1 TRANSLATION 

RESOLUTION Decision of the President's Chamber of the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway of 12 October 2009 on the flexibilisation of the frequency usage rights for wireless access for the offer of telecommunications services in the ranges 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz - File reference: BK 1a-09/001

Background The Federal Network Agency took the decision to flexibilise the frequency usage rights for wireless access for the offer of telecommunications services in the bands 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz through the President's Chamber. The existing frequency usage rights in these ranges are to be adjusted to achieve the target of technology and application neutrality. This decision serves to promote the implementation in Germany of the Wireless Access Policy for Electronic Communications Services (WAPECS) of the Radio Spectrum Policy Group (RSPG). In its opinion on WAPECS the RSPG states that technology and service neutrality are policy goals to achieve more flexible frequency use and that as few technical restrictions as possible should apply to the use of the frequency bands mentioned in the opinion (amongst them the frequency bands dealt with here). It is planned to publish this decision on the Federal Network Agency's web site as well. 212c 5555

RESOLUTION Decision of the President's Chamber of the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway of 12 October 2009 on the flexibilisation of the frequency usage rights for wireless access for the offer of telecommunications services in the ranges 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz - File reference: BK 1a-09/001 The following decision was made by the President's Chamber of the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway on the flexibilisation of frequency usage rights for wireless access for the offer of telecommunications services in the bands 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz:

 

In case of divergent interpretation of the German and English text, the German text shall prevail. This decision serves to transpose Council Directive 87/372/EEC of 25 June 1987 on the frequency bands to be reserved for the coordinated introduction of public pan-European cellular digital land-based mobile communications in the Community.

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The Federal Network Agency is taking the following activities to flexibilise frequency usage rights for wireless access for the offer of telecommunications services in the bands 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz: Activity 1:

The Federal Network Agency will open up the possibility of access to radio frequencies for wireless access for the offer of telecommunications services under 1 GHz by assigning available spectrum in the band 800 MHz by means of open, transparent and non-discriminatory award proceedings (BK1a-09/002). This award procedure will be linked with the frequency assignment proceedings already initiated in the band 1.8 GHz, 2 GHz and 2.6 GHz for wireless access for the offer of telecommunications services (BK1-07/003).

Activity 2:

The Federal Network Agency will flexibilise GSM frequency usage rights (900 MHz and 1800 MHz) as quickly as possible upon application and in accordance with the Directive of the European Parliament and of the Council amending Council Directive 87/372/EEC1.

Activity 3:

The Federal Network Agency will take a decision ex officio on the assignment of the frequencies in the 900 MHz and 1800 MHz band with effect from 01 January 2017 before the current frequency usage rights in these bands expire. The same applies should the holder of a frequency assignment submit an application for an extension of the limited period of use beyond 31 December 2016.

Activity 4:

The Federal Network Agency will flexibilise UMTS/IMT frequency usage rights (2 GHz) upon application as quickly as possible.

Activity 5:

The Federal Network Agency will flexibilise the frequency usage rights for wideband trunked radio in the frequency band 450 MHz upon application as quickly as possible.

Activity 6:

The Federal Network Agency will flexibilise the frequency usage rights for broadband wireless access (BWA) in the band 3.5 GHz upon application as quickly as possible.

The decision is based on the following considerations:

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This Directive was adopted by the European Parliament on 06 May 2009 and by the Council on 27 July 2009 (European Commission Press Release IP/09/1192 of 27 July 2009). As far as the Federal Network Agency is aware, the legal act is expected to be promulgated in the European Union’s Official Journal in mid-October 2009.

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A. Starting situation The following issues were raised: Several respondents claimed that the usage rights for the 2.6 GHz band should be included in the draft. Some pointed out that companies holding frequency assignments in that band already had to take recourse to the courts to obtain an extension and would again be discriminated against. As regards general market developments, it was noted that the market for broadband wireless access continued to grow rapidly worldwide, especially in Europe. The significance of the market would continue to increase in the next decade, particularly because of the high demand for smartphones. Analysts forecast that 3rd generation mobile communications (G3) will make up 80 per cent of mobile broadband use by 2013. The main reason for this trend is said to be the decline of 2nd generation mobile communications (G2). At the same time, LTE technology (Long Term Evolution), which is increasingly penetrating the market, will supplement 3G and probably gain market shares beyond 2013. HSPA+ (High Speed Packet Access), a more advanced version of UMTS which became marketable in 2009, is said to offer significantly improved data transmission rates and functional features. That is why HSPA+ is deemed much more sophisticated than 2G technology. HSPA+ release 7 is already available. The introduction of 64 QAM (quadrature amplitude modulation) and MIMO (Multiple Input Multiple Output) enables peak transmission rates of up to 28 megabits per second (Mbit/s). Some of HSPA+ release 7’s main features support the technology’s rollout by the mobile operators: –

It is easy to retrofit existing network devices with HSPA+ and this technology hence represents a cost-efficient enhancement of existing 3G networks. HSPA+ terminals are backwards compatible.

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HSPA+ enables the capacity in a 5 MHz channel to be increased substantially within an appropriate period whilst use of mobile data transfer has developed at an explosive rate, necessitating three HSPA carriers in some urban areas.

This multi-carrier technology which allows simultaneous multiple transmission of data via adjacent 5 MHz channels will become reality with HSPA+ release 8. This will improve the reliability of the data transmission rates under real conditions as experienced by mobile users within a cell and especially at the border of a cell. LTE is deemed an optimised OFDMA solution (Orthogonal Frequency Division Multiple Access) following 3G enhancement plans. It increases not only spectral efficiency but also the mobility features of 3G technology. LTE increases data rates in densely populated areas, especially through the use of networks operating in frequency bands allowing a bandwith of more than 10 MHz. HSPA+ and LTE permit prarallel evolutions. Whereas HSPA+ enables optimum use to be made of 5 MHz and 10 MHz FDD frequency channels (Frequency Division Duplex), LTE is considered to be the optimal solution for the new FDD frequency bands with a bandwidth of 10 MHz or 20 MHz and for TDD spectrum (Time Division Duplex). In view of these key features it is claimed that it will be possible to use LTE at an early stage to improve capacity in densely populated areas and to complement HSPA+. HSPA+ will continue to offer users valuable broadband experience in rural areas. HSPA+ release 7 solutions for data terminals are already available, for handsets solutions are expected at the beginning of 2010. Tests of the HSPA+ release 8 functions for data terminals are anticipated in mid-2009. The first devices are said to be scheduled for mid-2010. The HSPA+ release 8/LTE multimode solutions have a similar schedule (availability mid-2010). HSPA+ release 8/LTE solutions for handsets are expected to be launched in 2011.

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Mobile operators need new (2.6 GHz) and existing (1800 MHz, 2 GHz) higher frequency bands for additional capacity as well as new (800 MHz) and existing (900 MHz) lower frequency bands for covering their broadband networks in rural areas and in buildings. The Chamber has come to the following conclusion: This decision takes into account the development of telecommunications markets characterized by the increasing convergence of services and technologies, merging markets that have been separated to date, rapidly increasing demand for broadband access to telecommunications networks and wide-ranging flexibilisation of frequency regulation. The outcome of the public consultation confirms the Chamber’s statement. In its decision, the Chamber not only bore the interests of users in accordance with section 2(2) para 1 TKG and the promotion of innovative technologies in accordance with section 2(2) para 3 TKG as regulatory aims in mind but also took the need to secure efficient and interference-free use of frequencies and fair and workable competition in accordance with section 2(2) TKG into account. Modern frequency regulation makes these objectives as valid and effective as possible. If individual regulatory requirements from the past are recognized as being no longer required or suitable to realize the targets and are therefore barriers that can be dispensed with, these barriers must be removed within the frequency regulator’s legal scope for assessment and development until the degree required to realize the above described objectives is reached and unjustified access restrictions have been removed. This decision fosters this objective. The regulatory framework conditions of all frequencies intended for wireless access for the offer of telecommunications services are to be flexibilised. This means that barriers that can be dispensed with will be removed on account of technical, competitive-economic and international developments. Once all measures required to realize this target have been completed, the regulatory requirements will be reduced to a minimum level. With its decision, the Chamber determines the Federal Network Agency’s next steps in flexibilising existing frequency usage rights in frequency bands that are currently intended in the Frequency Usage Plan (April 2008; last amended in October 2009, published in the same Official Gazette) for wireless access for the offer of telecommunications services. These are the following frequency bands:

Lower band

Upper band

Name

Frequencies (in MHz)

Entry into the Frequency Usage Plan

Frequencies (in MHz)

Entry into the Frequency Usage Plan

Wideband trunked radio

450 - 455.74

No. 224 028

460 - 465.74

No. 224 064

GSM 900

880 - 915

No. 227 011

925 - 960

No. 228 005

No. 228 001

No. 228 006

GSM 1800

1710 - 1780.6

No. 267 001

1805 - 1875.6

UMTS/ IMT-2000

1900 - 1920

No. 267 011

No duplex band

1920 - 1980

No. 267 012

2110 - 2170

No. 268 001 2010 - 2025

No. 270 001 No. 270 002

No. 267 008

No. 272 001 No. 273 001

No duplex band

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BWA

3410 - 3494

No. 292 005 No. 292 006 No. 293 002 No. 293 003

3510 - 3594

No. 293 002 No. 293 003

Some respondents claimed that the usage rights for the 2.6 GHz band should also have been included in the draft. In this connection the Chamber wishes to point out the following. As expounded above, this decision merely concerns the flexibilisation of existing frequency usage rights in bands currently dedicated in the Frequency Usage Plan for wireless access for the offer of telecommunications services. Since changes to the Frequency Usage Plan do not automatically change existing frequency assignments, further activities are needed for continuing the process of flexibilisation at the level of the actual usage rights. This decision (BK 1a-09/001) lays down the framework conditions for implementing the flexibilisation of existing frequency assignments, i. e. of frequencies which have been assigned and as such are not available in accordance with section 55(5) sentence 1 para 2 TKG, whilst in its parallel proceedings BK 1a-09/002 the Chamber awards the frequencies available under framework conditions which are flexible from the start. Keeping this in mind, the 2.6 GHz band – just as the frequency bands 1710 - 1725 MHz/ 1805 1820 MHz and 3.6 GHz to 3.8 GHz – is not the subject of this decision because in the 2.6 GHz band there are no frequency usage rights which could be flexibilised. In fact, the frequency usage rights assigned in this band are flexible from the start. Contrary to the view of some respondents, frequencies in the 2.6 GHz band have not been assigned to companies. At present, use of part of these frequencies by a company is tolerated on the basis of a settlement reached between the Federal Network Agency and this company before a court until the court comes to a legally binding decision but at the longest (however) until the use is taken over by another assignee. The frequencies covered by the court settlement are hence deemed available under section 55(5) sentence 1 para 2 TKG and as such are the subject of the BK 1a-09/002 proceedings. This decision also takes into account – beyond the frequency bands concerned – the regulatory interconnections with other frequency bands, if this is required. This particularly applies to avoiding interference with radio systems in adjacent frequency ranges. Where it was stated in K 9|18 discussion paper (see also following C.III.) that the frequency bands 876 MHz to 880 MHz and 921 MHz to 925 MHz (GSM-R) should be included in the concept, we agree with this assessment. The Chamber is aware that the technologies and systems used after flexibilisation must ensure coexistence with the existing railway radio applications within the affected frequency bands as well as in relation to adjacent frequency bands. Investigations into this were actively supported by committees of the European Conference of Postal and Telecommunications Administrations (Conférence européenne des Administrations des postes et des télécommunications; CEPT). The Electronic Communications Committee (ECC) of CEPT concludes in report 96 on the interference situation between GSM-R and UMTS in the 900 MHz band that compatible use of both systems is possible in adjacent frequency ranges if specific general conditions are complied with. These general conditions are to be stipulated in the specific administrative measures on implementing Activity 2. B. Strategic frequency regulation approach The Federal Network Agency (then Reg TP) put down in writing its strategic approach for exploiting the options available to it back in 2004. Following a public hearing and evaluation of the statements submitted, the result was published under the title Strategic aspects of frequency regulation (in the following ”strategy paper”; can be downloaded at http://www.bundesnetzagentur.de/media/archive/340.pdf).

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Due to the type of use and status of technology, the frequency spectrum required to provide wireless access for the offer of telecommunications services is a public resource that is only available to a limited extent, in shortage depending on demand, and cannot be reproduced. The possibility of using frequencies can therefore not be left entirely up to market forces. Anticipatory, non-discriminatory and proactive frequency regulation is required. The purpose of such frequency regulation is to manage the provision of frequencies appropriately as a resource and ensure that demand is met and the requirements of the market are satisfied. In this connection, it is not just the existing frequency uses that have to be kept in mind, but also future technological and market developments, as far as they can be foreseen. This is the only way of ensuring a rapid and adequate response to changing market demand and changing framework conditions. As a rule, the Federal Network Agency’s decisions are intended to provide regulation that is neutral in terms of application and technology in order to promote new and innovative applications and technologies. On the other hand, it must also take account of major economic and competitive aspects. Based on these strategic considerations, the Federal Network Agency commissioned a study on the flexibilisation of frequency regulation. The study was completed in December 2005 (can be downloaded at http://www.bundesnetzagentur.de/media/archive/4746.pdf). A flexible approach towards frequency regulation is recommended by the authors of the study. Liberalising the regulatory requirements in the National Table of Frequency Allocations according to section 53 TKG and the Frequency Usage Plan according to section 54 TKG, on the one hand, and the frequency usage conditions in frequency assignments according to sections 55, 60 TKG, on the other hand, was suggested as a major component of flexibilisation. Planning requirements and frequency usage rights should be provided as neutrally as possible in terms of technology and applications. Based upon this strategy, the Federal Network Agency initiated and pushed the European initiative of a Wireless Access Policy for Electronic communications services (see also C.I. in the following) with the objective of a harmonized approach for flexibilising frequency regulation. C. Flexibilisation of frequency regulation The following issues were raised: Further amendments of the regulatory rules are deemed necessary to satisfy customer requirements regarding area and capacity coverage. Taking Japan as an example, it was claimed that it is much easier to develop broadband wireless access in Japan and greater progress has hence been achieved there than in Europe. One local operator had even been able to install 2000 WiMAX stations and put a commercial, broadband network covering 25 per cent of the Japanese population into operation within six months. The most important differences between Japan and Germany are deemed to be (i) the high level of cell density and direct connection to the fibre optic network, (ii) the initiation of the terminals by the network over the air interface, facilitating sales via resellers, (iii) the network-side support of different models for integrating MVNO (Mobile Virtual Network Operator), and (iv) the outsourcing of network operation to an external operator. These four innovations find little favour in Germany. The Chamber has come to the following conclusion: Individual concepts for specific frequency bands have been prepared and initial appropriate measures taken based upon the Federal Network Agency’s strategic approach to flexibilise frequency regulation. The Federal Network Agency acted in compliance with the European harmonization within the European Union and CEPT.

