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Due to shortfalls in expanding the mobile phone network, a watchdog authority is considering asking Germany’s big telecom providers to pay up for the first time. © Jens Kalaene/dpa-Zentralbild/dpa

In 2019, four telecommunications groups bought mobile frequencies for 6.5 billion euros and bet on a rapid expansion of the network. So far, no company has met all the requirements.

Bonn – Due to shortfalls in expanding the mobile phone network, a supervisory authority is considering asking Germany’s big telecom providers to pay up for the first time. “The Federal Network Agency currently intends to impose a fine of up to 50,000 euros per location,” reads a letter from the Bonn authority to its advisory council. The document is available to dpa. These are sites that should have been built late last year as part of the 2019 frequency auction, but were not. It goes on to say, “Paid fines can also be imposed.” Fines paid could have even greater financial consequences.

According to their own statements, the three incumbent network operators Telefónica (O2), Vodafone and Deutsche Telekom have met the core requirements of the expansion obligations – for example, that in every federal state at least 98 percent of households have a mobile phone connection with a download rate of 100 megabits per second. In the case of the so-called white points, on the other hand, the three clearly broke the bar. These are areas where no cell phone network can transmit 100 megabits per second. Instead of having 167 of its own locations in said area as of December 31, 2022, Vodafone reported only 86, Telefónica 61 and Telekom 38.

Among other things, the threat of sanctions in the letter to the advisory board refers to such places. Network operators unanimously emphasize that they are making progress. There are 14 more under construction, says a Telekom spokesman, for example. He also stresses that in the remaining 115 other locations, there are “mostly no dead spots,” but there is “basic service” there: mobile phone has broadband reception, but the prescribed minimum transmission of 100 megabits per second. He is lost.

Companies: state list received too late

The companies also say they received a government list of affected areas too late and that expansion is simply not possible in some places, for example, when no landlord is willing to rent land for a radio antenna. The construction of such masts is also difficult in nature reserves. If it is impossible to install antennas for “factual and legal” reasons, the Federal Network Agency does not classify this as misconduct.

So it’s not clear how big the gap is with the mandatory requirement of 167; depending on how many locations the Federal Network Agency considers “legally and really” impossible, it is smaller or larger. The Bonn authority is currently examining the documents that the companies submitted in early January.

For 1&1, penalties could be costly

The most flagrant breach of expansion obligations comes not from the three incumbent network operators, but from newcomer 1&1. This company first bought frequencies in 2019 and is currently building its own mobile phone network; So far, 1&1 has sold mobile phone contracts where customers are mainly connected to the O2 network. 1&1 pay rent to O2 for this. Montabaur’s group should have activated 1,000 5G stations at the beginning of the year, but in reality there were only five. 1&1 justified this with delivery problems at a construction partner. 1&1 wants to hit 1,000 by summer 2023. If 1&1 is penalized, it could be expensive.

However, it is not clear whether the Federal Network Agency will impose fines or penalties. After the frequency auction in 2015, no network operator met all of its obligations; Telefónica (O2), in particular, revealed serious deficits at the time. At that time, too, the regulatory authority threatened sanctions, but ultimately turned a blind eye.

How consistent does the authority remain in the end?

It could be the same this time. The letter to the advisory council, which meets this Monday, says: “When sanctions are imposed, a global evaluation is made, in which the respective individual case will be evaluated.” It is quite possible that the authority will only make a threat this time to increase the pressure, but in the end it will not use the sword of sanctions.

However, telcos shouldn’t be too sure about this. Because Klaus Müller, who previously chaired the Federal Association of Consumer Centers, is now in charge of the regulatory authority. He is known for paying more attention to consumer protection issues than his predecessor: Rather than forgo litigation with companies, the agency may want to pick it up this time and apply sanctions. dpa

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