5G should make the country better, more digital, smarter. Autonomous driving, telemedicine, intelligent trash cans: the telecommunications companies are happy to outdo each other with new milestones and visions. But not only Telekom and Vodafone, who already have quite a few 5G masts in large cities, but also Telefónica and 1 & 1 Drillisch put billions on the table for the corresponding frequencies. The latter have not yet started to expand. Cooperation between competitors is required – and there is still a problem one year after the frequency auction.
Dependent on competitors’ networks
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This focus shows what the new mobile radio standard can do, for whom it makes sense and why scientists warn against 5G rays.
Unlike the three competitors, the United Internet subsidiary 1 & 1 Drillisch based in Maintal does not yet have its own mobile network. That should change: With the auction of rights of use for 5G frequencies, the company has positioned itself to become the fourth network operator. Since some 1 & 1 frequency blocks will only be available in a few years, the company will rent some from Telefónica until then.
But that’s not all: It will take years before 1 & 1 Drillisch can offer a comprehensive 5G network. However, since the company does not operate its own 4G network unlike its competitors, help is needed. “In the beginning, we are dependent on roaming capacities,” explains CEO Ralph Dommermuth in an interview with the German Press Agency. “Nobody wants to use a mobile phone contract that only works in Cologne, Düsseldorf or Munich, for example. Everyone wants to surf and make calls everywhere.” That means: Drillisch virtually wants to rent rights so that its own customers outside the expansion zone do not fall into the deadlock, but can use the networks of their competitors.
National roaming in the far distance
The requirements of the Federal Network Agency stipulated in the frequency auction prescribe a so-called “negotiation requirement” for the network operators: there is therefore no obligation to rent out the networks – that is, to operate so-called national roaming, but at least negotiations must be in progress. That also happened – but much more intensely and longer than hoped by 1 & 1 Drillisch. “We are now a year ahead and still have no national roaming,” complains Dommermuth. “It was clear that this would not be a walk.” However, the company’s original schedule was to end the talks in autumn 2019.
Instead, there is still no agreement. “We have received offers that do not allow us to have a product that is in line with the market,” says Dommermuth. The three top dogs are keeping their secrecy in view of the ongoing negotiations, but let it be clear that they disagree clearly. “We are open to third-party business – as long as this is done on reasonable commercial terms,” said Telecom CFO Christian Illek in a conference call.
“Moon prices” versus “requirements too high”
Telefónica refers to the current contracts with 1 & 1 Drillisch, from which the company can derive a claim to national roaming. In a letter to the advisory board of the Federal Network Agency, Vodafone complained about the attitude of 1 & 1 Drillisch. The newcomer called for a “risk-free business model” and insisted that Vodafone bear the entrepreneurial costs for investments or increasing data traffic entirely on their own.
“Drillisch wants to access resources as cheaply as possible. The others are interested in keeping the new competitor as small as possible,” explains telecommunications expert Torsten Gerpott from the University of Duisburg-Essen. While 1 & 1 boss Dommermuth accuses rivals of “moon prices” for their offers, they complain that the newcomer places too high demands on them.
In fact, 1 & 1 Drillisch has not yet started building 5G masts, and there are no corresponding contracts with suppliers, only a few test antennas are running. The company points out that the expansion cannot begin until the negotiations have ended, otherwise the foundations are lacking. Gerpott, however, does not consider this to be true: “They want to put pressure on politics,” says the expert. “The regulatory framework is a hygiene factor, but certainly not the show stopper. The availability of 5G network technology at competitive costs and the development of attractive new 5G applications are at least as important.”
The delay is annoying from a consumer perspective. The later all competitors start the expansion, the later an area-wide, affordable 5G network will be available for everyone. With the predecessor 4G (LTE), all three network operators have so far broken the deadlines set by the Federal Network Agency, according to which at least 98 percent of households in every federal state should be equipped with the fast mobile radio standard by the turn of the year.
Negotiation requirement – but no obligation to agree
The dispute has not yet reached the highest possible escalation level – an arbitration procedure led by the Federal Network Agency. Nevertheless, 1 & 1 Drillisch has already asked the regulatory authority for help. This has already held talks with all parties hoping to mediate. “We accompany the talks of the companies so that the negotiations run fairly and the new competitor is not discriminated against,” says network agency president Jochen Homann.
In the opposition, the fact that national roaming cannot be ordered by the Federal Network Agency according to the current legal situation is a problem: The “top dogs” caused 1 & 1 Drillisch “to starve to death” without a bid to negotiate, complains the Green MP in the Bundestag, Oliver Krischer. “Although there is a negotiation requirement that the other network operators take the new competitor 1 & 1 piggyback on their LTE network, it is not worth anything because there is no obligation to agree.” The network agency must be enabled to make decisions.
Industry expert Gerpott still considers the negotiations on a voluntary basis to be the right way: “I consider an obligation to national roaming to be problematic because it would create false incentives. Those who helped build networks as pioneers would be at a disadvantage.”