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In the course of the public consultation it was stated that further amendments of the regulatory rules were deemed necessary. In this connection the Chamber wishes to point out that it is of the opinion that the regulatory framework should be constantly adapted to continuously changing circumstances. Already in its strategy paper the Federal Network Agency pointed out the frequency-related regulatory cycle when it stated the following (page 10f): „Planning and assignment specifications create a stable basis for frequency users and market players. From a technical frequency-regulatory viewpoint this is particularly true due to the specification of concrete usage parameters for efficient and interference-free frequency use. From a competitive and economic viewpoint, this applies, inter alia, because of the provision of the necessary planning certainty for market players in refarming specifications or a limitation of the frequency users in particular fields. The specifications in these areas do not imply, however, that stability is achieved by means of rigid rules. Although the specifications not only accurately mirror prevailing conditions but also incorporate future developments as far as possible, the individual frequency regulation elements must also continue to lend themselves to changing market conditions. This necessitates an ongoing adaptation process focussed on the dynamics of technological and market developments. For this reason Reg TP must constantly monitor the frequency-related regulatory as well as competitive and economic aspects of frequency regulation, determine the need for action and act accordingly in its plans and specifications. Also in the future it will be one of Reg TP’s main tasks in frequency regulation to provide all market players with stable conditions without impairing the flexibility necessary for the introduction of new technologies and for changing market forces.“ In the Chamber’s opinion, the differences between Japan and Germany are solely ascribable to entrepreneurial decision-making. There is certainly no reason to believe that the differences are due to differences in the regulatory framework since the business model described could also be implemented in Germany. I.

Pan-European harmonized flexibilisation

The following issues were raised: The Federal Network Agency refers to the fact that under the WAPECS concept the Member States are called upon to urgently clarify existing authorisation conditions and to repeal restrictions where possible in order to promote flexibility, rapid access to frequencies and competition, also in infrastructure. These statements are deemed to require amplification. It should be clarified that the prevention and dismantling of competitive distortions are also considered to be part of the WAPECS concept and hence that flexibilisation should not be implemented at all costs. Flexibility should be used to establish a level playing field and to give customers the chance to use modern technology. None of the two goals should be considered or pursued singly. It was also pointed out that the documents of the European Commission referred to in the draft always contained a statement to the effect that in the course of flexibilisation competitive distortion should be avoided and even reduced. In this context the suggestion was also made that a list showing the measures being taken or having been taken in other countries on the Continent in terms of frequency use flexibilisation be added.

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The Chamber has come to the following conclusion: On 23 November 2005 the Radio Spectrum Policy Group (RSPG) established in line with the European Commission’s decision of 26 July 2002 (Official Journal EC No. L 198 of 27 July 2002, page 49) adopted an opinion on the Wireless Access Policy for Electronic Communications Systems (WAPECS) (RSPG opinion no. 3; RSPG05-102 final (can be downloaded in English at http://rspg.groups.eu.int/doc/documents/opinions/rspg05_102_op_wapecs.pdf)). In its opinion on WAPECS, the RSPG explains that technology and service neutrality are policy targets for achieving more flexible frequency usage and that a minimum number of restricting frequency conditions should apply for using the frequency bands specified in the opinion (of the applicable frequency bands). Germany advocated implementation of this concept. Accordingly, frequencies were made available by the Chamber according to the WAPECS concept. It assigned frequencies for broadband wireless access (BWA) in the band 3.4 GHz to 3.6 GHz in a technology and application-neutral manner (BK 1-05/008). Some comments on the draft decision stated that it should be clarified that preventing and reducing competitive distortions also formed part of the WAPECS concept. In this connection the Chamber wishes to point out the following. WAPECS is a framework for the provision of electronic communications services within a set of frequency bands defined by the Member States of the European Community in which a range of electronic communications networks and electronic communications services may be offered on a technology and service neutral basis, provided that certain technical requirements to avoid interference are met, to ensure the effective and efficient use of the spectrum, and the authorisation conditions do not distort competition (page 2f of the WAPECS concept). The WAPECS concept does not need to be introduced throughout the Community quasi „overnight“. In the RSPG’s opinion, such an approach would have the potential to cause disruption in the market and discourage investment in the short term. The RSPG hence considers that implementation packages, detailing specific actions required for flexibilisation, are needed to ensure that sufficient spectrum is made available at the same time to avoid congestion, hoarding and allegations of unequal treatment (page 14). The Chamber has taken up the RSPG’s statement and with its approach is pursuing the implementation package concept. With this decision, existing frequency usage rights are rendered flexible in terms of the WAPECS framework. To this end, the Chamber is linking several WAPECS frequency bands and is flexibilising them en bloc at the same time. Furthermore, all available frequencies dedicated to wireless access for the offer of telecommunications services are placed at the disposal of the market in joint award proceedings (BK 1a-09/002) The Chamber is convinced that this mode of procedure will fully cover the WAPECS concept, including its competition aspects, and that an overall view of the Chamber’s decisions will reveal its contribution to implementing the regulatory aims in section 2(2) TKG as best possible. Especially by opening up access to further spectrum at 800 MHz, the Chamber has created a basis which allows the market itself to organise the distribution of the frequencies. Under the title Rapid access to spectrum for wireless electronic communications services through more flexibility, the Commission of the European Communities directed Communication COM(2007) 50 to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on 08 February 2007 (can be downloaded at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0050:FIN:EN:PDF). In this, the Member States are asked to clarify existing authorisation conditions (technical and nontechnical) as a matter of urgency and to remove restrictive conditions wherever possible in order to facilitate flexibility, rapid access to spectrum and competition, including in the area of radio infrastructure.

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The Chamber sees no reason to draw up and publish a list of the measures taken or being taken in other countries on the Continent to render frequency use more flexible. Such an exercise would not conform to any of the Federal Network Agency's legal mandates. In its implementation of Community and federal law the Federal Network Agency closely cooperates with other frequency regulators and the European Commission and is aware of the flexibilisation status in other States. II. Flexibilisation of the frequency usage plan To provide a basis for flexibilising the conditions of use, the respective dedications in the Frequency Usage Plan had to be adjusted first. Taking into account the WAPECS concept, the Frequency Usage Plan was gradually flexibilised by the Federal Network Agency for the frequency bands concerned. In April 2008, it informed the public by ordinance 27/2008, Official Gazette Federal Network Agency 6/2008, page 543, about the changes to parts of the Frequency Usage Plan. Since then, the GSM and UMTS/IMT 2000 frequency bands have been dedicated to wireless access for the offer of telecommunications services. This dedication is described in the general part of the Frequency Usage Plan (April 2008) as follows: The wireless access for the offer of telecommunications services serves to connect terminal equipment to radiocommunication networks via land stations that cover one or several radio cells (sectors). This definition (published in ordinance 33/2009, Official Gazette Federal Network Agency 15/2009, page 2985) was amended as follows in August 2009: The frequency use serves to connect terminal equipment to radiocommunication networks via land stations. Telecommunications services are normally offered by these means. According to section 3 para 24 TKG, telecommunications services are services normally provided for remuneration consisting in, or having as their principal feature, the conveyance of signals by means of telecommunications networks, including transmission services in networks used for broadcasting. The Federal Network Agency opened up a procedure for amending the Frequency Usage Plan to implement decisions taken by the World Radiocommunication Conference 2007 (WRC-07) of the International Telecommunication Union (ITU) and implement the WAPECS concept further. By ordinance 2/2009, Official Gazette Federal Network Agency 4/2009, page 607, the public was informed about this and participation of interested public groups was initiated. According to the draft submitted of the entries changed in the Frequency Usage Plan, the frequency bands that have so far been assigned to wideband trunked radio and BWA are to be made more flexible and assigned – just as the GSM and UMTS/IMT-2000 frequency bands – for wireless access for the offer of telecommunications services. After completion of this procedure to change the Frequency Usage Plan (cf ordinance 33/2009, Official Gazette Federal Network Agency 15/2009, page 2985) the legal requirements of the frequency bands concerned will be dedicated consistently and without limitation to a specific standard. Thus, usage rights in the frequency bands concerned can be assigned neutrally in terms of technology and applications and existing frequency usage rights can be made more flexible. III. GSM flexibilisation The foundations for flexibilising GSM spectrum were defined at an early stage by the Federal Network Agency. Its concept on awarding further spectrum for digital public cellular mobile radio below 1.9 GHz of 21 November 2005 (GSM concept; ordinance 88/2005, Official Gazette Federal Network Agency 23/2005, page 1852; can be downloaded at http://www.bundesnetzagentur.de/media/archive/4284.pdf) meant that the regulatory framework conditions were adjusted, paving the way for flexibilising GSM spectrum. The following was stated in the GSM concept (ordinance 88/2005, cit. loc. page 1853):

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„The plan is to further develop the GSM concept upon completion of the activities described above with a view to subsequent linking to other concepts such as the UMTS concept to ultimately achieve interconnection of radio markets and their regulatory framework conditions. The GSM concept presented here is to be continued after its implementation in a next step that provides technical regulatory foundations to enable GSM frequencies to be used with other systems as well (transition of spectrum usability by systems with 5 MHz bandwidth). In a next step, the intention is to look into the legal framework conditions of the various mobile communication uses with reference to merging the markets. It is our long-term target to provide a flexibilisation of regulatory framework conditions to the extent that radio frequencies will no longer be assigned to specific types of use, but that all services that are technically feasible in a specific frequency band can be offered.“ Since then additional measures for harmonizing the pan-European flexibilisation of GSM frequency usage rights have been taken. On 1 December 2006 the ECC adopted a decision on the assignment of frequency bands 880 MHz to 915 MHz, 925 MHz to 960 MHz, 1710 MHz to 1785 MHz and 1805 MHz to 1880 MHz for terrestrial IMT-2000/UMTS systems (ECC/DEC/(06)13). This decision mainly concerns the fact that the named frequency bands are to be dedicated for terrestrial IMT2000/UMTS systems according to the WAPECS concept of RSPG. National authorisation procedures and market demand are to be taken into account in this process. In addition, the existing GSM applications are to be safeguarded with adequate measures. In its communication COM(2007) 50, the Commission stated that action was required due to the introduction of third-generation mobile communications services and the continued restrictions imposed by Directive 87/372/EEC and announced its intention to have the applicability of this Directive reviewed. Against this backdrop, on 25 July 2007 the Commission submitted to the European Parliament and to the Council a proposal for a directive of the European Parliament and the Council repealing Council Directive 87/372/EEC on the frequency bands to be reserved for the coordinated introduction of public pan-European cellular digital land-based mobile communications in the Community (KOM (2007) 367) (Official Journal European Union No. C 191 of 17 August 2007, page 14, can be electronically downloaded at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0367:FIN:DE:PDF). On 19 November 2008 the Commission submitted to the European Parliament and the Council a proposal for a directive by the European Parliament and the Council amending Council Directive 87/372/EEC on the frequency bands to be reserved for the coordinated introduction of public pan-European cellular digital land-based mobile communications in the Community (KOM (2008) 762), can be electronically downloaded at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0762:FIN:DE:PDF). In contrast to the proposal of 25 July 2007, the draft of a directive no longer provides for repeal, only amendment. The proposed amendment is aimed primarily at removing the restriction of the GMS standard. The procedure for adopting this directive has meanwhile been completed. The Directive of the European Parliament and of the Council amending Directive 87/372/EEC on the frequency bands to be reserved for the coordinated introduction of public pan–European cellular digital land-based mobile communications in the Community is at present expected to enter into force in October of this year.2 On 22 May 2007 the Radio Spectrum Committee (RSC) that was established according to art. 3, No. 1 of Decision No. 676/2002/EC of the European Parliament and of the Council of 7 March 2002 on a regulatory framework for radio frequency policy in the European Community (Radio Spectrum Decision) adopted a draft of a Commission Decision on the harmonisation of the 900 MHz and 1800 MHz frequency bands for terrestrial systems capable of providing pan-European 2

See footnote 1.

