First fine proceedings opened against cell phone network operators

First fine proceedings opened against cell phone network operators

For the first time, the Federal Network Agency is imposing fines on Germany's mobile network operators Deutsche Telekom, Telefónica (O2) and Vodafone due to weaknesses in mobile communications.

This has been done "due to culpable failure to fully comply with coverage requirements in a timely manner", according to a letter from the agency, which is available to Deutsche Presse-Agentur. The proceedings, which were opened in September, have not yet been made public. The companies can now submit comments. A decision will be made next year. In separate proceedings initiated at the same time, the companies are also threatened with so-called penalty payments.

The grid operators are of the opinion that they have not violated the expansion requirements. They refer to an exception rule: where the expansion was not possible for legal and factual reasons - for example, because nobody wanted to rent a plot of land on which a radio mast could be erected - the requirement is deemed to have been fulfilled even without a network. However, the Network Agency is of the opinion that this justification does not apply in some cases - and that antennas could have been installed in some places after all.

Deficits in white spots and tunnels

There are 500 4G dead spots where none of the three network operators can provide reception of 100 megabits per second. These white spots should have disappeared by the turn of the year. However, the companies did not manage to do this for all of them. In addition, the providers still do not have a good network in some federal highway tunnels, although this is mandatory - this is also the subject of the proceedings.

According to industry circles, the number of violations is very low. If fines are ultimately imposed, they are likely to be correspondingly low. The opening of proceedings is seen more as a signal to the industry to make more of an effort in the expansion and to fully comply with supply requirements. In the past, the Network Agency has turned a blind eye to similar cases. For example, none of the three grid operators complied with expansion obligations resulting from the 2015 auction by the end of 2019. There were no fines at the time.

Telefónica had major difficulties at the time. Telekom and Vodafone only had small deficits. A penalty payment procedure was initiated against Telefónica in 2020. However, after O2 was severely delayed, the proceedings were discontinued.

Former consumer protector is head of the authority

The Network Agency dropped the fine in 2020, but is now swinging it - even though the misconduct was much greater back then than it is today. This could also be due to Klaus Müller, who used to be head of the Federal Association of Consumer Organizations and has been President of the Network Agency since 2022. In his new role, he continues to be a strong advocate for consumer interests.

This is not the first fine proceedings against telecommunications providers, but it is the first against established network operators. Since the spring, the Network Agency has been taking action against the newcomer 1&1, which is currently setting up its own mobile network and plans to launch it soon. To this end, 1&1 purchased frequencies for the first time in 2019. The company should have activated 1,000 5G sites by the end of 2022. In fact, there were five. The outcome of the proceedings is still open.

Expansion requirements from 2019

Companies need radio frequencies in different bands for their networks. When awarding the contract, the federal government sets a minimum quality level to which the networks must be brought. For example, the companies had to provide 98% of households in each federal state with at least 100 megabits per second by the end of 2022. Telekom, Vodafone and O2 fulfilled this central part of the list of requirements. There were also requirements for traffic routes and the aforementioned white spots - the Network Agency is convinced that the companies showed weaknesses here.

Exact figures on how many white spots and tunnels are considered unserved are not known. A spokesperson for the Network Agency does not wish to comment on the issue of fines. The companies also do not disclose any figures when asked.

Positive

Federal politicians and consumer advocates have reacted positively to the initiation of the fine proceedings. According to Reinhard Houben, member of the Bundestag for the Free Democratic Party (FDP), the companies had apparently been unable to provide the authorities with any plausible reasons as to why the expansion obligations had not been fully complied with. "The draft fine is therefore only logical."

Praise also comes from Social Democrat Johannes Schätzl: "Supply requirements only make sense if they are consistently enforced and penalties are imposed if requirements are not met," says the MP. Maik Außendorf from the Green Party calls non-compliance "annoying". The companies must meet their obligations. "The imposition of fines by the Federal Network Agency is an important signal for enforcing the supply requirements." CSU politician Reinhard Brandl calls the initiation of proceedings "absolutely right".

Consumer advocate Felix Flosbach also welcomes the Network Agency's tougher approach. If the agency now controls the network requirements more strictly and punishes infringements, this will help consumers - "today and in the future".

The companies, on the other hand, point to the great progress they have made in expanding the network. The networks are actually much better than they were a few years ago after billions were invested by the companies. However, the fine proceedings are an indication that there are still problems in some places.

1. Despite German Telekom, Telefónica (O2), and Vodafone arguing that they have not violated expansion requirements due to legal and factual reasons, the Federal Network Agency believes some cases warrant fines, particularly in regards to internet coverage in white spots and tunnels.
2. The proceedings against Telefónica, German Telekom, and Vodafone also include threats of so-called penalty payments for not meeting coverage requirements, as the companies didn't manage to eliminate all 4G dead spots by the end of 2022, as required.
3. The former consumer protector, now head of the Network Agency Klaus Müller, stresses the importance of enforcing supply requirements and penalizing non-compliance, viewed positively by Federal politicians, consumer advocates, and parties such as the Free Democratic Party, Social Democrats, Greens, and CSU.

Source: www.dpa.com