws are flouted by the German scheme, it "will not shy away from enforcing the EU's competition and single market rules in this important context", Selmayr said in an interview.
Under EU law regulators have to allocate spectrum in an "objective and transparent way" that does not stifle competition or benefit incumbents. The German regulator argues this matter is "outside the EC's competence".
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