MNOs may face 'white spot' fines as Germany pushes to expand coverage

Late last year, German operators raced to eliminate so-called "white spots" – or areas with inadequate mobile broadband coverage – in an effort to comply with coverage requirements set during the 2019 3.6GHz spectrum auction, and declared victory. News has, however, emerged this week that the Federal Network Agency, or Bundesnetzagentur (BNetzA), has found some extra white spots and may issue some fines as a result. This is part of the country’s continuing push to expand high-speed Internet coverage to all populated areas by 2030.

The conditions established during the 2019 auction stated that 98% of households in each of the country’s 16 federal states had to be covered by 4G or 5G by the end of 2022, with speeds reaching at least 100 Mbit/s. 

Operators raced late last year to add infrastructure and meet the requirement, with O2’s coverage falling short in six states as of December, followed by DT with four and Vodafone with three. And while all claimed to have reached the target, it now seems the BNetzA disagrees.

The German media has obtained a letter from the regulator showing it has launched penalty proceedings against Deutsche Telekom (DT), Telefonica Deutschland (O2) and Vodafone for failing to eliminate around 500 4G white spots.

According to German newspaper der Spiegel, the disagreement seems to hinge on an exception granted to areas where it is impossible to improve coverage for legal or other reasons. BNetzA believes the operators have been too liberal in applying the exception, with certain areas lacking coverage even though an antenna could be added.

Any fines are, however, likely to be relatively low according to the newspaper, because the breach only concerns a relatively small number of areas. 

Fourth operator blues

The same might not be the case for newbie 1&1, which may be facing a much heftier fine in a separate BNetzA proceedings launched earlier this year.

The company set out to become Germany's fourth MNO in a somewhat surprise move that saw it enter the 2019 spectrum auction. It has, however, failed to meet its obligation of deploying 1,000 5G basestations by the end of 2022. It is said only five were operational at the time, which could trigger a fine of €50,000 (US$54,682) for each missing basestation. If the numbers are accurate, this would add up to €49.8 million ($54.4 million), adding to what has already been an expensive and complicated rollout.  

The telco has previously blamed Vodafone for its struggles. Having entered into a mast-sharing agreement with the Vodafone-controlled Vantage Towers in 2021, which became its largest expansion partner, 1&1 has since accused Vodafone of obstructing its rollout. 

It now seems 1&1 will have 1,000 basestations deployed by year's end. In a recent interview with business newspaper Handelsblatt, Ralph Dommermuth, the CEO of 1&1 parent United Internet, said the company would have 1,000 basestations installed by the end of this year, which would grow to 3,000 by the end of 2024. This is, however, a revision of its promise to have 1,200 basestations in place by year’s end.

The struggles are seemingly never-ending for 1&1, given BNetzA is considering a measure that might complicate its network rollout even further. With licenses for the 800MHz, 1,800MHz, and 2.6GHz bands are due to expire in 2025, it is conducting a consultation on extending existing licenses rather than launching a new auction. 

Next up: ubiquitous 5G 

This would leave out 1&1, even though BNetzA is considering a measure that would require the three incumbents to negotiate terms for national roaming with 1&1. It would seem, however, that a requirement to negotiate doesn't quite ensure an offer will be made, let alone a viable one.

As part of the license extension, new coverage obligations may also be imposed on operators. They would need to ensure at least 98% of households in sparsely populated areas can access 100Mbit/s speeds, with stricter requirements also imposed on coverage along roads. 

While BNetzA is pestering operators about 4G on this occasion, Germany also seeks to provide fiber and 5G wherever people live, work and travel by 2030 as part of its Gigabitstrategie, mirroring a target set by EU's Digital Decade strategy. 

BNetzA told Handelsblatt in September that 89% of German territory was covered by 5G as of July. An area is counted as covered, however, even if a single operator has deployed 5G there, meaning this metric says little about individual operators' progress. 

In its Q3 interim report, Deutsche Telekom said its 5G network was available to 95.4% of the population. In August, Vodafone stated 90% were covered by its 5G network, with 45% of people in Germany having access to 5G standalone at home. O2 also said in August its network reached 90% of the population, and plans to increase that to 100% by 2025.

While 5G coverage in Germany is among the best in the EU, according to the 5G Observatory, Ookla's data show it is trailing behind when it comes to speeds.