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electronic communications services in the Community (RSCOM07-04 final). The procedure involving the adoption of this decision has meanwhile also been completed. The draft for the Commission’s decision was updated with due consideration being given to the Directive of the European Parliament and of the Council amending Council Directive 87/372/EEG and finally adopted by the Radio Spectrum Committee in September 2009, using the written procedure. The Commission decision on the harmonisation of the 900 MHz band and the 1800 MHz band for terrestrial systems capable of providing pan-European electronic communications services in the Community is at present expected to enter into force in October of this year.3 According to this draft resolution, the frequency bands covered are still to be provided for GSM systems in the future. In addition, the frequencies concerned are also gradually to be assigned and provided for other terrestrial systems that can render electronic communications services in the Union, on the condition that they comply with the technical conditions that are listed in the annex to the draft resolution. Since the formal implementation of this decision requires the amendment of Directive 87/372/EEC (GSM Directive) and this procedure has not yet been completed (see above), the decision finally adopted in the RSC has not come into force so far. Against this backdrop, the Federal Network Agency took the initiative to flexibilise GSM frequency usage rights following flexibilisation of the Frequency Usage Plan. On the way towards flexibilisation of the GSM frequency usage rights, the Federal Network Agency considered it useful to begin by fully determining the circumstances, legal position and interests. A discussion paper with five core issues in the flexibilisation project was formulated for this purpose. The discussion paper for preparing a concept on the flexibilisation of frequency usage rights in the bands 900 MHz and 1800 MHz (K 9|18 discussion paper) was published on 19 November 2008 at the Agency's web site (http://www.bundesnetzagentur.de/media/archive/14982.pdf) and in the Official Gazette of the Federal Network Agency (Communication 663/2008, Official Gazette Federal Network Agency 22/2008, page 3649ff) and comments were invited on this. A total of 15 comments have been received by the Federal Network Agency with reference to the K 9|18 discussion paper. In addition to the four GSM network operators and (potential) competitors, regional fixed network operators, manufacturers and membership groups also responded. In particular, a complex situation in terms of individual interests has been confirmed that is contradictory in many ways. Thus, comprehensive regulatory consideration and assessment have turned out to be necessary. A key result of the public hearing has been the demand not to favour GSM frequency usage rights for flexibilisation over frequency usage rights in other frequency bands such as 450 MHz (wideband trunked radio) or 3.5 GHz (BWA). The Chamber addressed this demand and took it seriously into account in this decision. IV. Flexibilisation UMTS/IMT-2000 In summer 2000 the Federal Network Agency – at the time named Reg TP – auctioned licenses for the operation of transmission paths in the frequency bands from 1900 MHz to 1980 MHz, 2010 MHz to 2025 MHz and 2110 MHz to 2170 MHz for publicly available third-generation (3G) mobile services (UMTS/IMT-2000). The award procedure was based in particular on the decisions of the Chamber of 18 February 2000 on –

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the determinations and rules for the award of licenses for the Universal Mobile Telecommunications System (UMTS)/International Mobile Telecommunications 2000

The Members of the Radio Spectrum Committee adopted the draft for the Commission decision, using the written procedure. This means that the preconditions for the establishment of the decision under Art. 4 of the Radio Spectrum Decision are met. As far as the Federal Network Agency is aware, the legal act will be promulgated in the Official Journal of the European Union in mid-October 2009.

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(IMT-2000), third-generation mobile communications, file reference: BK-1b-98/005-1, ordinance 13/2000, Official Gazette Reg TP 4/2000, page 516, and –

the rules for conduct of the auction for the award of licenses for UMTS/IMT-2000, thirdgeneration mobile communications, file reference: BK1b-98/005-2, ordinance 14/2000, Official Gazette Reg TP 4/2000, page 564.

Frequencies from 2010.5 MHz to 2019.7 MHz were not awarded because they were reserved for license-free applications (so-called SPA applications) under decision ERC/DEC/(99)25. Six licenses were issued as a result of the auction proceeding (see communication 597/2000, Official Gazette Reg TP 20/2000, page 3435). These licenses and frequency usage rights shall remain in effect according to section 150 (3) and (4) TKG. These frequency usage rights were assigned from the outset in a technology-neutral manner and all technologies from the so-called “IMT family“ could be used. Usage was thus not limited to the UMTS standard. In 2005 these frequency bands were identified by the RSPG for the flexibilisation based upon the WAPECS opinion (RSPG05-102 final). In its opinion, the RSPG recommends providing more flexible conditions for frequency usage rights for these frequency bands, in particular by ensuring the principles of neutrality in terms of technology and applications. The European Commission took up RSPG’s recommendation and called in Communication COM 2007 (50) for the frequency regulatory authorities of the Member States to review the frequency bands used for third-generation mobile communications services from 1900 MHz to 1980 MHz, 2010 MHz to 2025 MHz and from 2110 MHz to 2170 MHz in terms of introducing greater flexibility. In 2006 the ECC of CEPT adopted the decision ECC/DEC/(06)01, which also allows greater flexibility when selecting technology with frequency division duplex (FDD) or time division duplex (TDD) transmission schemes. Additionally, these frequencies are harmonized for applications with technologies from the “IMT family”. V. Flexibilisation of wideband private mobile communications / trunked radio Based upon the decision of the Chamber of 17 December 2004 on the procedure for the award of frequencies for wideband private mobile communications/trunked radio in the paired frequency bands 450 MHz to 455.74 MHz and 460 MHz to 465.74 MHz (file reference BK 1a04/001; published as Ordinance 6/2004, Official Gazette Reg TP 7/2004, page 299), the Federal Network Agency assigned frequencies to three companies. In line with the regional approach, each assignee was assigned one frequency for the 24 individual coverage areas that - as a whole - cover the whole of the Federal Republic of Germany. Frequency assignments are not restricted to specific radio systems so these frequency usage rights are already neutral in terms of technology. However, they are dedicated for wideband private mobile communications/trunked radio with specific application features. These frequency bands were also identified by the RSPG for flexibilisation based upon the WAPECS opinion (RSPG05-102 final). The RSPG recommends providing more flexible conditions for frequency usage rights for these frequency bands, in particular by ensuring the principles of neutrality with regard to technology and applications. VI. BWA flexibilisation In October 2006 the Chamber adopted a decision on the order for and choice of award proceedings for the award of spectrum in the 3.5 GHz band for Broadband Wireless Access (BWA) and the determinations and rules for conduct of the proceedings (file reference BK 105/008, published as Ordinance 42/2006, Official Gazette Federal Network Agency 20/2006, page 3051).

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The federal territory was divided into 28 regions for which frequency usage rights were auctioned off individually. Three companies acquired frequencies in all regions and thus throughout Germany. Two companies purchased frequency usage rights in two regions or one region. The purpose of use was determined by the Chamber as “broadband wireless access“ and therefore in an as technology-neutral way as possible. Nevertheless, the Frequency Usage Plan had to be taken into consideration when determining the relevant product market according to section 61 (4) sentence 2 para 2 TKG. At the time the decision was taken, the Frequency Usage Plan only permitted use in the relevant frequency band within the fixed service. This meant that usage had to be restricted. It was explicitly pointed out in the decision that the intention is to extend the use of frequencies to mobile applications as soon as this is possible in accordance with legal requirements to give all parties concerned an adequate planning basis for potential frequency uses (Ordinance 42/2006, cit. loc. page 3084]). At the time of the Chamber's decision, the allocation of frequencies to the fixed service contradicted mobile use. For legal reasons, the introduction of the mobile component required a change in the allocation in the Frequency Band Allocation Table Ordinance by the Federal Government according to section 53(1) sentence 1 TKG. Changing the allocation of frequencies in the band 3.4 GHz to 3.6 GHz to the mobile radiocommunication service means that the National Table of Frequency Allocations has been adjusted as necessary. In its 859th meeting on 12 June 2009 the Bundesrat consented to the second ordinance on the amendment of the Frequency Band Allocation Table Ordinance adopted by the Federal Government on 04 March 2009 according to section 53(1) sentence 2 TKG (Bundesrat official document 204/09 (Beschluss)). The ordinance of 14 July 2009 was published on 20 July 2009 in the Federal Law Gazette, part I, page 1809 and took effect on 21 July 2009. Thus, the first condition for the flexibilisation of frequency usage rights is met. In 2005 the frequency bands affected by this award were identified for flexibilisation by the RSPG according to WAPECS opinion (RSPG05-102 final). In the opinion, the Member States are recommended to provide more flexible conditions for frequency usage rights for these frequency bands, in particular by ensuring the principles of neutrality with regard to technology and applications. Following the adoption of the WAPECS opinion by the RSPG the European Commission called in Communication COM 2007 (50) for the frequency regulatory authorities of the Member States to investigate the frequency bands used for broadband connections to the customer’s premises from 3400 MHz to 3800 MHz - and thus also the BWA frequencies concerned here - with regard to the implementation of greater flexibility. In addition, the European Commission adopted a decision on 21 May 2008 on the harmonisation of the 3400-3800 MHz frequency band for terrestrial systems capable of providing electronic communications services in the Community (2008/411/EC, published in the Official Journal European Union no. L144 of 04 June 2008, page 77). The decision provides that the Member States permit the use of this frequency band for nomadic and mobile electronic communication. On 30 March 2007 the ECC of CEPT adopted the decision ECC/DEC/(07)02 on the availability of frequency bands between 3400-3800 MHz for the harmonised implementation of Broadband Wireless Access systems (BWA). This decision involves the national frequency regulatory authorities being able to provide flexible conditions of use. Accordingly, the technical parameters are limited to the extent that is absolutely essential.

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D. Flexibilisation concept The following issues were raised: The conceptional approach of the draft for a decision on flexibilisation which was presented for public hearing was welcomed. Flexibilisation is to be implemented as quickly as possible in a non-discriminatory manner. Endeavours should be made especially to avoid discriminating frequency bands against others from a temporal point of view during the flexibilisation process. Some respondents called upon the Federal Network Agency to clarify the legal nature of the decision. The Federal Network Agency had failed to explain the legal status it intended to assign to the draft decision. Designating it as a resolution did not suffice to provide sufficient clarity to market participants. This particularly applied in view of the arrangement of not including the 2.6 GHz band in the decision. A respondent suggested extending the spectrum categorisation from two to three categories: 1.

mobile area coverage

below 1 GHz

2.

mobile cellular networks

between 1 GHz and 3 GHz

3.

portable capacity coverage

above 3 GHz

Splitting up the spectrum into three categories was deemed to provide greater support to operators when they need to optimise their business models and in doing so, need to take parameters such as wave propagation, cell radius and the desired data throughput rate into account. The Chamber has come to the following conclusion: Frequencies have now developed so far in technical, competitive-economic and international terms that frequency regulation no longer needs to be made more flexible in individual projects. Instead, a holistic approach can be taken to advance flexibilisation. Due to the Chamber's decision, all usage rights pertaining to frequencies that have been flexibilised at plan level can now be flexibilised in an open, transparent and non-discriminatory manner upon application. The Chamber took this decision for this purpose. The frequency regulation framework is to be made more flexible by taking the principles of technology and service neutrality into consideration as far as possible. The frequency regulation framework offers the Agency a great deal of scope for assessment and development. The Federal Network Agency will act fully in accordance with its obligations in using this scope. This means that its decisions will be compliant with the purpose of authorisation and in line with the legal provisions limiting the scope for assessment and development. When exhausting the legal scope, due regard must be given to the purpose set forth in section 1 of the TKG, the regulation and frequency regulation aims specified in section 2(2) and in section 52(1) of the TKG as well as the proportionality requirement derived from the principle of rule of law. The process of creating a more flexible frequency technology framework is based on international, procedural, economically competitive and regulatory aspects relating to frequency technology. Therefore, the transfer of the framework conditions governing the frequency bands concerned to a more flexible frequency regulation environment is to be implemented on the basis of a conceptual approach. In doing so, the technological, competitive, legal and international developments meanwhile realised are to be taken into consideration, on the one

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hand, while the conceptual approach will ensure, on the other, that the effects of a more flexible approach on competition will be included in the relevant considerations (impact assessment). With its decision and the following implementation measures, the Chamber contributes to panEuropean flexibilisation of the regulatory framework conditions for wireless electronic communications services. Regarding the request made in the comments that the legal nature of the decision be clarified, the Chamber wishes to point out that in legal terms the decision does not have any immediate external effects. To ensure that market players have the certainty needed for investment and planning decisions, the Chamber has deemed it expedient to make a decision on the approach to be taken by the Federal Network Agency in cooperation withh interested public parties and to publish this decision. This decision initially only binds the Federal Network Agency. As such, it is not an administrative act in terms of section 35 VwVfG. To clarify the difference with respect to section 132 TKG, this decision is not titled general administrative order but resolution. A resolution is also binding for the Federal Network Agency, meaning that companies are guaranteed a high level of certainty. The relevant offices of the Federal Network Agency will take the steps needed for implementing the flexibilisation concept pursued by this decision as soon as possible (for the 2.6 GHz-band see under A above). The Federal Network Agency’s conceptual considerations are based upon the fact that the frequency bands concerned differ substantially in terms of their propagation characteristics. This differentiation was agreed to in the comments on the K9|18 discussion paper for the frequency bands 900 MHz and 1800 MHz. Due to the physical and technical propagation and attenuation properties of the electromagnetic waves, the frequency bands dedicated to wireless access for the offer of telecommunications services can be divided into two categories. The first category refers to frequencies below 1 GHz, for example, the frequencies 450 MHz, 800 MHz and 900 MHz. If the same transmission parameters are used, these frequencies, unlike higher ones, are marked by larger coverage ranges. Longer waves also allow better penetration of building walls. These frequencies are suited in particular to the provision of services in the field (area coverage). The second category refers to frequencies above 1 GHz. Due to a better channel reuse rate, they can be used for more closely meshed networks. They offer a larger transmission capacity in densely built-up areas and are thus particularly suited for providing services in smaller cells with many subscribers (capacity coverage). The Federal Network Agency is aware of the fact that this differentiation is important to network operators. The possibility of accessing spectrum from both frequency categories can be of substantial importance depending on the business model concerned. Particular importance was attached to this fact by the Federal Network Agency when testing the necessity and adequacy of the implementation measures. The classification into frequencies for area coverage (and coverage in buildings) on the one hand, and frequencies for capacity coverage on the other, is merely deemed a model. Another model, a three-tier one, was suggested by a respondent. This model is also suitable for illustrating the frequency-related physical-technical characteristics. Unlike the model used by the Chamber, the three-tier model also takes into account that the receiver may be portable or may even be used while in motion. However, in view of the principle under which frequency regulation is neutral in terms of application and technology, this distinction is insignificant, even though these usage properties are derived from the physical propagation properties. The Federal Network Agency also took account of the fact that frequency usage rights have been granted for almost 20 years in the frequency bands concerned that are used for providing nationwide mobile voice telephone services in particular. At the end of 2008, mobile networks had about 107.2 million subscribers. This corresponds to a penetration rate of 130.6% with the result that - according to the statistical average - each inhabitant in Germany has more than one contractual relationship (Federal Network Agency, Annual Report 2008, page 77).

