Study on the frequency situation on the German mobile communications market shows: Adequate spectrum for the operation of four networks remains available

• A European comparison reveals that subsequent to the dissolution of E-Plus Deutsche Telekom, Vodafone and Telefónica have larger than average frequency portfolios
• Despite large frequency portfolios, Germany lags behind other major European countries in terms of network availability
• Some ranges of the mid- and low-band frequencies are currently not being used efficiently
• Upcoming frequency allocation must take into account the needs of all network operators from the perspective of both competition and efficient utilisation
• Other large European countries with four providers offer good role models – there is no reason why a fair distribution of frequencies should not be successful in Germany as well

Montabaur, 17 January 2024 Germany once again has four mobile networks – the 1&1 network has been fully functional since December 2023. 1&1 is the first provider in Europe to use the new Open RAN technology — cloud-native, independent of specialised network suppliers such as Huawei and ready for real-time applications.

Despite this innovative strength, non-discriminatory access to frequencies is a key prerequisite for 1&1’s competitive network operation, just as it is for other providers. A study requested by 1&1 and conducted by the international consulting firm Aetha Consulting – “The Frequency Situation in Germany Ahead of the Upcoming Frequency Allocation 2024/25” – sheds light on the frequency situation on the German mobile communications market. The experts at Aetha conclude that the upcoming frequency allocation must give fair consideration to all four network operators if effective competition and efficient frequency utilisation are to be ensured. The study refutes the claims of Deutsche Telekom, Vodafone and Telefónica, who are lobbying for a unilateral extension of their rights of utilisation (which will expire at the end of 2025) and the exclusion of 1&1.

Initial situation
The regular award cycle of the Federal Network Agency (Bundesnetzagentur; BNetzA) will feature the availability of 60 MHz of low-band frequencies in the 800 MHz range in addition to the present 240 MHz of mid-band spectrum (1800 MHz and 2600 MHz) as of January 2026. These bandwidths are essential for network coverage and availability in densely populated urban areas as well as for the provision of sufficient data transmission speeds and network capacities and are of tremendous importance for all network operators. A current consultation paper issued by the BNetzA considers for the first time an extension of the frequency rights of Deutsche Telekom, Vodafone and Telefónica that will be expiring in lieu of the usual frequency auction, an action tantamount to subsidisation in the billions of euros of the three established network operators.

During the consultation process, the BNetzA received statements of position from companies, politicians, associations, authorities, municipal networks and other market players. In their statements, Deutsche Telekom, Vodafone and Telefónica argue in favour of an extension of their frequency utilisation rights while ignoring 1&1’s frequency requirements; in contrast, 36 other stakeholders are in favour of taking the new entrant’s interests into account.

Myth 1: “There is too little spectrum for four providers”

Following the dissolution of E-Plus, 1&1’s market entry has returned the number of network operators in Germany to four, as is the case in all other major European countries. A comparison of the frequency portfolios in other countries with four network operators shows that the three established German network operators have significantly more frequencies than the “Top 3 providers” in each of the observed European countries. Specifically, they have access to an average of 38 MHz more spectrum in the low-band ranges and their overall portfolio is almost 120 MHz larger. In other countries, this additional frequency availability is typically held by the fourth network operator.

„It is evident that four mobile networks can be operated in parallel without the risk of coverage gaps or capacity shortages, as seen in the UK, France, Spain, Italy and Poland. In all these countries, similar amounts of spectrum are available overall, as a result of European harmonisation processes”, says Marc Eschenburg, partner at Aetha Consulting. 

“Seeking to pave the way for Germany to have four mobile networks again, the Federal Network Agency issued special rules for new entrants in the 2019 5G auction. 1&1 invested over one billion euros in its initial high-frequency spectrum and trusted in the provision of additional frequencies by the end of 2025, as was expressly stipulated in the auction conditions”, says Ralph Dommermuth, CEO of 1&1 AG. “All low-band frequencies in particular are in the hands of the incumbent network operators. Only one-third of the low-band frequencies will become free at the end of 2025 when the 800 MHz frequencies become available. In effect, Deutsche Telekom, Vodafone and Telefónica will in any case have unrestricted access to the other two-thirds in the 700 and 900 MHz ranges until 2034 as a minimum. If 1&1 were to be excluded from the frequency allocation, we would be blocked for many years and would not be able to operate our network competitively.”

