Germany’s 5G Auction Proposal Keeps Barriers High for New Entrants

Germany's 5G Auction Proposal Keeps Barriers High for New EntrantsGerman mobile phone operators will not be asked to allow national roaming when they roll out 5G solutions, the country’s network service stated in a record, which might make it harder for new entrants to have the services suppliers.
The auction for the 5G, or fifth creation, spectrum licences at Europe’s biggest telecoms market is intended for early 2019 and details are being closely-watched to determine whether smaller contenders will have a realistic chance to compete with the established players.

But there are concerns among industry analysts that market concentration has left Europe’s biggest market lagging its rivals in the race to build network-dependent connected factories or place self-driving cars on the road.

Germany’s antitrust regulator last week called for a fourth largest mobile operator to enter the marketplace for its 5G market, rebutting arguments from the”Big Three” that more competition would hit investment.

The suggested terms for its 5G market, laid out in a document from network service Bundesnetzagentur (BNetzA), don’t include a binding commitment to permit national roaming – that would let a new entrant lease network access where it lacks coverage – a key requirement of smaller player United Internet, which will be considering bidding.

With no drifting commitment the incumbent operators may choose whether or not they would like to allow the new entrants access to their networks, for example, in rural areas.

The proposed provisions, which will be discussed by BNetzA’s advisory board on September 24, also noted that at least 98 percent of German families need to be supplied with a high-speed link of 100Mbps at the end of 2022.

At least 50Mbps have to be accessible for active regional and long-distance rail traffic lines.

“The coverage obligations might not be not quite as extraordinary as BNetzA describes them but at first sight do enforce substance capex requirements about the network operators, in our view,” Jefferies analysts wrote in a note.

Asked about auction proceeds, BNetzA president Jochen Homann told German paper Handelsblatt that the government was unlikely to create proceeds in line with those in the UMTS, or 3G, auction in 2000, which amounted to EUR 50 billion ($58 billion roughly Rs. 4.1 lakh crores).

Deutsche Telekom, late on Thursday, said it anticipated the BNetzA to refrain from additional regulatory interventions to the mobile phone market, including the proposals were counterproductive.

Vodafone, meantime, criticised requirements to supply federal primary roads with 100Mbps as”unacceptable”, warning of high expenses.