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Against this backdrop, the Chamber published the draft of this decision on 03 June 2009 as communication 320/2009 in the Official Gazette Federal Network Agency 10/2009, p. 2648, and also placed it on the Federal Network Agency’s web site at http://www.bundesnetzagentur.de/media/archive/16304.pdf. At the same time the Chamber asked interested public parties to comment on the draft in writing by 17 July 2009. 19 companies and membership groups took advantage of the possibility of doing so. In view of the results of the public hearing, the Chamber decided to take the following activities for flexibilisation: Activity 1 The Federal Network Agency opens up the possibility of access to radio frequencies for wireless access for the offer of telecommunications services under 1 GHz by assigning available spectrum in the band 800 MHz by means of open, transparent and nondiscriminatory award proceedings (BK 1a-09/002). These award proceedings are associated with the frequency assignment already initiated in the bands 1.8 GHz, 2 GHz and 2.6 GHz for wireless access for the offer of telecommunications services (BK1-07/003).

The following issues were raised: The majority endorsed Activity 1. The reason given for the endorsement was that the provision of nationwide mobile broadband coverage in Germany in the medium term is only possible if frequency spectrum from the digital dividend is awarded. The frequency bands 900 MHz and 800 MHz have an excellent propagation property and thus lend themselves to an ideal, low-cost extension of broadband access in rural areas, smaller towns and communities. The possibility of such an access is deemed to have a positive effect on productivity, employment and on bridging the social divide. The frequency ranges in the bands 1800 MHz, 2 GHz and 2.6 GHz give mobile network operators the chance to increase the capacity of their mobile broadband networks to meet the substantial growth in demand for data services. Some respondents were sceptical about whether it would really be possible to implement the Federal Government’s broadband strategy with the frequencies from the digital dividend. The internet is making great strides as far as media use is concerned and is the medium of choice amongst the younger population groups, ahead of radio and television. However, the highest growth rates are meanwhile observed amongst the older members of the population where in fact information procurement is dominated by the internet. All available frequencies should therefore be deployed rationally for the nationwide, mobile coverage with broadband services. Only by these means would it be possible perspectively to ensure free access to information from all sources, at all times, in all situations and for all. It is anticipated that worldwide about 2 million notebooks will be in use by 2010. This implies that about 2 million customers may wish to be interconnected by wireless means. They will probably expect to be able to transfer data at 10 Mbit/s over wireless connections. Such high throughput rates are not feasible with spectrum from the digital dividend. It should also be borne in mind that a cell is only as fast as allowed by the backbone network to which the cell is connected. A fibre-optic infrastructure enhanced with an additional radio cell layer would help solve the capacity problem. Tiny cells with high transmit powers, wide radio frequency channels, mechanisms for dynamic interference avoidance and directly connected to the fibre-optic network would be able to provide users with very high data transfer rates. Instead, the government’s rather unambitious plan envisages that 50 Mbit/s via SDL be made available to 75 per cent of the population in 2015 and up to 100 per cent of the population in 2018. Since consumers would expect about 10 Mbit/s in 2018, it was hardly helpful to claim that nationwide coverage with real broadband will be possible with 2 x 30 MHz at 800 MHz. This is physically not possible. The spectrum from the digital dividend should therefore

17

be used to offer the population a basic supply of data applications – for which the lower data transfer rates would suffice – on a nationwide basis as soon as possible. Some respondents endorsed Activity 1 in principle but called for a modification of the Federal Network Agency’s approach to the effect that ancillary measures be planned for the equal distribution or redistribution of the spectrum amongst existing network operators. It should be borne in mind that equal competitive opportunities must be ensured especially with regard to these highly suitable frequencies for area coverage not only with a view to a sustainable largescale network expansion. The suggestions regarding the flexibilisation of frequency usage rights in the 900 MHz band (Activity 2) and the conditions for the auction of 800 MHz frequencies (Activity 1) were not deemed to be in line with the regulatory aims in the TKG because the current competitive disequilibrium in the German mobile market due to the differences in frequency spectrum would be reinforced at the expense of the E network operators. The Federal Network Agency opposes the necessary redistribution of 900 MHz frequencies (see Activity 2) by referring to the forthcoming auction of 800 MHz frequencies without, however, ensuring E networks operators’ access to the frequencies by means of appropriate award conditions. The auction of the 800 MHz frequencies, as proposed here, which in view of the spectrum cap will most likely result in the D network operators acquiring two thirds of the area spectrum available at 800 MHz, will further boost the concentration of area spectrum in the hands of the D network operators. In view of the fact that at 800 MHz a 2 x 10 MHz arrangement was deemed necessary by the Federal Network Agency for reason of efficiency, as only 2 x 30 MHz is available, it is likely that one of the four established network operators will not obtain further area spectrum. This means that this network operator’s competitive position would be drastically impaired, and competition in area development significantly impeded. The Federal Network Agency’s plan to open up the possibility of access to spectrum by auctioning 800 MHz frequencies is not a suitable means for creating a regulatory level playing field because the concomitant award rules did not ensure that all four network operators would have a procedurally guaranteed chance to acquire the same number of frequencies in rural areas as the competing mobile network operators. The proposed limitation of the bidding rights (spectrum cap) missed the point. The Federal Network Agency assumes that efficient infrastructure investments will enable future broadband technology to be deployed to greater avail if spectrum of at least 2 x 10 MHz (paired) is made available. To achieve this, an E network operator would have to obtain 2 x 10 MHz and hence a third of the available digital dividend spectrum. For comparable outputs the D network operators merely need to acquire 2 x 5 MHz. The reason for this is that in future spectrum at 800 MHz and 900 MHz may be concentrated in greater blocks due to bandwidth linking where several physically separate frequency blocks are merged into single large carrier. If a D network operator were to interconnect 2 x 5 MHz from 900 MHz and from 800 MHz, this would yield a single 2 x 10 MHz carrier and the operator would thus have an additional 2 x 7.4 MHz more than an E network operator. Considerable progress has already been made in the standardisation of this technology. The standard is expected to be adopted in 2010/2011. The fact should also be taken into consideration that market entry possibilities at 800 MHz will only emerge at a later point in time (no specified technology, no terminals). Furthermore, the market entry obstacles are deemed to be much higher. In the case of the D networks, flexibilisation would be gratuitous whereas other network operators would have to acquire frequencies by auction. Basically, D network operators will be given the chance to operate networks with the GSM and another standard in parallel without having to pay for doing so. On top of that, they will be given the chance to establish new and larger carriers across bands at a later point in time.

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The D network operators could embark on their network expansion straightaway, the requisite system technology has been standardised, tried and tested and has been on the market for years. In addition, a great many UMTS capable devices already commercially available also support 900 MHz UMTS and its derivatives (HSxPA). In contrast, the E network operators are called upon to take part in the auction of other spectrum as a trade-off. The question that arises is whether, and if so, at what price spectrum could be acquired. For this spectrum no technology is specified, there are no commercially available terminals for stationary and nomadic use (PC cards or USB dongles) and no mobile terminals (mobile phones). In addition to all this, in all probability the parties acquiring this spectrum will be obliged to implement a development concept focussing on societal aspects (overcoming the Digital Divide) rather an economic aspects. Two respondents called upon the Federal Network Agency to give due consideration to the interests of users of professional production articles such as wireless microphones. Inter-trade organisations estimate that about 700,000 wireless production articles, especially wireless microphones, are in use in Germany. In view of their increasing significance, their status in international agreements and national regulations should be changed into a primary one. The Federal Network Agency is said not to differentiate adequately between the goal of closing the gaps in broadband coverage in rural areas and mobile communications’ development into a new generation. The decision gives the impression that spectrum will be awarded without being linked to a specific standard. But on the whole this does not apply since the draft states that in opening up the possibility of equal access to 800 MHz spectrum the question of operating GSM in parallel with UMTS or LTE was borne in mind. This reinforces the impression that the primary goal is to improve mobile communications coverage to which the interests of the broadcasting sector and the creative industry are subordinated. Parallel operation of wireless internet and wireless production articles is mutually exclusive. It is planned to provide wireless internet to the uncharted territories even before the ordinance 91/2005 expires on 31 December 2015. For this reason a workable plan needs to be drawn up to prevent interference to productions in those ranges in which wireless internet is introduced prior to 31 December 2015. Since to begin with wireless microphones and LTE would encounter each other in rural areas before the end of 2015, definitive arrangements and procedures for the introduction of LTE are needed to prevent damaging production relying on wireless production facilities where possible. The areas concerned should be informed two years in advance so that adequate time would be available to ensure that the functions underpinning operation would also work after the launch of mobile communications. Especially with regard to the drafting of public budgets, a period of two years is short. Precondition for a smooth transition is deemed to be a comprehensive and spirited information policy of the parties concerned, viz. the Federal Network Agency as regulator and the mobile telecommunications companies as the executors. Substitute spectrum of equal value should be indicated on a binding basis. Rules should also be in place for reimbursing the conversion costs of the cultural facilities affected. The prerequisites must already have been dealt with before the start of the auction. The linking of the procedures was the subject of fierce debate. The majority endorsed the linking. The combination with the auction for the higher frequency bands which had already been planned for some time paved the way for the award of the frequency rights at the earliest possible point in time. Moreover, the concurrent award of frequencies facilitates the implementation of different business models. Some respondents pointed out that frequencies from the upper ranges cannot automatically be considered substitute spectrum for the 800 MHz band since the physical properties of the frequencies at 800 MHz and those above 1800 MHz diverge considerably. Occasionally the linking was regarded with reservations. Respondents drew attention to the high level of legal uncertainty resulting from linking a procedure with procedures indirectly the subject of legal disputes. Award of the 2.6 GHz band should not be delayed unnecessarily by linking it

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with the other bands although the concurrent award of all the spectrum available would enable operators to optimise their business plans. The band should be awarded as soon as possible and no later than in spring 2010. Furthermore, respondents also noted that the joint award of the frequency range 790 MHz – 862 MHz and the other frequencies to close coverage gaps in rural areas was not necessary for either technical or competitive reason. The points in time at which technology was assumed to be available clearly indicated that the two goals could not be combined. It would therefore make sense to separate the auction of the mobile frequencies (1.8 GHz, 2 GHz, 2.6 GHz) from that of the culture frequencies (790 MHz - 862 MHz). This would give mobile telecommunications companies planning security since they could continue with their development of the LTE technology in this mobile spectrum range before introducing it. There was reason to question the urgency of the matter since there were still some unanswered questions in the UHF spectrum which called for even more thorough preparations. Linking the enhancement of mobile communications with the closure of gaps served primarily to impede competition. Especially Mittelstand companies merely interested in providing mobile internet to rural areas did not have the chance to obtain spectrum solely between 790 MHz and 682 MHz. It was confirmed that the possibility of bidding as a consortium was deemed a wise option. In view of the difference in physical properties and possibly divergent business objectives regarding the spectrum at 800 MHz or the higher frequencies, the possibility of band-related bidder/operator consortia (e. g. limited to 800 MHz) should be clarified in greater detail or permitted. In addition, the cooperation possibilities for operators following the issue of licences should be made easier (e. g. national roaming, spectrum sharing) in order to facilitate the rapid, efficient and economic coverage of underserved areas. Concluding, the suggestion was made to remove Activity 1 from the draft since a separate administrative procedure is in place to deal with this issue. However, as evidenced by its title, the current Chamber decision deals with the flexibilisation of the frequency usage rights (…) in the ranges 450 MHz, 900 MHz, 1800 MHz, 2 GHz and 3.5 GHz. At this point in time, spectrum at 800 MHz has not yet been allocated to wireless access for the offer of telecommunications services. Whether and to what extent the spectrum at 800 MHz should be awarded with flexible frequency usage rights was hence to be determined in exactly this procedure. The Chamber has come to the following conclusion: WRC-07 decided to identify the frequency band 790 MHz to 862 MHz for IMT (see 5.317A of the Radio Regulations) to meet the demand for mobile communications spectrum. On 04 March 2009, the Federal Government adopted the second ordinance on the amendment of the Frequency Band Allocation Table Ordinance and submitted it to the Bundesrat (Bundesrat official document 204/09) to implement these decisions by the World Radio Conference. In its 859th meeting on 12 June 2009 the Bundesrat consented to the ordinance according to section 53(1) sentence 2 TKG (official document 204/09 ruling). The ordinance of 14 July 2009 was published on 20 July 2009 in the Federal Law Gazette, part I, page 1809 and took effect on 21 July 2009. On 18 February 2009 the Federal Government adopted its broadband strategy (can be downloaded at http://www.bmwi.de). The strategy is intended to give the telecommunications industry an additional incentive to provide all households and companies with efficient broadband connections as quickly as possible. One of the four columns of the broadband strategy is the supporting frequency policy. As a measure in the supporting frequency policy, the broadband strategy provides that the potential of the digital dividend is to be used as quickly as possible. According to the broadband strategy, the digital dividend allows “fast and economic basic coverage of sparsely populated areas with broadband access and is the condition for establishing an efficient infrastructure in the long run“.

