German Refarming of 900 MHz Band

The German telecoms regulator has investigated refarming of 900 MHz band. On March 25 it issued a new independent report on flexible use of that spectrum.

Datei:Bundesnetzagentur logo.svgThe German Federal Network Agency (BNetzA, for its German acronym) published an expert opinion on March 25 on the technical and economic aspects of new frequency allocations for mobile terrestrial communication services. The report (4 mb PDF in German) in particular focuses on potential effects on competition through more flexible use of 900 MHz spectrum (a press release in English was also issued that day). It concludes that  GSM technology will remain for some time, despite availability of newer technologies like LTE for mobile communications. It also indicates that equal (symmetrical) availability of the same amount of spectrum in each mobile frequency band is not required for competitive conditions.

It seems that every few days a new smart-phone model hits the market, and more and more people are becoming heavy users of mobile internet services. What has been a market for “techies” and business executives only a few years ago has developed into a mass market. In order to handle the consistently growing data traffic, telecommunication companies demand extra spectrum usage rights. Especially in demand are frequencies below 1 GHz, because they allow the installation of a telecommunication grid at much lower costs.

However, there are hardly any more frequencies available in this band in Germany. Furthermore, frequencies already assigned to the incumbent telecoms companies are reserved for the old but nevertheless heavily used GSM standard, even though GSM is optimized for speech and unsuitable for broadband data transport.

The fact that sooner or later all mobile phones will master 3G (UMTS) or 4G LTE standards helps to solve the dilemma. Eventually it will no longer be necessary to rely on GSM. The BNetzA thus decided to make the GSM usage rights in the 900 MHz band “flexible” as soon as possible, so telecoms companies can decide themselves which standards they want to use their frequencies for.

Against this background, the European Commission asked the BNetzA to commission an expert opinion on the distribution of frequency bands. This opinion now investigates the possible competition distortions that could arise from this new flexible approach, based on the present allocation of frequencies in the 900 MHz band and the Directive 2009/114/EC.

The report analyses if and when GSM will reach its end of life. According to the report, this won’t be very soon. GSM will continue to be used for voice communication, some special services, and roaming for at least another ten years. Even afterwards, the report says, a general phase-out will take place which nevertheless will leave certain GSM capacities.

The opinion that GSM will vanish very slowly is shared both by the Federal Cartel Office (FCO - a 37 kb PDF in German) and by the major German telecoms player, T-Mobile  (7 mb PDF in German). T-Mobile says that until 2016 they don’t expect GSM usage to decline, but depending on how the demand for broadband services will develop maybe they will use some of their 900 MHz frequencies for LTE.

This T-mobile strategy to operate GSM in the 900 MHz band in parallel with UMTS/LTE for mobile broadband purposes leads to the question whether such a strategy is required to compete successfully. The FCO believes that it will essentially depend on the market players' respective business models and on market penetration with suitable end customer devices. Currently, the FCO considers it unclear whether a mere GSM model will succeed on the long run, whereas the offer of broadband services may become necessary at least in the medium term. The new report also concludes that parallel operation is likely to be technically and objectively advantageous, even if it is neither economically nor legally required.

Picking up the question the BNetzA raised, this study conclusion means that competition distortions due to flexible use of the 900 MHz band are unlikely, even if the approach does not give all competitors the opportunity to operate parallel standards in the band below 1 GHz. The report concludes that measures to guarantee competition, like reallocating spectrum to reach a symmetrical distribution, are not required.

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