BONN (dpa-AFX) - Following a court defeat in the dispute over mobile phone network frequencies, the federal government is facing losses amounting to billions. In 2019, the Federal Network Agency auctioned off frequencies for €6.5 billion, which were snapped up by mobile phone companies Deutsche Telekom, Vodafone, O2, and 1&1 – according to industry experts, this was a fairly high price.
However, smaller competitors Freenet and EWE Tel felt disadvantaged, filed a lawsuit, and were successful—a ruling by the Cologne Administrative Court recently became final. Now the Federal Network Agency must rework the network expansion requirements that were in place at the time. To this end, it launched a hearing to gather comments from the industry.
Two possible paths, both risky and consequential
The paper now published by the agency contains two options for action. On the one hand, officials could conclude that a new auction is not necessary. The interesting thing about this is that the authors write that "remedial measures may be taken" in this case. This would probably mean that the companies would be financially relieved: either they would pay less or the expansion obligations would be somewhat relaxed, meaning that fewer radio sites would have to be built.
The Federal Network Agency must make its decision based on the current market situation, according to the ruling of the Cologne Administrative Court. If it changes the list of requirements and decides not to repeat the auction, it could face claims for damages – the companies bringing the action could argue that they would not have bid as much money at the time based on the changed requirements.
The other option available to the agency is to repeat the auction, even though the decades-long use of the auctioned frequency rights has long since begun. In a new auction, the question of what the companies would bid and what they would pay for the previous use of the frequencies would be completely open.
At the time, the companies drove up each other's bids in the auction, with newcomer 1&1 not letting up in the bidding rounds and the bids getting higher and higher. It is quite possible that the situation would be different this time, especially since O2's Spanish parent company Telefónica is considering possible acquisitions and may be looking at 1&1. If there were only three network operators instead of four, competitive pressure would decrease. This would then probably also be reflected in the auction result – and instead of the original six and a half billion, only two or three billion would end up in the state coffers.
Whatever the authorities decide to do next, there is likely to be a lot of grumbling at some company – and the next lawsuit is probably not far off in this litigious industry. /wdw/DP/nas