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Some reservations were expressed about the possibility of achieving the goals of the broadband strategy with the frequencies from the digital dividend. In this connection the Chamber wishes to point out that the frequency policy – and with it official steps taken within the framework of frequency regulation - constitutes one of four strategic columns and as evidenced by the title of the broadband strategy is “supportive”. The broadband strategy goals can hence at any rate not be achieved simply with the frequencies from the digital dividend. On 01 April 2009 the Federal Network Agency announced key elements for the award of frequencies in the band 790 MHz to 862 MHz for realizing wireless access for the offer of telecommunications services (Communication 209/2009, Official Gazette Federal Network Agency 6/2009, page 985; English translation can be downloaded at http://www.bundesnetzagentur.de/media/archive/16077.pdf) for implementing Activity 6 of the broadband strategy. These key elements mainly provide that both the legally required adjustment of the frequency usage sub-plan and the development of an award procedure shall be completed quickly so that the procedure for awarding the available spectrum can be initiated this year. Based upon these key elements, the Chamber prepared a draft decision on linking the procedure of awarding frequencies in the bands 790 to 862 MHz as well as 1710 to 1725 MHz and 1805 to 1820 MHz to the procedure of awarding frequencies in the bands 1.8 GHz, 2 GHz and 2.6 GHz for wireless access for the offer of telecommunications services and presented this for public hearing according to sections 55(9), 61 TKG (see Communication 319/2009, Official Gazette Federal Network Agency 10/2009, page 2555). After evaluation of the comments received, the Chamber took its final decision BK 1a-09/002 on the same day as this decision BK 1a-09/001. As such, the Federal Network Agency opens up the possibility of access to available spectrum for wireless access for the offer of telecommunications services under framework conditions that are neutral in terms of technology and applications. The Chamber took the concerns expressed in some comments on the impact of the award proceedings on the competitive situation seriously and has thoroughly investigated them. Since this viewpoint does not concern the spectrum provision as such but detailed arrangements of the award proceedings in the parallel procedure BK 1a-09/002, especially the limitation of the bidding rights (spectrum cap), the Chamber refers to the statements made there. The same applies to the requests that the interests of users of professional production articles such as wireless microphones, the question concerning the linking of the award of 800 MHz frequencies with the award of frequencies at 1.8 GHz, 2 GHz and 2.6 GHz, and the possibility of bidding as consortia be taken into account. Here also, the Chamber refers to the statements in its decision BK 1a-09/002 of the same day. As far as the suggestion is concerned that Activity 1 be removed from this decision since a separate administrative procedure concerning the issue is in place, the Chamber cannot subscribe to this view. It is true that the decisions on the award proceedings required by law are taken in the course of a separate procedure. Nonetheless, the Chamber deems it necessary to clarify the conceptual link between the flexibilisation of existing frequency usage rights in the frequency bands dedicated for wireless access for the offer of telecommunications services on the one hand, and the opening up of the possibility of access to other available frequencies on the other. As such there are various interactions which become cognisable in a general survey of the two final decisions.

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Activity 2 The Federal Network Agency will flexibilise GSM frequency usage rights upon application and in accordance with the Directive of the European Parliament and of the Council amending Council Directive 87/372/EEC4 as quickly as possible.

The following issues were raised: The proposed flexibilisation of the GSM frequency usage rights is welcomed by most respondents. It gives network operators planning security for the deployment of future broadband technologies. The reason given was that this step was in accord with European harmonisation, especially the WAPECS concept. The activity enabled Germany to transpose the directive amending the GSM directive in a timely manner. In some instances the Federal Network Agency was called upon to campaign for the rapid modification of the relevant EC legal instrument on UMTS to include other technologies. Such a modification would embrace technology neutrality, a concept also advocated by the Commission. It would also create a foundation under Community law for the establishment of modern network infrastructures based on LTE in the 900 MHz bands. Such a modified GSM directive should hence be input into the European coordination process as soon as possible. The flexibilisation, especially of the 900 MHz frequency band, also supports the implementation of the Federal Government’s broadband strategy (1 Mbit/s for 100 % of households by 2010) since this goal can be achieved by deploying HSPA/HSPA+ in this frequency range. The release of 900 MHz and 1800 MHz for UMTS (HSPA+) and other technologies is of crucial importance. The frequencies should be released as soon as possible and certainly before the release of the 2.6 GHz and 800 MHz bands. HSPA+ technology in the 900 MHz band constitutes the only technology by means of which the goal in the government’s broadband initiative of providing 1 Mbit/s for 100 % of households in 2010 could be achieved. This approach gives network operators the chance to launch a uniform spectrum use strategy for the provision of universal, mobile, broadband services in Germany and to take informed decisions on the award of new, additional frequencies in the ranges 800 MHz, 1800 MHz, 2 GHz and 2.6 GHz. The availability of UMTS-900 devices has made great strides in recent years. The latest survey by the Global Suppliers Association (GSA) on HSPA devices (May 2009) confirmed that 130 HSPA-enabled devices supporting operation in the 900 MHz frequency band have been placed on the market by more than 21 different suppliers (compared with 20 devices in mid-2008). It was pointed out that the admission of FDD and TDD systems could lead to co-existence problems. Two FDD/TDD borders could emerge (one in the uplink and one in the downlink). At these borders a protective band or at least a frequency block with limited use would be necessary. Since most future systems (e. g. LTE or WiMax) will support both FDD and TDD, the exclusive use of FDD systems would not result in any restrictions in terms of technology and service neutrality.

4

See footnote 1.

22

It was also stated that the division into paired and unpaired spectrum should be left to the market players to ensure that there are adequate possibilities for providing spectrum access for the new technologies based on OFDMA, such as WiMAX. It was also demanded that priority be given to making UMTS and LTE usable since they represent technology families and since co-existence issues pertaining to these technologies have already been dealt with and solved during the standardisation process. An opening-up for other technologies necessitates co-existence analyses or alternatively, the definition of block edge masks. Concluding, some respondents noted that the draft did not contain any statements on the specific implementation measures deemed necessary by the Federal Network Agency for the actual flexibilisation process. In some cases it was pointed out that it was assumed that existing uses would not be affected by the flexibilisation and that in any case they may not be restricted. Some respondents endorsed the flexibilisation of the GSM licences in principle but called for a modification of the Federal Network Agency’s approach to the effect that ancillary measures be planned for the equal distribution or redistribution of the spectrum amongst existing operators. It was stated that flexibilisation without a redeployment of the spectrum at 900 MHz would place the E network operators at a disadvantage vis-à-vis the D network operators. This constituted a violation of the regulatory aims in section 2(2) TKG which in accordance with section 52 (1) TKG need to be observed. The regulatory goal of safeguarding the interests of users and especially consumers in telecommunications (section 2(2) No. 1 TKG) should not be trimmed down to merely holding broadband access technology in readiness for coverage on as large a scale as possible. It would also be in the users’ interest to continue to use existing hardware (e. g. inbuilt terminals in cars, inbound roaming) and to be able to choose from a large variety of products and prices. The flexibilisation of the frequency distribution rights will not per se result in a market with sustainable competition (section 2(2) TKG) but may instead amplify existing competitive distortions and impede or even preclude sustainable competition altogether. It was noted that the Chamber’s decision on the flexibilisation of the frequency usage rights presented for consultation did not comprise an impact assessment. If the Federal Network Agency had carried out an assessment of the impact which the Agency itself deemed necessary, then it would have realised that a planned flexibilisation of the frequency rights in the 800 MHz to 900 MHz spectrum range on the basis of the proposed award rules for the BK1a-09/002 procedure was not suitable for creating sustainable competition and will instead bring about the reverse, i. e. competition will be impeded. The Bundeskartellamt is of the opinion that the market position of T-Mobile and Vodafone is even stronger than is implied by market share data (Beschluss B 7 – 61/07 of 13 August 2007). Scientifically substantiated empirical studies have revealed that distinct asymmetries in market shares cannot be put down to the capability of the individual companies. The real reason for such asymmetries – as acknowledged by the Federal Network Agency, most recently in its latest decision on the determination of call termination charges – is the sequential licensing of the network operators on the one hand, and the frequency division on the other. A frequency regulation which in view of its impact on companies’ cost structures does not create equal opportunities for providers contravenes the legal mandate of promoting workable competition. It was also claimed that the regulatory aim of ensuring efficient and interference-free frequency use (section 2(2) para 7 TKG) is not implicitly upheld by the flexibilisation. The Federal Network Agency seems to base its statement that the possibility of introducing innovative services not merely maintains but actually improves the level of efficiency on the spectral efficiency of the technologies deployed, viz. on the maximum achievable transmission rates per spectrum block.

23

In the case of UMTS or LTE, these are indeed higher than in the case of GSM. However, the draft does not take into account the fact that the GSM standard is still needed and that upholding or even increasing spectral efficiency is only possible if GSM and other networks can be operated in parallel. This is the case, for example, when an operator reserves part of the spectrum for GSM and another part for, say, UMTS. Should an operator not be in a position to use both standards in parallel, then from a cognitively logical viewpoint the only way of introducing UMTS or LTE would be to divide the frequencies on a regional basis. In this case it would be necessary to establish broad safety corridors between the technologies to avoid interference and in which the spectrum would lie dormant. The competitive disadvantages of the E networks operators can only be avoided by a prior redistribution of the frequency usage rights at 900 MHz. Under European Community Law, frequency usage rights may be changed to avoid competitive distortions or restraints. The Commission’s proposal for amending Directive 87/372/EEC explicitly deals with this issue (COM (2008) 762 final). The D network operators cannot claim to have a right to an established and running business enterprise. Legislation acknowledges that frequency usage rights are limited a priori by conditions of use, revocation clauses and the revocation justifications in section 63 TKG (cf Higher Administrative Court of North Rhine-Westphalia, decision 13 A 2394/07 of 30 October 2008). The Federal Network Agency rejects the necessary redistribution of 900 MHz frequencies by referring to the forthcoming auction of 800 MHz frequencies without guaranteeing E network operators’ access to these frequencies by means of appropriate award conditions (see Activity 1). Against this backdrop, a respondent suggested that the introduction of flexible usage rights regarding the GSM spectrum be limited to those companies that have less than 8.7 MHz of GSM 900 spectrum. One respondent pointed out that the flexibilisation of the frequencies dealt with here can also affect neighbouring frequency uses. More specifically, Activity 2 affects the following railway radio frequencies: 

GSM-R uplink

876 MHz - 880 MHz



GSM-R downlink

921 MHz - 925 MHz



E-GSM-R uplink

873 MHz - 876 MHz



E-GSM-R downlink

918 MHz - 921 MHz

The respondent hence requests that interference-free frequency use be ensured so that operational requirements under railway legislation may be complied with. The security relevance of the railway radio services and the specific linear topology of the railway radio wave propagation area necessitate a higher coverage quality level („quasi-permanent connection“), a feature to be taken into account in co-existence analyses. The respondent emphasized the Federal Network Agency’s obligation to ensure interferencefree frequency use. This obligation derives not only from the TKG but from international regulations such as the ITU Radio Regulations as well. The question as to which frequency ranges could cause interference to railway radio applications also depends on the radio technologies deployed, especially bandwidth, duplex scheme, RF and antenna characteristics, air interface and protocols, and on operational behaviour. The term “neighbouring” hence will probably not only relate to adjacent frequency bands but should be deemed to cover all frequency ranges potentially likely to cause interference to each other.

24

In view of this situation, the respondent suggested that legal measures ensuring the interference-free operation of railway radio applications such as mandatory coordination, possibly involving restrictions as to choice of location, transmitting power or the transmit characteristic (RF or antenna characteristic), be taken into consideration. The Chamber has come to the following conclusion: At assignment level the existing frequency usage rights for 900 MHz and 1800 MHz frequencies are currently limited to the GSM standard. In order to implement the regulatory aims according to section 2(2) TKG, the Federal Network Agency will cancel this restriction upon application by the frequency assignment holder and in accordance with the Directive of the European Parliament and of the Council amending Council Directive 87/372/EEC5 so that network operators can use the frequencies as soon as possible in a technologically neutral manner ensuring an interference-free use of frequencies. Some respondents stated that the Chamber did not provide any information on the actual implementation measures. The Chamber wishes to point out that to begin with, all companies concerned will be notified of this decision. They will be informed that they are entitled to submit an application for a modification of their frequency assignment forthwith. Upon receipt of such an application the Federal Network Agency will cancel the restriction to the GSM standard under the proviso that the examination called for in the current version6 of Art. 1(2) of the Directive of the European Parliament and of the Council amending Council Directive 87/372/EEC comes to the conclusion that in view of the existing assignment of the 900 MHz band to mobile operators competing in the area concerned competitive distortions on the relevant mobile markets are unlikely. The replanning required due to the flexiblilisation will be undertaken in consultation with the frequency assignment holders. Since the current arrangement of the channels corresponds to the 200-kHz carrier spacing in the GSM standard, a division of the 900 MHz band for use by UMTS or any other broadband system compatible with GSM would have to be converted to a 5 MHz spacing. In view of the assigned channels, relocations will be necessary (cf Activity 3). With this decision, the Chamber opens up the GSM frequencies for GSM and UMTS systems and any other systems capable of providing pan-European electronic communications services and capable of being operated alongside GSM system without causing interference. In doing so, the Chamber transposes the current version7 of Art. 1(1) of Directive 87/372/EEC. The network operators affected can apply for the flexibilisation of their rights at any time with immediate effect. Flexibilisation of existing frequency usage rights will be undertaken in such a way that existing uses will not be impaired. It is also not the Federal Network Agency’s intention to restrict frequency rights entitled to retain their status quo. On the contrary, flexibilisation will extend rights since unnecessary commitments are abolished. Opening up the spectrum and eliminating the restriction to the GSM standard as quickly as possible will provide economic benefits overall. This is emphasized in the Federal Government's broadband strategy. In addition to the broadband strategy, the flexibilisation of GSM spectrum is an important regulatory contribution to realizing the Federal Government's objective of improving broadband coverage for the population in the medium and long run. The Agency's approach of making frequencies available to the market in a demand-oriented manner that is neutral in terms of technology and applications is explicitly supported by the Federal Government. Particular importance is attributed to 900 MHz spectrum - as to the entire spectrum below 1 GHz that can be used for wireless access for the offer of telecommunication services - due to the 5 6 7

See footnote 1. See footnote 1. See footnote 1.

