Big legal success for telecom companies EWE TEL and Freenet: The Federal Network Agency’s rules for the 2019 mobile phone spectrum auction were unlawful, the Cologne Administrative Court ruled on Monday. The regulatory authority must now decide again on the requirements for licensees and issue new notices for the procedure (file numbers: 1 K 1281/22 and 1 K 8531/18).
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Deutsche Telekom, Vodafone, Telefonica Deutschland and newcomer 1&1 spent a total of 6.55 billion euros in the 5G spectrum auction that ended in mid-2019. The auction involved using rights for frequencies in the 2 GHz and 3.6 GHz ranges, which are particularly suitable for 5G mobile communications.
Lawsuit from EWE TEL and Freenet
EWE TEL and Freenet offer their own mobile phone tariffs based on the advance services of mobile network operators. They complained about the regulator’s award conditions, which they found disadvantageous. In addition to specific supply requirements for homes and transport routes, these also include the “service provider regulation”. This stipulates that network operators must negotiate the shared use of radio capacities with service providers without their own network infrastructure.
EWE and Freenet consider this negotiation requirement insufficient, which is why they are demanding a more comprehensive service provider liability. This would mean that Telecom & Co would have to rent out some of its capacity to competitors that do not have their own infrastructure – and not just negotiate.
Protection of minors: AI is emerging as a problemEWE and Freenet based their complaints on serious errors made by the Presidential Chamber of the Federal Network Agency. The process was illegally influenced in particular by the Federal Ministry of Transport and Digital Infrastructure (BMVI) under the direction of the then department head Andreas Scheuer (CSU). This is the result of administrative procedures of the BMVI, the Federal Ministry of Economic Affairs and Climate Protection and the Chancellery, which were obtained based on the Freedom of Information Act.
The Cologne Administrative Court initially dismissed EWE’s lawsuit in 2019 as inadmissible. In 2021, the Federal Administrative Court partially overturned the decision and sent it back to its Cologne colleagues for a new decision. Among other things, they must clarify whether there is a “concern for bias” and whether the independence of the Federal Network Agency is maintained.
After questioning the then members of the Presidential Chamber in early June 2024, the Cologne Administrative Court delivered its far-reaching verdict and overturned their 2018 decision – for the first time. The court is convinced that “the Presidential Chamber has at least partially succumbed to enormous pressure from the BMVI.”
According to the Cologne Administrative Court, the ministry “attempted to significantly influence the decisions of the President’s Chamber during the entire procurement process in 2018.” For example, it advocated for stricter supply requirements, but not service provider liability.
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In addition, the Cologne judges complain that various non-kosher agreements were made around the 2018 mobile communications summit. They also see “violations in the fact that the Federal Network Agency did not sufficiently actively safeguard its independence by not preventing ministerial attempts to exert influence at the ministerial meeting level or the expert working level.”
EWE TEL management spokesman Norbert Westphal welcomed the decision. “It strengthens not only an independent federal network agency, but above all competition in the mobile communications market.” The regulator should “critically examine” its decision on service provider liability. There is now an opportunity to take proper account of the broader competition problems in a new award decision.
An EWE spokesman initially did not want to comment on the question of whether the auction would have to be repeated. The ball is in the court of the federal network agency. The Cologne Administrative Court did not allow the appeal. However, those involved can file a complaint against this decision. If the Cologne judges themselves do not comply, the Federal Administrative Court will decide on this.
The Federal Network Agency wants to examine the exact implications of the decision once the written reasons are available. Then the question of revision will also arise. In the context of the frequency auction, another process by the mobile network operators is pending. There were a total of 16 lawsuits, almost all of which, as expected, were dismissed.
(vbr)
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