Myth 2: “The incumbent network operators are utilising their large frequency portfolios in full”

The established network operators efficiently use the low-band frequencies in the 800 MHz range and mid-band frequencies in the 1800 MHz and 2100 MHz ranges for the broad provision of 4G and 5G coverage. Frequencies in the 700 MHz, 900 MHz, 1500 MHz and 2600 MHz ranges, however, are not utilised at many antenna sites. The study, based on data collected by reputable measurement companies, reveals that only five per cent of locations in all of Germany use more than 40 MHz of the 60 to 70 MHz available to each incumbent network operator. In other words, each network operator could relinquish 20 MHz in the 700 or 900 MHz frequency range without any significant losses in the quality of service. Moreover, the coverage obligations and the provision of speeds of 100 Mbps demanded by the BNetzA can also be met with 40 MHz in the low-band range.

Myth 3: “The large frequency portfolios of the established network operators are the foundation of the high network quality in Germany. If the low-band spectrum in particular is divided among four providers, there is a risk of dead spots”

Drawing on the measurement data gathered by independent experts at OpenSignal and Ookla, the Aetha study concludes that the network availability in Germany lags behind that of other major European countries such as Spain, France, Great Britain and Italy despite the above-average size of the frequency portfolios held by the three established network operators (following the dissolution of E-Plus). Data transmission speeds in Germany are also no better than average despite the significantly lower data traffic per customer compared to other European countries.

The large frequency portfolios of the established network operators evidently have no direct relationship to good network quality. Even countries with smaller portfolios per network operator generally achieve higher data transmission speeds in particular. The benchmark calculated by Aetha also indicates that there are no measurable differences in performance, regardless of whether countries have three or four mobile networks.

Conclusion

The study determines that Deutsche Telekom, Vodafone and Telefónica could operate their networks nationwide – even in the event of a theoretical complete loss of 800 MHz frequencies – by utilising more intensively their other low-band frequencies. Nevertheless, it would be much more advantageous for the German market to include the less utilised 700 and 900 MHz frequencies in the upcoming award process – as was suggested by the Federal Network Agency back in 2022 — with the aim of avoiding an expensive bidding war and the necessity for incumbent network operators to carry out extensive restructuring measures.

An extension of the frequencies solely in favour of the three established network operators would mean that important ranges of the low- and mid-band frequencies would potentially remain unused in the long term. Simultaneously, the present unequal distribution of frequencies favouring the established network operators over 1&1 would be cemented for many years to come, a situation that would inevitably and fundamentally limit the competitiveness of the fourth network operator.

“If we are treated fairly, we are also open to alternative procedures for frequency allocation – including the extension of frequency rights. Other countries show how this can be done. In France, for instance, all four network operators – including the newcomer Free Mobile – received an equal share of the frequencies being allocated when the low-band frequency awards were extended as a means of assuring fair competition. There is no discernible reason why a fair distribution of frequencies would not be equally successful in Germany as well”, says Ralph Dommermuth, CEO of 1&1 AG.

About 1&1 AG

1&1 AG is a listed telecommunications provider based in Montabaur, Germany. The company is member of the United Internet AG Group.

1&1 is the first network operator in Europe to operate a fully virtualised mobile network based on innovative Open RAN technology. In addition to a comprehensive portfolio of mobile communications products, the Company offers broadband lines, most of which are based on 1&1 Versatel’s Germany-wide fibre optic transport network, and added-value applications such as home networking/smart home, online storage, video-on-demand and IPTV.

While the 1&1 brand addresses value and premium segments, the Group’s discount brands appeal to price-conscious target groups.

Press Contact 1&1
Robin Schmidt
Email: presse@1und1.de

About Aetha Consulting

Aetha Consulting Limited supports leading players in the TMT sectors to make major strategic and regulatory decisions.

Our commitment is to provide high-quality advice, supported by rigorous quantitative analysis, to help our clients solve their most pressing issues. With our strong track record in both developed and emerging markets, our footprint is global.

Over the last 10 years, Aetha has supported industry players, regulators and financial institutions in preparing for more than 100 spectrum awards. As a result, we are recognised as one of the leading advisors worldwide in the area of spectrum management.

Contact Aetha Consulting

Marc Eschenburg

Email: enquiries@aethaconsulting.com