25

more favourable propagation conditions compared to higher frequency spectrum and the ensuing substantial cost benefits for nationwide network rollout. As the network costs are considerably lower than those arising for higher spectrum, broadband services can be offered more efficiently, in particular in rural areas. The regulatory target of encouraging efficient investment in infrastructure and promoting innovation as stipulated in section 2(2) para 3 TKG is achieved. Therefore, making frequency usage rights more flexible safeguards user - most notably consumer - interests in telecommunications in accordance with section 2(2) para 1 TKG. The proposed abolition of the restriction to the GSM standard means that holders of frequency usage rights will be able to introduce broadband access technologies early on in line with requirements and throughout the country. Improving broadband access for users is - as it is emphasized by the Federal Government in its broadband strategy - a paramount aim of telecommunications policy and contributes substantially to realising the Federation's mandate to ensure the availability of infrastructure ensuing from Article 87f(1) of the Basic Law. Some respondents stated in their views on the draft of this decision that the regulatory aim in section 2(2) para 2 TKG should not be restricted to providing nationwide broadband network access technologies. The Chamber concurs with this view. The nature of consumers’ and other users’ interests is complex. It should indeed be borne in mind that users are also interested in continuing to use existing terminal devices. The Chamber is nevertheless of the opinion that this factor does not conflict with flexibilisation. Flexibilisation gives network operators the chance to deploy technologies other than GSM but they are not obliged to switch to other technologies. In fact, the Chamber expects the network operators to decide on the basis of their business model and user demand when they wish to make use of the more flexible conditions of use. Against this backdrop, there is no reason for the Chamber to doubt that user and especially consumer interests will be taken into account in the flexibilisation. In order to exhaust the efficiency gains in the provision of low spectrum broadband services and to safeguard the interests of private and commercial users (low prices, quick provision of services throughout the country), the existing usage rights have to be adjusted as early as possible and technology-neutral uses provided. Finally, rapid flexibilisation ensures the regulatory aim set forth in section 2(2) para 2 TKG to promote telecommunications markets with sustainable competition. This will allow broadband technologies to be used fast in line with requirements. Network operators will be allowed to take the necessary decisions for the transfer in compliance with the market situation. This may encourage competition among the existing mobile operators on the one hand. They can decide on their own and without regulatory restrictions when to implement the technological changes, and whether to introduce innovative technologies in the market or to continue writing off previous investments. On the other hand, it could stimulate intermodal competition between cable and wireless infrastructure operators in the broadband access market. Broadband wireless access offered at lower prices may increase the competitive pressures on operators using cable technology, thus contributing to achieving the aim of making broadband services available to private and commercial end users throughout the country. With the flexibilisation of the GSM frequency usage rights, the Chamber contributes to promoting the development of the European Union internal market according to section 2(2) para 4 TKG because it transposes Art. 1(1) of amended Directive 87/372/EEC. In their views on the draft of this decision, some respondents called upon the Federal Network Agency to campaign for the rapid modification of the relevant EC legal instrument on UMTS to include other technologies. The Chamber wishes to point out that the current version8 of the directive 87/372/EEC also deems systems other than GSM and UMTS which are capable of co8

See footnote 1.

26

existing with GSM admissible. This is also indicated in the current version of the Commission’s decision on the harmonisation of the 900 MHz and the 1800 MHz band for terrestrial systems capable of providing pan-European electronic communications services in the Community9. The Federal Network Agency will persevere with its endeavours to have other systems with a proven co-existence track record put on the list of permitted systems under the procedure in Art. 4 of the Radio Spectrum Decision. Hence GSM and UMTS may be used. Other systems may be used as soon as their co-existence has been proven. This applies in the same way to LTE as to other technical systems. In view of Community legislation there is at any rate no room for arrangements under federal law dealing with the prioritisation of technologies or standards. Furthermore, with the intended flexibilisation of GSM frequency usage rights, the regulatory target of ensuring efficient and interference-free use of frequencies according to section 2(2) para 7 TKG is achieved. According to the Chamber's opinion, the introduction of innovative broadband technologies enabled after flexibilisation will not only maintain but further increase the level of efficiency already reached. The Federal Network Agency will support the network operators concerned in switching to new technologies with a 5 MHz channel grid, mainly by coordinating these new frequency uses in border areas of the Federal Republic of Germany with frequency uses in neighbouring countries. The Federal Network Agency will also take account of the justified claims to the protection of domestic frequency use in adjacent frequency bands. Some respondents pointed out that the improvement in spectral efficiency should be viewed in conjunction with continued demand for GSM and that for this reason all network operators should be entitled to operate GSM and UMTS or LTE in parallel. In this connection, the Chamber wishes to point out the following. Under the Chamber’s Activity 3, the Federal Network Agency shall take a decision ex officio on the assignment of the frequencies in the frequency bands 900 MHz and 1800 MHz with effect from 01 January 2017 well before the current frequency usage rights expire. If a frequency assignment holder submits an application for an extension of the limitation beyond 31 December 2016 before the Federal Network Agency has done so, the Agency will nonetheless take a decision on the future assignment of all currently assigned frequencies in the bands 900 MHz and 1800 MHz from 01 January 2017. This decision will also deal with the issue of the competitive neutrality of the regulatory framework conditions (cf the details in the justification for Activity 3). A comment on the K 9/18 discussion paper requested that TDD systems be excluded as a rule. It must be noted in this connection that this and other questions concerning technical parameters are determined in compliance with the Commission’s decision on the harmonisation of the bands 900 MHz and 1800 MHz for terrestrial systems capable of providing pan-European electronic communications services in the Community10. Under the decision, excluding TDD systems in this way is not explicitly planned. According to Art. 5 of the Commission decision, it is instead intended that Member States can also make the frequencies at 900 MHz and 1800 MHz available for other terrestrial systems not listed in the annex to the decision if co-existence with GSM systems can be ensured. Thus, if a network operator wants to use TDD systems, this would generally be permitted under the Commission’s decision if co-existence with GSM systems is ensured. Some respondents pointed out that the admission of FDD and TDD systems could lead to coexistence problems. The Chamber wishes to point out that the frequencies have already been assigned and are being used. Should a network operator wish to deploy a TDD system in the 900 MHz frequency band, then the operator must make sure that neighbouring network operators do not experience any interference. Whether the guardbands to be observed permit an efficient frequency use in terms of the business model pursued is for the network operator to decide.

9 10

See footnote 3. See footnote 3.

27

Some respondents emphasized that dividing the spectrum into paired and unpaired spectrum should be left to the market players. The Chamber wishes to point out that to ensure efficient and interference-free use, it may be expedient to specify the duplex ranges within a regulatory framework. Such specifications, which are harmonised at international level or within the European Community, are drawn up in the course of a procedure which permits participation in their evolution. The Chamber therefore deems it appropriate to transpose internationally agreed band plans at national level but at the same time not to preclude – where possible from a technical and regulatory viewpoint – the use of paired and unpaired spectrum provided that no detrimental interference is caused to neighbouring frequency users. As in the case of the K 9|18 discussion paper, of special interest to respondents was the question of the expediency of redistributing the frequency usage rights in the 900 MHz band. The main point made was that the flexibilisation of existing usage rights in the 900 MHz band would place the E network operators at a competitive disadvantage vis-à-vis the D network operators. In view of their frequency spectrum, only the D network operators are deemed to be in a position to operate GSM and UMTS in parallel in the 900 MHz range. This was seen to be a competitive distortion. That is why claims are put forward for the assignment of further spectrum at 900 MHz as a consequence of redistribution. The Chamber has carefully examined this viewpoint and the reasoning. After a general survey of all arguments and having given due consideration to the regulatory aims, the Chamber has come to the conclusion that there is no need for a redistribution of the 900 MHz spectrum in view of the award of spectrum in the 800 MHz range because the goals aimed for by a redistribution can be achieved just as effectively by the latter without having to intervene in the established, running business of the network operators concerned. To implement Activity 1 of this decision, the Chamber prepared a draft decision on linking the procedure of awarding frequencies in the bands 790 to 862 MHz as well as 1710 to 1725 MHz and 1805 to 1820 MHz to the procedure of awarding frequencies in the bands 1.8 GHz, 2 GHz and 2.6 GHz for wireless access for the offer of telecommunication services (Chamber decision BK1-07/003 of 07 April 2008 on the order and choice of the award proceedings and on the detailed definitions and rules) (BK 1a-09/002; published in this Official Gazette). Under this award procedure spectrum below 1 GHz is thus available in the short term. Hence, the circumstances have changed substantially compared to the circumstances on which the K 9|18 discussion paper was based. At the time of commenting on the K 9|18 discussion paper, this development could not be known with the result that the new circumstances could not be taken into account in its consideration. On the one hand, access to additional spectrum in the 900 MHz band was requested to be able to use UMTS technology in addition to GSM networks in this frequency band as well and thus realize low-cost network rollout and operation for broadband offers (parallel operation). On the other hand, access to frequencies in the 900 MHz band was requested by potential new entrants to have the chance to acquire frequency spectrum comparable to that of the existing mobile communications operators in terms of both area coverage and capacity coverage frequencies. The demand for 900 MHz frequencies resulted due to the fact that 800 MHz frequencies and other frequencies below 1 GHz for wireless access for the offer of telecommunications services were not available in the short term at the time the K 9I18 discussion paper was published. The respondents’ interest behind this requirement of gaining access to spectrum below 1 GHz in the short term could not be met otherwise at this point in time. Keeping in mind the interest of these respondents and due to the allocation of 800 MHz frequencies in the procedure BK 1a-09/002, a regulatory redistribution of frequency spectrum in the band 900 MHz is not required either for implementing the regulatory aims of securing fair competition and promoting telecommunications markets with sustainable competition in the field of telecommunications services and networks as defined in section 2(2) para 2 TKG or for complying with the principle of non-discrimination in accordance with section 55(1) sentence 3 TKG.

28

The regulatory target of ensuring fair competition and promoting telecommunications markets with sustainable competition according to section 2 (2) para 2 TKG is achieved primarily by the fact that the Federal Network Agency opens up opportunities for access to spectrum with the award procedure BK 1a-09/002. This applies both for E network operators and any new entrants. The Chamber is of the opinion that the award conditions set out therein are well-suited to paving the way to equal access. In their views on the draft of this decision, some respondents state that the award conditions are inappropriate for “ensuring access” to these frequencies. The Chamber wishes to point out that it is a characteristic of open, transparent and non-discriminatory award proceedings that no company is given a guarantee of access to frequencies but merely the possibility of access. The rules for the award procedure BK 1a-09/002 provide for a limitation of the bidding rights of a bidder for 800 MHz spectrum to a maximum of 2 x 20 MHz (paired). The justification for item IV. 3.2. provides as follows: „To ensure access to these frequencies with equal opportunities, the Chamber considers it necessary to limit the bidding rights for these frequencies by means of a spectrum cap. This limitation will avoid these frequencies being bought at the auction by only one company. Rather, the intention is for as many bidders as possible to buy this spectrum at the auction. As such, it will be ensured that new entrants get the opportunity to buy adequate frequencies for their business models. On the other hand, the four existing mobile network operators can also gain access to additional frequencies in rural areas.“ A bidder that has no spectrum in the 900 MHz band may exercise bidding rights for a maximum of 2 x 20 MHz (paired). This means that such a bidder can bid for a greater chunk of spectrum than the GSM network operators because existing frequency spectrum in the 900 MHz band (the GSM network operators) will be taken into account when limiting the bidding rights. This will result in the following limitations of bidding rights for GSM network operators: D network operators may acquire by auction a maximum of 2 x 10 MHz (paired) at the auction given the determined spectrum cap of 2 x 20 MHz (paired). Each of the E network operators has 2 x 5 MHz (paired) available in the 900 MHz band, so that there is a spectrum cap of 2 x 15 MHz (paired) for the 800 MHz band. Opening up equal access to the 800 MHz spectrum takes account of the concern of a parallel operation of GSM, UMTS and LTE that was addressed in some statements on the K 9|18 discussion paper. The Chamber agrees to the opinion presented on the K 9|18 discussion paper that GSM will still be used in the medium and long term and be gradually replaced. The assumption is based on the fact that the majority of mobile terminals used in Europe and throughout the world still use the GSM standard and will continue to do so. According to the Chamber, it will take quite a few of years until the number of GSM terminals falls below the critical mass from a network operator’s point of view. This applies particularly to inbound roaming by foreign GSM customers. This assessment by the Chamber is backed up by the outcome of the consultations in this proceeding and in the parallel procedure BK 1a-09/002. The views presented show that although the flexibilisation of the 900 MHz spectrum is welcomed, especially by the D network operators, due to the high demand for GMS applications the existing GSM systems will continue to be used for many years to come, possibly even until the expiry of the current period of validity on 31 December 2016. It should also be borne in mind that the E network operators already have spectrum in the 900 MHz band (implementation of the GSM concept 205, course of action I). This means that there is no competitive distortion in terms of Art. 1(2) of amended Directive 87/372/EEC in favour of the D network operators at the E network operators’ expense for as long as the D network operators use the 900 MHz frequencies solely for GSM applications. During this period the D network operators also do not have a competitive advantage over the E network operators by being able to operate GSM and UMTS in parallel.

