BONN (dpa-AFX) – A multi-billion euro mobile network auction from 2019 may have to be repeated. After telecommunications providers Freenet and EWE Tel achieved a legal victory at the Cologne Administrative Court last year, the Federal Administrative Court in Leipzig has now dismissed an appeal by the Federal Network Agency. The Cologne court had previously ruled that the conditions for the frequency auction were unlawfully established.

According to the judges, the Federal Ministry of Transport, then headed by CSU politician Andreas Scheuer, exerted influence at the time, thereby undermining the independence of the federal authority in Bonn. With the dismissal of the appeal, this ruling is now legally binding. The broadband association Breko described it as a "severe blow to the Federal Network Agency."

The regulatory authority must now retroactively redefine the regulatory framework that underpinned the frequency auction at the time. "We will promptly restart the 5G frequency process to ensure legal certainty and planning reliability for companies as quickly as possible," emphasized agency chief Klaus Müller.

What Could Happen Next

There are several options for how the Federal Network Agency might proceed: it can independently and freely develop a new set of conditions and ultimately reach the same conclusion as before the 2019 auction – in which case, it would adopt the same regulatory framework for frequency allocation as it did then. If this happens, the auction would not need to be repeated, and nothing would change.

Another possibility is that the Federal Network Agency establishes different rules retroactively, requiring a new auction. The financial implications for the federal government – for example, whether it would receive less money for the frequencies – remain entirely unclear. Industry observers believe a repeat of the auction is not particularly likely.

Billions in Revenue for the State

In the 2019 frequency auction, Deutsche Telekom, Vodafone, O2 Telefónica, and 1&1 committed to paying a total of approximately EUR6.6 billion to secure long-term use of specific frequencies. They were not subjected to a so-called service provider obligation – a requirement that telecommunications companies EWE Tel and Freenet, which also sell mobile contracts and lease network access from competitors, had demanded. There is currently no obligation to grant these smaller telecom firms access to the networks – if such a rule existed, smaller companies would have a stronger negotiating position.

Plaintiff Freenet welcomed the decision by the Federal Administrative Court. The Federal Network Agency, Freenet argued, had pursued a hopeless "delaying tactic" with its appeal in Leipzig, which has now failed. "Now it's time for action: the reallocation must include measures to protect competition," said Freenet CEO Rickmann von Platen. He is counting on the Federal Network Agency to revise the set of conditions and strengthen the position of virtual network operators – companies like Freenet that lease access from network providers – in the new framework./wdw/DP/jha