Major regulatory decisions

Our business activities are largely subject to national and European regulation, which is associated with extensive powers to intervene in our product design and pricing. We were again subject to extensive regulation in our mobile and fixed-network businesses in 2017. The focus was primarily on the regulation of services for wholesale customers and the corresponding charges as well as the award of mobile frequencies.

REGULATION

Federal Network Agency consultation on the FTTH/B roll-out. The Federal Network Agency held a public consultation process from March 14, 2017 to April 26, 2017 on proposals for how regulatory support could be provided to accelerate the roll-out of fiber-optic networks (FTTH/B) with a view to rates regulation. All market players were asked to respond to the consultation paper. The 17 responses received were published on May 17, 2017. The Federal Network Agency said it will first analyze these responses, some of which are extensive, before announcing any conclusions.

Further vectoring roll-out agreed. The Federal Network Agency reviewed the specific conditions required for nearshore vectoring by way of a reference offer procedure. It announced its ruling in its official journal on August 9, 2017. The deadlines for the three planned nearshore build-out tranches have thus now been set. A parallel rate approval procedure was also carried out at the Federal Network Agency from the end of March 2017 to set the rates for a nearshore ULL substitute product. The ruling for this process was also announced on August 9, 2017, finally giving the green light for our nearshore vectoring roll-out.

Regulation of termination rates. The Federal Network Agency issued final approval for fixed-network and mobile termination rates in the reporting year, with retroactive effect from January 1, 2017 (fixed-network termination rates) and December 1, 2016 (mobile termination rates), with no changes to the rates provisionally approved back in 2016. In these rate rulings, the Federal Network Agency followed for the first time the recommendation of the European Commission to set charges based on the “pure LRIC cost standard.” In the approval period, the charges declined by 30 percent overall for mobile termination and by as much as around 58 percent for fixed-network termination.

International roaming. The new EU Regulation to abolish roaming surcharges (commonly referred to as Roam Like at Home) within the European Union as well as in Iceland, Liechtenstein and Norway entered into force on June 15, 2017. In addition, on May 17, 2017, the European Council and European Parliament adopted amended regulations for wholesale roaming charges, significantly reducing regulated price caps at wholesale level. We had already launched customer-friendly Roam Like at Home offers on the market before this date.

Federal Network Agency decision on StreamOn. On December 15, 2017, the Federal Network Agency prohibited elements of the MagentaMobil StreamOn add-on option. According to the Federal Network Agency, two aspects of this option breach the EU Regulation on net neutrality and roaming. The ruling stipulates that, from April 1, 2018, we must transmit all StreamOn data traffic at the maximum available bandwidth and that this also cannot be deducted from the included data volume contingent when roaming within the EU. We remain of the opinion that our offer complies with EU law and will appeal against the ruling.

Federal Network Agency decision on bitstream charges. On November 30, 2017, the Federal Network Agency provisionally approved as of December 1, 2017 the rates we can charge to wholesale customers for access to our broadband lines for “layer 2 bitstream access.” We had requested an increase in the monthly rate as part of contingent models, but this was not approved. The Federal Network Agency will only set the final charges with retroactive effect once the national and EU-wide consultation processes are complete.

AWARDING OF SPECTRUM

The table below provides an overview of the main spectrum awards through auctions as well as license extensions in Germany and at our international subsidiaries. It also indicates spectrum to be awarded in the near future in various countries. For further information on the spectrum awards, please refer to the section “Risk and opportunity management.”

Main spectrum awards
  Start of award
procedure
End of award
procedure
Frequency ranges
(MHz)
Award process Acquired spectrum
(MHz)
Spectrum
investment
Albania Q3 2018 Q4 2018 800 Sealed bid a or auction tbd tbd
Germany Q2 2018 Q4 2018 2,000 / 3,400 – 3,700 Auction (SMRA b) expected tbd tbd
Greece Q4 2017 Q4 2017 1,800 Sealed bid a 25 MHz € 83.2 million
Macedonia Q1 2018 Q4 2018 900 / 2,100 Extension of licenses (expected) tbd tbd
Netherlands Q1 2019 Q2 2019 700 / 1,500 / 2,100 Auction, details tbd tbd tbd
Austria Q3 2018 Q4 2018 3,400 – 3,800 Auction (CCA c) (expected) tbd tbd
Austria Q3 2019 Q4 2019 700 / 1,500 / 2,100 Auction, details tbd tbd tbd
Poland Q2 2017 Q2 2017 3,700 Sealed bid No spectrum acquired
Poland Q2 2018 Q3 2018 1,500 tbd tbd tbd
Romania Q2 2018 Q4 2018 700 / 800 / 1,500 / 2,600 / 3,500 Auction, details tbd tbd tbd
Slovakia Q2 2017 Q2 2017 3,700 Auction (SMRA b) 40 MHz for Bratislava € 200 thousand
Czech Republic Q2 2017 Q3 2017 3,700 Auction (SMRA b) No spectrum acquired
Czech Republic Q3 2017 Q4 2017 900 / 1,800 Extension of licenses (expected) No spectrum acquired
Czech Republic Q4 2018 Q2 2019 700 / 3,500 Auction, details tbd tbd tbd
Hungary Q3 2018 Q4 2018 700 / 1,500 / 2,100 / 2,300 / 2,600 and 26,000 Details tbd tbd tbd
United States Q3 2016 Q2 2017 600 Incentive Auction d Regional licenses; mostly 2x20 MHz $ 7.99 billion
 
a Submission of an individual bid in a sealed envelope, in some cases sequential, in several awards.
b Simultaneous electronic multi-round auction with ascending, parallel bids for all ranges.
c Combinatorial Clock Auction, three-stage, multi-round auction for spectrum from all frequency ranges.
d Quantity and prices of spectrum to be traded depends on spectrum surrendered by radio broadcasters.