29

The fact that the issuers of directives obviously share the Federal Network Agency's view on this rating is clearly illustrated by recital 6 of the Amendment Directive which states the following: „The liberalisation of the use of the 900 MHz band could possibly result in competitive distortions. In particular, where certain mobile operators have not been assigned spectrum in the 900 MHz band, they could be put at a disadvantage in terms of cost and efficiency in comparison with operators that will be able to provide 3G services in that band. Under the regulatory framework on electronic communications, and in particular Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive), Member States can amend and/or review rights of use of spectrum and thus have the tools to deal, where required, with such possible distortions.“ Not the liberalisation of the 900 MHz band but the liberalisation of the uses in that band could lead to competitive distortions. Liberalised use is only deemed to exist when the companies concerned make use of the liberalised regulatory framework. This necessitates a modification of the content of the frequency usage rights. Such a modification is needed because the channels are currently separated in accordance with a 200-kHz spacing corresponding to the GSM standard. If the 900 MHz band is to be used for UMTS or other broadband systems compatible with GSM, the channel separation in that band would have to be converted to a 5 MHz spacing. In view of the channels assigned, relocations are necessary. A prerequisite for the modification of the content of the frequency usage rights is that a frequency assignment holder files an application to that effect. The Federal Network Agency will then examine in accordance with the current version11 of Art. 1(2) of the directive 87/372/EEC whether the existing assignments in the 900 MHz bands to the mobile operators competing in that region are likely to lead to competitive distortions on the relevant mobile markets and would then eliminate such distortions, where justified and reasonable, in accordance with Art. 14 of Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive) (Official Journal European Union L 108 of 24.04.2002, page 21). The examination of possible competitive distortions on the relevant mobile markets in accordance with the current version of Art. 1(2) of Directive 87/372/EEC12 also has its basis at national level. Under the Telecommunications Act, in the execution of its tasks in the field of frequency management, the Federal Network Agency not only has to ensure an efficient and interference-free use of frequencies but also needs to bear the other regulatory aims in section 2(2) para 2 TKG in mind in its regulatory activities. Under section 2(2) TKG, in addition to the regulatory aims of safeguarding the interests of users and consumers, encouraging efficient investment in infrastructure, developing the internal market and ensuring the nationwide provision of basic services, the Federal Network Agency is responsible for ensuring fair competition. Especially in the context of the flexibilisation of existing usage rights the regulatory goal of ensuring fair competition is of crucial importance (see the GSM concept 2005, page 5). However, this regulatory goal only comes into play when – as mentioned above – an application for flexibilisation is submitted. Only then can an examination of the competitive situation be carried out and a possible competitive distortion - as presented in the comments - be assessed by the Chamber. Until an application for flexiblilisation is submitted, any statements on possible forthcoming effects on competition are merely of a hypothetical nature. The real impact on competition cannot be assessed. This applies all the more because in the forthcoming frequency assignment proceedings for wireless access frequencies in the 800 MHz range will be auctioned which are comparable to the frequencies to be flexibilised in the 900 MHz range. The outcome of this award in the form of an auction is at any rate not in any way foreseeable. At this point in time the Chamber has no reason to believe that existing assignments are likely to lead to competitive distortion. Furthermore, the principle applies that any restriction of the possibility to flexibilise 11 12

See footnote 1. See footnote 1.

30

usage rights must be justified and proportionate. Hence a general a priori preclusion of the possibility of flexibilising the usage rights in the 900 MHz frequency band – as called for by respondents – would be neither justified nor proportionate since any real risk to competition can only be predicted after a flexibilisation application has been submitted. The case mentioned in the second sentence of the recital regarding the possibility of competitive distortion is not applicable in Germany due to the implementation of the GSM concept’s course of action I. All current GSM network operators have frequency usage rights in the 900 MHz band. Furthermore, in the forthcoming auction of frequencies for wireless access there is a chance to obtain frequencies below 1 GHz in rural areas. Possible competitive distortion can only be identified in the context of the auction's outcome. The outcome of an auction cannot be foreseen. Furthermore, at present there are no indications for any other case involving competitive distortion. In addition, it is questionable whether the frequency assignments referred to in Art. 1(2) of amended Directive 87/372/EEC still account for significant cost differentials between the network operators. Regulatory order BK 3a-09/003 of 31 March 2009 stated the following (page 31f): „Apart from the difference in termination volumes, the applicant pointed out existing differences in GSM frequency spectrum which in her view also justified the approval of different rates. However, following an examination of the cost effects caused by this difference the Ruling Chamber has doubts – which have in fact been reinforced since the last decision BK 3a-07/026 of 30 November 2007 – that current frequency spectrum apportionments still are the reason for significant cost differentials. As a result of the reverse effects of coverage and capacity of current GSM frequency spectrum, the frequency relocations taking place within the GSM bands and the increased use of UMTS frequencies, the cost differentials that at one time existed between the frequency spectrum of the D and E network operators has gradually disintegrated to a mere remnant. Actual frequency spectrum can hence no longer be put forth as the main reason for substantial cost differentials between the D and E network operators.“ The Federal Network Agency also put on record that any differences in the call termination charges of the D network operators on the one hand and the E network operators on the other could at this point in time at best be explained by having entered the market at different times. The following details were given (page 31): „The strong positive correlation between the point in time of market entry (with certain frequency spectrum) and today’s market success permits the conclusion to be drawn that a not insubstantial part of the success is not due to the company’s management but to the actual market structures prevalent at the time of entry.“ At the same time the Federal Network Agency underlined the following (page 32): „The Chamber has determined the different market entry dates (with different frequency spectrum) of the third parties to 16. on the one hand and the applicant on the other and the ensuing less favourable economies of scale to be the main reason for the difference in termination volumes and the associated difference in unit costs. However, as time passes, the causal relationship between market entry date and market success loses in strength and persuasive power. The disadvantages which must be viewed in the applicant’s favour for these historical reasons must as time goes on be accorded less significance in an efficiency-based analysis.“ In this connection the Chamber refers to the justification for its decision BK-1b-98/006 of 14 April 1999 (published as ordinance 45/1999, Official Gazette Reg TP 7/1999, page 1251) where it stated the following: „The fact of previous earlier or later frequency award in association with the corresponding competitive impact does not give rise to another judgement or the “necessary” preferential treatment or placing at a disadvantage of a market participant. Moreover, the term granted

31

to one of the licensees already expired on 4 May 97 (cf sub-section 2.1 in Annex A of E1 licence dated 4 May 93, Official Gazette BMPT No. 23 of 5 December 94, page 880).“ The question whether the current frequency allotment in the 900 MHz band will render competitive distortions more likely after the flexibilisation of use cannot be evaluated by the Chamber in this decision. This decision will have to be made with due consideration being given to the circumstances prevailing at the time. The outcome of the award proceedings BK 1a09/002 will need to be given special attention in the assessment (cf justification for Activity 3). With regard to the claim that the Chamber failed to present an impact assessment, the Chamber wishes to point out that it was only possible to carry out an impact assessment after the consultation on the draft decision and hence in cognisance of the full facts. The Chamber has thoroughly examined the impact of this decision. From the Chamber’s viewpoint a redistribution of the current frequency usage rights is not called for at least as long as the D network operators continue to use all their 900 MHz spectrum for GSM services. Until then, no competitive distortion can occur due to the fact that it would be possible for the D network operators but not the E network operators to deploy GSM and UMTS or LTE systems in parallel in the 900 MHz band. Hence the question whether the network operators could invoke their right to an established, running business enterprise to avert intervention – this is rejected in some comments with reference to legal practice - remains unanswered at this point in time. Some respondents suggested that the introduction of flexible usage rights in the GSM spectrum should be restricted to those companies that have less than 8.7 MHz of GSM 900 spectrum. In this connection the Chamber refers to its statements on Activity 3. As soon as the flexibilisation of the frequency usage rights in the 900 MHz band is applied for, the Federal Network Agency will have to decide on the issue of the competitive neutrality of the regulatory framework conditions, not least in view of the current version of Art. 1(2) of Directive 87/372/EEC13. In this case the question concerning redistribution or redeployment will have to be dealt with. Some respondents claimed that the D network operators’ market position is stronger than indicated by their market shares. In this connection reference is made to the Bundeskartellamt’s decision B7 – 61/07 of 13 August 2007 (can be downloaded at http://www.bundeskartellamt.de/wDeutsch/download/pdf/Fusion/Fusion07/B7-61-07.pdf). The Bundeskartellamt has indeed stated that for this reason the market position of T-Mobile and Vodafone is stronger than implied by their market shares (marginal note 142). But the Bundeskartellamt has not identified any impact of the planned merger on the end customer mobile market for voice telephony examined (marginal note 161). Hence the significance of this conclusion (without consequences) for this Federal Network Agency decision is unclear. In this connection the Chamber also wishes to clarify that in its decisions on call termination rates the Federal Network Agency did not acknowledge that the division of the frequencies amongst the existing network operators is asymmetric, necessitating a redistribution. In this respect it refers to the statements from the decision BK 3a-09/003 excerpted above which state to the contrary that the GSM frequency spectrum apportionments do not lead to substantial cost differentials. The Chamber also underlines that the Federal Network Agency ensures that the protection rights of the users of frequencies dedicated to applications of public railways are safeguarded. The studies needed for an evaluation of the compatibility issues raised have meanwhile begun at European level. The Federal Network Agency will define its assignment in the context of these results and will also take the points made in the comments on the draft of this decision into account. In this connection the Chamber wishes to point out that it is well aware of the importance of railway radio for the safe operation of the railway in accordance with sections 1(1) sentence 1 13

See footnote 1.

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and 4(1) sentence 1 AEG. Hence the parameters defined for the radio applications of public railways differ from those for other applications within the land mobile service. However, the Chamber wishes to draw attention to the fact that in view of the provisions in the Frequency Band Allocation Table Ordinance the radio applications of public railways in the 900 MHz band are deemed a frequency use within the mobile service excepting the aeronautical mobile service. The mobile service does not constitute a safety-related radiocommunication service in terms of the ITU Radio Regulations. Mandatory coordination – as suggested in some comments – is in the Chamber’s view not necessary due to the clear-cut frequency separation. To assess an impairment in a GSM-R network, in the Chamber’s view it is not only necessary to examine the potential interferer but, for example, the usable field strength in the potentially impaired GSM-R network as well. The Chamber nevertheless deems it expedient for the Federal Network Agency to actively support pending co-existence analyses regarding the radio applications of public railways at CEPT level in order to adequately bear in mind the interests of all frequency users concerned in future as well. Activity 3 The Federal Network Agency will take a decision ex officio on the assignment of the frequencies in the 900 MHz and 1800 MHz band with effect from 01 January 2017 before the current frequency usage rights in these bands expire. The same applies should the holder of a frequency assignment submit an application for an extension of the limited period of use beyond 31 December 2016.

The following issues were raised: The majority endorsed Activity 3 along with the following wording: The Federal Network Agency will grant the holders of existing frequency usage rights in the frequency bands 900 MHz and 1800 MHz (GSM licensees) an option for extending the current time limit, allowing them to exercise their frequency usage rights until 31 December 2025. The reason given for the endorsement is that the flexibilisation of the usage rights is supported by an extension until 2025. In view of the factually close connection, granting an option to extend the time limit to 2025 is deemed appropriate and proper. The extension also offers greater and longer term investment security which is deemed beneficial to investments in network structures. One respondent suggested extending the term to 2030 to create planning security for future investments. In some instances the option of an extension to 2025 was only partially endorsed. The notion of using flexibilisation as a means of extending frequency use to 2025 was basically endorsed. But flexibilisation should not be deemed a prerequisite for the option of an extension. Furthermore, an extension should only be granted to the D network operators if the relevant spectrum had been redeployed or the 800 MHz frequencies had been auctioned with a spectrum cap of 2 x 17.5 MHz prior to the extension. The suggestion was made that if the frequency usage rights in the 900 MHz band were extended, they should be limited to 2 x 8.6 MHz. In this way it would be possible to carry out the inevitable redistribution of the spectrum at 900 MHz caused by the competitive distortions created and perpetuated elsewhere. The introduction of flexibilisation should be made dependent on the cession of spectrum in cases where an operator had more than 2 x 8.6 MHz at its disposal at the time of flexibilisation, thereby impeding the parallel operation of technologies by other GSM licensees. The regulatory aims in the TKG demanded such a course of action.

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Concluding, it was pointed out that it had been inappropriate not to extend the frequency usage rights in the 2.6 GHz band and the Federal Network Agency was accused of discriminatory behaviour. By extending GSM assignments until the end of 2025 in the course of flexibilisation, all other frequency holders not being granted an extension of their frequency terms within the framework of flexibilisation are discriminated against. The explanations on the differentiation between a peremptory time limit for frequencies in the 2.6 GHz band and a time period set for GSM frequencies to justify the rejection of an extension of the frequencies in the 2.6 GHz band were deemed to make little sense. As such there is no legal basis to support the argumentation. In its WLL award decision, the Chamber explicitly stated that the time limit for the 2.6 GHz frequencies would “initially” be set for 31 December 2007, subject to a technology and servicebased reservation of this band for IMT/UMTS mobile radio. The Federal Network Agency has not pursued the latter since 2006 which in any case was rendered inadmissible under Community law by EU decision 477/2008/EC. In contrast, a time limit had been set for the GSM licences without reservation with an explicit statement by the legislator to the effect that the use of these frequencies may not be limited to a few in the long term. With this in mind, it makes little sense that the GSM frequencies are repeatedly extended – now in connection with the flexibilisation of frequency use – whilst on the other hand an extension of the 2.6 GHz frequencies is rejected on the grounds of flexibilisation. Reference to the alleged fact that the assignment conditions are not fully met by the frequency holders in the 2.6 GHz band does not justify this discrimination. The licensees in the 2.6 GHz had met all existing assignment requirements to date. Furthermore, frequency use in the 2.6 GHz band had been flexibilised under Community law in order to cancel existing restrictions and enhance current usage possibilities. It is difficult to understand how on the basis of existing usage – which is supposed to profit from flexibilisation – these flexibilised usage conditions can be taken as a means to oppose the termination of use. Here, the Federal Network Agency is called upon to ensure the non-discriminatory treatment of all frequency holders in accordance with Community law. The Chamber has come to the following conclusion: The present frequency usage rights in the 900 MHz and 1800 MHz bands are subject to a limited period of use due to the protected GSM licences granted to network operators. Based on the Agency's GSM concept of 21 November 2005, the GSM licensees have exercised the option to extend the limited period of use with a view to adjusting the remaining periods. Accordingly, the frequency bands concerned will not be available for other frequency assignments before the expiry date of 31 December 2016 (cf Communication 951/2007, Official Gazette Federal Network Agency 23/2007, page 4673 and Communication 487/2009, Official Gazette Federal Network Agency 18/2009, page 3522). The Federal Network Agency will take a decision ex officio on the assignment of the frequencies in the 900 MHz and 1800 MHz band with effect from 01 January 2017 before the current frequency usage rights in these bands expire. Contrary to the Chamber’s approach in the draft document for consultation, no option for an extension of the term is granted. Instead, the Federal Network Agency will decide in time, i. e. about three years before the current expiry date (31 December 2016), on the future assignment of frequency usage rights. The Chamber took special note of the outcome of the latest consultations. The outcome revealed that it is unlikely that current GSM network operators will soon need to flexibilise their frequency usage rights. In fact, it appears that the D network operators will fully use their frequency usage rights, especially those in the 900 MHz band, for GSM services for many years to come, probably until the date of expiry on 31 December 2016. The versions of Activities 2 and 3 presented for consultation were based on the Chamber’s expectation that new technologies such as UMTS or LTE would be deployed in the 900 MHz band in the short or medium term. To support these investments by regulatory means and to provide the necessary investment and planning security, the early specification of an appropriate time period would have been needed to allow for the depreciation of the investments. Since the expectation was

