Ralph Dommermuth, head of the telecommunications company 1&1, is calling for the usual state auctions worth billions to be abandoned when it comes to the allocation of mobile phone frequencies. There should be an "industry solution" in which the four providers divide up the frequencies among themselves by negotiation. "I would rather invest the money in the network than spend it on frequencies," Dommermuth told dpa in Montabaur. "Under the supervision of the Federal Network Agency, the four network operators should agree on a fair distribution." He is interested in low frequencies - in the 700, 800 and 900 MHz range - which have a wide range and are important for coverage in rural areas.

Spectrum that is currently used by Telekom, Vodafone and Telefónica (O2) will become available at the beginning of 2026. In future, however, there will be not just three but four mobile network operators in Germany. This is because 1&1 wants to activate its own new network for mobile customers in summer 2023. In future, the network will operate in higher frequencies (2.1 and 3.5 GHz), the usage rights for which were auctioned off by the Federal Network Agency in 2019 and which are particularly suitable for cities with high data requirements. At that time, the state collected €6.5 billion from the four bidders. Forgoing a new auction would also mean forgoing high state revenues.

The upcoming award is about "low-band" frequencies, which are important for national coverage. The Federal Network Agency has not yet decided whether there will be another auction, an award against fees or a completely different approach.

Alternatives to the auction

Dommermuth is now introducing another option into the discussion. However, the manager emphasizes that there should be another auction if the industry talks fail. "In the past, the auction has proven to be a tried and tested way of distributing a scarce commodity."

In terms of frequencies, the top dogs Telekom, Vodafone and O2 are also against an auction. However, their stance differs fundamentally from that of newcomer 1&1 in other aspects. They would prefer it if the current usage rights were simply extended. But Dommermuth takes a critical view of this. "This would obviously discriminate against 1&1 and would be incompatible with German and EU law," he says.

Some of the long-established network operators argue that 1&1 is still a tenant of Telefónica anyway - the newcomer would therefore indirectly continue to have access to the frequencies. However, Dommermuth rejects this. Like every other network operator, 1&1 absolutely needs "low-band" frequencies. "That's the piece of the puzzle that we're still missing," he says. "But we can of course turn the proposal around: 1&1 gets frequencies and one of the other three companies becomes our tenant."

Dommermuth does not accept the argument that there is enough spectrum for three parties, but not enough for four. "There are four networks in all major European countries, and they also have exactly the same frequencies as in Germany." In France, for example, there was no auction, but an industry solution in which the spectrum was quartered and then allocated. This shows that it works.

To date, 1&1 has been active in the mobile communications market as a so-called MVNO. As a "Mobile Virtual Network Operator", the company is to a certain extent a tenant of O2 and Vodafone; 1&1 mobile customers are connected to these two networks. The company's own mobile network is to be activated for new customers in the third quarter of 2023, after which the current 11.4 million existing customers are to be gradually migrated to the company's own network within two years. Where there are no 1&1 antennas yet - and this will be the case across the majority of Germany in the initial phase - a "national roaming" contract will apply, enabling automatic connection to the O2 network.

According to Dommermuth, the expansion of the network is progressing well. Initial tests are underway in Karlsruhe, Mainz and Frankfurt with some customers using mobile communications as a substitute for a DSL connection. Download speeds of more than one gigabit are being achieved and latency (response time) values of just 3 ms. "We still need to continue scaling and testing, but things are already looking very good," says Dommermuth. By the end of 2030, 1&1's 5G network must reach at least 50% of German households, as stipulated by the Network Agency. "We will probably reach this target much earlier," says Dommermuth.