Frequency Auction for mobile broadband starts in May

On 22 April, the Federal Network Agency (FNA) has announced the time and participants to the next frequency auction for mobile broadband. Not a big surprise to market experts, the authority admitted the established MNOs Telefónica, Vodafone and Deutsche Telekom.

Right before the FNA’s decision, the Federal States had paved the way for the frequency auction by approving the regulation that provides the legal framework for the auctioning for frequencies in the 700 MHz band.

The auction will commence with a public kick-off on 27 May in the FNA’s branch office in Mainz. The following auction itself will however not be accessible for the public. In order to prevent manipulation, the auction participants will be closed off from the public as in the last auction in 2010. The participants will even have to hand over their mobile phones before entering the auction room.

Neither the duration of the auction nor the revenues from the auctioning (which will be credited to the Federal Government) are exactly foreseeable. However, the FNA has set minimum bets for each frequency package totaling to 1.5 billion Euros.

The auction will encompass frequencies in the bands of 700, 900, 1500 and 1800 MHz. Some focus of public interest is on the 700 MHz frequencies. They have so far been used for broadcasting and are now becoming available due to the migration of DVB-T to DVB-T2. These frequencies are particularly well suited for mobile broadband deployment in rural areas.

The Federal Government’s plans to use the revenues from the auctioning to support broadband deployment in underserved areas of the country, are widely criticized by the MNOs. They anticipate significant distortions of competition. Ultimately, they say, successful bidders would be compelled to subsidize their fixed-line competitors.

Jochen Homann, Chairman of the FNA, defended the auction design:“Germany is the first country in Europe to allocate spectrum in the 700 MHz band for mobile broadband”  he said in a press statement. Mr Hohmann expects that the auction will stimulate broadband deployment in rural areas.