Germany's Bid to Catch Up on Digital Age Hinges on 5G Sale
Germany’s effort to catch up to the digital age starts this week with an auction of the airwaves needed to build ultrafast 5G wireless networks, according to Bloomberg.
The rollout will be critical as Europe’s biggest economy tries to reduce its dependence on old-school engineering. The country lags behind the likes of Qatar, Albania and Moldova when it comes to mobile internet speeds, a handicap in the transition to a data-based economy.
Chancellor Angela Merkel’s government has promised to create a “world-class” digital infrastructure and end the notorious dead zones that dot the countryside. For the first time, the regulator has set aside airwaves for companies that want to run small 5G networks covering just their factories and the likes of Daimler and Audi have said they’ll apply. While the government expects the auction, which starts today, to generate proceeds of as much as 5 billion euros, the final figure is hard to predict.
The bidders are a select group, comprising current network operators Deutsche Telekom, Vodafone and Telefonica as well as new entrant United Internet. The buildup to the auction has been accompanied by controversy, including legal disputes over the terms and pressure on the German government to ban network equipment made by Huawei over security concerns.
But it will need hefty spending to realize that potential. Over the next three years, Deutsche Telekom plans to invest 20 billion euros in Germany on 5G services and high-speed internet connections.
The daunting cost of the new networks prompted bidders to try to stop the auction by filing lawsuits against the government’s requirement that they provide coverage for 98 percent of German homes, every highway and all federal roads with download speeds of 100 megabits per second by the end of 2022. A court threw out those suits on Friday, clearing the way for the auction to start as planned.
The bidding teams will be in closed rooms at the headquarters of Germany’s network regulator in Mainz. They will bid on 41 blocks of frequencies akin to wireless building lots, with some more prized than others. Bidders are likely to be cautious after auctions in Italy and the U.K. overshot on costs.