• Operators secure improved payment terms for 5G frequencies.
  • Added rollout commitments made in return.

 

137-04-02 LTE-Antenne-Halle-Neustadt TfD

Operators soften 5G cash blow with mobile pact

Source: Telefónica Deutschland

The consequences of Germany’s costly 5G auction continued to ripple out as Telefónica Deutschland (O2 Germany) and its network operator peers agreed to a “mobile pact” with the government that aims to ensure 99% household coverage for 4Gin every German state by the end of 2021.

The legally-binding agreements, also signed by Telekom Deutschland and Vodafone Germany, were made with Germany’s Federal Ministry of Transport & Digital Infrastructure (BMVI), and build on commitments from a mobile summit in July 2019. It also seems that the original pact was extended to include Drillisch, which recently secured a 5G licence and is evolving into a mobile network operator (MNO).

In return, the government will allow the MNOs to spread out the cost of their 5G spectrum rights by making annual, interest-free payments to 2030.

Telefónica welcomed the agreement as enhancing its financial flexibility after it had previously expressed disquiet at having to spend huge sums on “a piece of paper” to enable it to get started on 5G investment (Telefónicawatch, #136). A further update on the operating business’s plans for 5G investment is expected in early-November 2019.

Through the pact, the operators are mandated to achieve:

  • 99% nationwide 4G household coverage by 31 December 2020, and 99% in each German state by 31 December 2021.
  • Greater collaboration on network expansion through the construction of an additional 1,400 open access LTE base stations.

Telefonica Deutschland said that it will build 333 additional mobile radio sites in ‘white spots’ by end-2021 on its side of the bargain.

The BMVI indicated that additional 5G service targets have also been agreed in connection with the improved payment terms, including:

  • Minimum 100Mbps speeds (and maximum 10ms latency) on all German motorways by 31 December 2022, and on all other federal highways by end-2024.
  • 50Mbps-plus on all national and state roads, seaports, and core inland waterways by 31 December 2024.
  • 100Mbps or better on railway lines with more than 2,000 daily passengers by 31 December 2022, and at least 50Mbps on all other railway lines by 31 December 2024.
  • Commissioning of 500 base stations supporting 100Mbps or better in mobile “white spots” by 31 December 2022.

Quid pro quo

The German authorities also have some action items to attend to, following the pact.

Andreas Scheuer, Minister of Transport & Digital Infrastructure, set out a five-point plan to improve mobile network coverage in Germany. The strategy focuses on measures to close gaps in the 4G network, accelerate 4G and 5G network expansion, and enable greater use of existing resources such as state-owned properties and infrastructures.

Proposals include an early extension of 700MHz, 800MHz, and 900MHz licences that are due to expire in 2025 and 2033; creation of a mobile infrastructure company to build mobile antennas in any remaining mobile “white spots” with the use of public funding; and simplification and acceleration of approval procedures for building permits.

The mobile pact was signed only days after the President of the Federation of German Industries (BDI) complained about the slow progress that has been made in ensuring mobile network coverage in rural areas of Germany. In an interview with the dpa news agency, Dieter Kempf called for an overhaul of the entire system. It is not clear what Kempf makes of the new mobile pact or five-point plan, but he asserted that little progress had been made with rural LTE coverage in the past five years and saw few indications that the situation might improve any time soon.