German regulator Bundesnetzagentur has said it will move ahead with the proposed 5G auction plan, despite German telcos and industry lobby group GSMA slamming the plans as a commercial nightmare.
The auction, which will take place in early 2019, requires minimum data rates of 100 Mbps available by the end of 2022 in 98% of households in each state as well as along all major transport paths. Each of the telcos must also install 1000 5G base stations and 500 other base stations, and by 2024, the data coverage must be extended to seaports, main waterways and other minor roads.
While data rates for the longer-term targets will be lower, this is still a big ask for a country which currently does not meet the standard for 4G coverage. For the GSMA, the conditions placed on the spectrum are unreasonable and not commercially viable for the telcos. The risk is Germany will be left behind as the rest of the world progresses into the 5G economy.
“The mobile industry is essential to delivering on Germany’s vision for 5G leadership,” said said Mats Granryd, Director General of the GSMA. “We are alarmed that – despite real and substantial concerns raised by the mobile industry on the original proposals – the proposed terms make the situation worse by doubling down on unrealistic conditions that puts Germany’s 5G future at risk.
“Operators in Germany have invested billions in the country’s networks and have proven through history that they are committed to investing and providing innovative services. German consumers and businesses will be the ones to lose out from unreasonable obligations that make investment in 5G rollout uneconomical.”
One of the concerns surrounds the 3.6 GHz band, which can deliver on the high capacity demands though it does not offer the same advantages for coverage. To meet the 98% coverage conditions, the economics do not match, especially when you take the huge transport network into account. The GSMA also considers the roaming and wholesale obligations attached to the 3.4 to 3.7 GHz band as suspect, perhaps creating a critical level of legal uncertainty and will could deter investment in 5G networks. This is also where some of the telcos have found complaint.
“Our decision sets vital preconditions for the digital transformation of industry and society,” said Bundesnetzagentur President Jochen Homann. “Through the award of frequencies, we are creating planning and investment certainty, and contributing to a fast, needs-based rollout of the mobile radio network in Germany.”
Another issue with the auction requirements, which will certainly have the incumbent players up in arms, are the lighter conditions placed on new market entrants. As it stands, new comers could pick and choose their markets, as national roaming requirements could be negotiated with the regulator. It is creating a unfair environment, with the incumbents forced to provide coverage in the less commercially attractive regions while new comers could focus resources on the more profitable urban environments.
While telco moaning is usually taken with a pinch of salt, in this case you have to have a bit of sympathy for the established players. The German regulator seems determined to create an environment which increases the number of telcos in the country, and potentially builds the prospect of furthering the digital divide between urban and rural environments. Not only does this favouritism go against a lot of the independent values supposedly in place at government level, but risks the spread of wealth. This in turn will decrease a telcos ability to invest. Just as the industry is craving consolidation, the German regulator seems to be shooting off in the other direction.
The plans seems incredibly short-sighted, though it reeks of bureaucrats who wanted to clock out on time for the 4pm happy hour stein and bagel.