TEF Telefonica SA

By Patrick Costello

German telecoms operators have criticized auction rules for 5G spectrum approved late Monday by the Federal Network Agency, Germany's national telecoms regulator, saying the agency's rules are expensive and lack a legal basis.

Telefonica Deutschland AG (O2D.XE)--one of Germany's three main mobile operators--called the regulator's conditions a "dubious compromise" that runs counter to operators' interests.

"Network operators are being deprived of funds with an expensive auction policy," said Telefonica Deutschland, "while at the same time we are asked to invest massively in coverage areas."

The 5G mobile standard is widely expected to serve as the basis for nascent technologies including self-driving cars and networked factories. Companies now have until Jan. 25, 2019, to register for the spectrum auctions being held next spring, said the agency.

Operators will be expected to fulfill certain conditions for 5G spectrum, such as ensuring 98% of German households have access to 100 Mbps internet connection by 2022, said the agency.

The regulator did not include national roaming requirements obliging the three main operators--Telefonica Deutschland, Deutsche Telekom AG (DTE.XE) and Vodafone Group PLC (VOD.LN) subsidiary Vodafone Germany--to open their mobile networks up to competitors as a condition.

Instead, network operators are required to negotiate "cooperation agreements" with competitors over the use of mobile sites.

Germany's main network operators opposed national roaming regulations. Deutsche Telekom chief executive Tim Hoettges said last month these obligations would stifle investment, as companies couldn't recoup costs if they had to share infrastructure with competitors.

But United Internet CEO Ralph Dommermuth called national roaming an "absolute precondition" for the creation of a fourth mobile operator in Germany--something German cartel authorities have said is "desirable" for competition purposes in the past--to be financially feasible.

The internet provider--which doesn't have its own wireless network but has expressed interest in 5G licenses--will now take a closer look at the auction rules before deciding whether to participate, a United Internet spokesman said.

Still, Vodafone Germany said the agency lacked a legal basis even for ordering operators to negotiate the shared use of mobile infrastructure with competitors.

"This legal basis assumes one company has a dominant position in the market," said Vodafone. "But Germany has three more or less equally large nationwide operators as well as numerous resellers that take up 23% of the market."

Write to Patrick Costello at Patrick.Costello@dowjones.com

(END) Dow Jones Newswires

November 27, 2018 10:20 ET (15:20 GMT)

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