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not confirmed, there is no longer any need to retain the option of a term extension as envisaged in the draft document for consultation for implementing the regulatory aims. On the other hand, the consultation revealed that the E networks make an extension of the terms contingent upon the simultaneous redistribution or equal distribution of the 900 MHz spectrum. The reason for the prerequisite to the extension is the concern that a flexibilisation without redistribution could lead to competitive distortion in that only D network operators and not E network operators would be able to implement GSM and UMTS or LTE technology in parallel in the 900 MHz band. Since it appears likely that the D network operators will need all GSM channels for meeting customer demand for GSM services probably until the term expires or at least for many years to come, it is unlikely that this situation will arise. As long as the D networks use their 900 MHz frequencies exclusively for GSM and D network operators do not apply for flexibilisation as set out in Activity 2, no competitive distortion will arise - this is confirmed by the E network operators' declaration - which implies that during this period no redistribution is required, not from the E network operators' view either. The Chamber had already based its GSM concept on these scenarios. The Chamber is still convinced that the regulatory framework for GSM services established by the GSM concept serves the regulatory aim of ensuring fair competition and promoting telecommunications markets with sustainable competition as set out in section 2(2) para 2 TKG. As a consequence of the GSM concept all network operators not only have spectrum both in the 900 MHz and the 1800 MHz band but have also been granted the same period of validity until 31 December 2016. A revision of these regulatory framework conditions, especially frequency allotment and time limit, is deemed necessary by the Chamber when technically enhanced systems come into play. In its GSM concept, the Chamber stated the following (page 1854): „This GSM concept also foresees uniform, legal framework conditions for the offer of GSM services to the extent that the current frequency usage conditions for GSM services of the E networks apply to offers provided over frequencies in the 1800 MHz and in the 900 MHz band and that the expiration dates have been uniformly set for 31 December 2016, the expiration date of the E2 licence. In view of technological progress and the anticipated merging of the GSM and UMTS markets, however, revisions and possibly the flexibilisation of frequency usage conditions will be necessary not as late as 2016 but in the next few years.“ Against this backdrop, the Chamber has now planned that in the likely case that at least the D network operators use the 900 MHz spectrum for GSM services until the expiration date it will take a decision ex officio on the assignment of the frequencies in the bands 900 MHz and 1800 MHz with effect from 01 January 2017 before the current frequency usage rights in these bands expire. For when the usage rights expire, the Federal Network Agency will be obliged to decide on the assignment of the frequencies for a certain period of time following expiry. In a first assessment the Chamber believes that its main possibilities lie in an extension under section 55(8) TKG or a (new) frequency award under sections 55(9), 61 TKG. At any rate the Federal Network Agency will then have to decide on the issue of the competitive neutrality of the regulatory framework conditions. This applies both to an extension and to a frequency award. The Agency will in this case re-examine the possibility of redistribution or redeployment, which has been called for, under the conditions prevailing at that point in time. It will especially bear the regulatory aims in section 2(2) TKG in mind in both its legal assessment of any claims to extension that may have been filed and in its analysis of whether award proceedings need to be instituted. The Chamber considers it feasible that the balance between the regulatory aims of relevance in this matter may shift as a result of changes in the market. From the Chamber’s viewpoint, the questions relating to the issue are of a particularly complex nature and the decision to be taken is of paramount importance as it will have a substantial impact on the market. The Chamber plans to launch the work on this decision early on in order to place it on an appropriately sound and stable footing. It is currently assumed that the work should be completed at least two years prior to the expiry of today’s period of validity to

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guarantee the companies involved and all other stakeholders the necessary planning and investment security. Without prejudice to the above, the Chamber also had do make arrangements to be able to deal with a situation in which a frequency assignment holder wishes to make use of the flexibilised framework conditions, especially in the 900 MHz band, prior to expiry of the current time limit. The Chamber deems it likely that in such a case the application for flexibilisation will be accompanied by an application for an extension of the term beyond 31 December 2016. In view thereof, the following applies to the decision on an extension of the validity of a frequency assignment: According to section 55(8) sentence 1 of the TKG, frequencies are typically assigned for a limited period of use. An extension of the period of use is possible. According to the justification of the Act, in the case of an extension the provisions of the Act as well as any collateral clauses that may be attached to the assignments and the requirement to ensure workable competition must be observed (BT official document 15/2316, page 78 on section 53(8)). Hence in its decision on an extension applied for in conjunction with flexibilisation, the Federal Network Agency needs to bear not only the regulatory aim of encouraging efficient investments in infrastructure and promoting innovation in section 2(2) No. 3 TKG but especially the regulatory aim of ensuring fair competition and promoting telecommunications markets with sustainable competition as set forth in section 2(2) para 2 TKG in mind. Consequently, the Federal Network Agency needs to examine the impact on the applicant’s competitors in its decision on a frequency assignment holder’s application. In view of the investment security needed by a network operator, the Chamber expects that flexibilisation will be applied for in conjunction with a request for an extension which means it will have to assess the overall competitive situation of all network operators in its decision on the application. Since even if extension is only applied for by one company, the decision between extension or award may only be taken on a uniform and non-discriminatory basis covering all network operators in this band. For this reason an overall evaluation is paramount since an extension would have to be refused if the frequencies need to be awarded for legal reasons. With its GSM concept the Federal Network Agency has established the basis for this decision by assigning the same time limit to all frequency usage rights. The Federal Network Agency will have to decide on the redistribution or redeployment called for in some of the comments submitted under changed circumstances in this case as well and will then also have to deal with the issue of the competitive neutrality of the regulatory framework conditions. In this context the Federal Network Agency will also have to bear in mind that the current division of the spectrum in this band is based on the deployment of systems with 200-kHz channels. The flexibilisation pursued by the applicant is closely associated with the additional possibility of deploying broadband systems which as a result of harmonisation agreements are operated in frequency bands split up into 5 MHz blocks. It should be noted that the majority of the frequency blocks currently assigned to the network operators do not fit into a 5 MHz channel spacing. To ensure efficient frequency use in line with sections 52(1), 2(2) No. 7 TKG, the Federal Network Agency will therefore have to examine on the basis of harmonised frequency usage conditions how the frequency channels in these bands have to be spaced. These regulatory activities of a technical nature will also have to cover competitive-economic aspects. For these reason the Federal Network Agency will have to take a basic decision on the future mode of procedure in this frequency range before it takes a decision on a specific case, even if only one frequency assignment holder submits an application for extension. This means that as soon as a frequency assignment holder applies for an extension, the Agency will have to clarify the aforementioned regulatory issues in an open and transparent procedure in a consistent and non-discriminatory manner. As stated above in the first sentence on Activity 3, these issues are of a particularly complex nature and the decision to be taken is of paramount importance, having a substantial impact on the market.

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It is for these reasons that the Chamber will not take a decision at this point in time on an extension until 2030 as called for in some comments. As for the claim that the time limits may only be extended in the case of a redeployment or a spectrum cap of 2 x 17.5 MHz, the Chamber wishes to point out that these questions, as explained above, will be dealt with in time. The same applies to the request to restrict the extension to 2 x 8.6 MHz. Where the comments on the 9|18 discussion paper – and again in the course of the consultation on the draft of this decision – state that the Federal Network Agency would act inconsistently and in a discriminatory manner with respect to the issues of extending the existing frequency usage rights, this objection is clearly rejected by the Chamber. The comments state that the Federal Network Agency brings forth the opinion in legal proceedings that existing frequency usage rights cannot be extended in the event of flexibilisation after the end of the limited period of use and that the frequency allocation holders’ interest in an adequate period of time for any investments needed to be amortised cannot be considered. Contrary to the opinion of the respondents, the Federal Network Agency’s administrative practices are consistent and non-discriminatory in this regard as well. As mentioned earlier, the question whether there is a legally valid claim to an extension or whether usage rights need to be granted anew after expiry will be dealt with in a later decision. Without prejudice to the above, the Chamber wishes to point out the following. The issue of the WLL licences in the 2.6 GHz band raised by the respondents diverges considerably from the GSM licences. Whereas in the former case a peremptory time limit (Ausschlussfrist) was set from the very beginning, in the case of the GSM licences, the legal nature of the limitation is that of a set time period (Ordnungsfrist) (cf GSM concept, ordinance 88/2005, Official Gazette Federal Network Agency 23/2005, page 1852 [1867]). Some respondents claimed not to understand the difference between a peremptory time limit and a set time period. The Chamber wishes to point out that this differentiation complies with general legal principles. Whereas an extension is precluded in the case of a peremptory time limit, a set time period was merely chosen to be able to assess at the expiry of the period whether a continuation of the right accorded would still be consistent with the aims pursued. In the case of the frequencies awarded on the basis of Chamber decision BK1b-98/002 of 06 October 1998 for wireless local loops using point-to-multipoint radio relay, the period of use of the frequencies in the range 2540 MHz to 2670 MHz initially expired at the end of 2007 as this frequency range would possibly be earmarked as UMTS extension band from 2008. This limitation which has meanwhile expired was a peremptory time limit which was to ensure that the Community-wide introduction of 3rd generation mobile communications and the extension bands, especially the 2.6 GHz band, envisaged for this technology – as foreseen at the time of the decision on 06 October 1998 - would not be hindered by any contradictory rights. An extension which would not be in line with this development was precluded. One of the reasons for this limitation was decision No. 128/1999/EC of the European Parliament and of the Council of 14 December 1998 on the coordinated introduction of a third-generation mobile and wireless communications system (UMTS) in the Community (Official Journal European Union No. L 17 of 22 January 1999, page 14 ; can be downloaded at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1999:017:0001:0007:DE:PDF). Under the time scale pursued in accordance with Art. 5(2) of this decision in conjunction with Annex II of decision No. 128/1999/EC, starting in February 1999 mandates would be issued to the CEPT for allocating further spectrum for UMTS. On 26 July 1999 the European Commission issued a mandate to the CEPT concerning the development of a common plan for identifying further spectrum for a third-generation terrestrial, mobile and wireless communications system in the Community (known as Mandate 3; can be downloaded in English at http://ec.europa.eu/information_society/policy/ecomm/radio_spectrum/_document_storage/mand ates/lc_15_99_mandate3.pdf). This mandate culminated in a European Common Proposal

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(ECP) for World Radio Conference 2000 (WEC-00). This ECP formed the basis for Resolution 223 of WRC-00 and the inclusion of 5.384A in the Radio Regulations in which frequencies inter alia in the 2500 MHz to 2690 MHz band were identified as UMTS extension band. The candidate status of the 2.6 GHz band as UMTS extension band was known at the time of drafting decision No. 128/1999/EC and taken into account by the Chamber in its decision of 06 October 1998. By precluding an extension the Chamber made sure that the frequencies would be available as UMTS extension spectrum. Some respondents do not appear to realise that the reservation as UMTS extension spectrum has not been rendered obsolete by the technology and service neutrality prescribed by Community law. The use of the term ‘service’ in this context does not refer to the radiocommunications services as is customary in connection with allocations at international and national level but to the telecommunications services differentiated at application level such as the voice telephony service, data transmission service or telegram service. Community law merely stipulates that specific applications may not be excluded. Not precluded is the specification of the frequency usage conditions derived from the allocation to services which are needed not least for cross-border coordination. Hence the aforementioned decision 477/2008/EC lists technical parameters in its Annex which have been derived from the allocation of these frequencies to the mobile service. Against this backdrop, frequency usage rights based on frequency usage parameters specified in connection with the allocation to the fixed service may not be quasi extended to mobile allocation. Activity 4 The Federal Network Agency will flexibilise UMTS/IMT frequency usage rights in the 2 GHz band upon application as quickly as possible.

The following issues were raised: The proposed flexibilisation of the UMTS/IMT-2000 frequency usage rights was welcomed in all comments on this activity. The endorsement is largely based on the fact that it supports the technology and service-neutral award of frequencies. In this connection mention is also made of the fact that the flexibilisation should be based on the frequency usage conditions, including the channelling scheme, harmonised by the CEPT on a pan-European scale. This appears even more important since flexibilisation of the 2 GHz band within the framework of the WAPECS concept aims at eliminating the restriction to IMT technologies. Some respondents suggested that the frequency usage rights be restricted to FDD systems. Such a determination would not violate technology neutrality because all technologies would still be permissible if they used this duplex scheme. Others, on the other hand, called for the market participants to be able to divide the spectrum into paired and unpaired spectrum to ensure adequate possibilities for access to spectrum by the new technologies based on OFDMA, such as WiMAX. It was also stated that it was assumed that it would not be permitted for flexibilisation to impair existing uses or for existing usage rights to be restricted. It was also noted that the draft contained no information on the implementation measures deemed necessary by the Federal Network Agency for flexibilisation. Concluding, it was recommended that the UMTS licences should also be extended until 31 December 2025. At 2 GHz further frequencies will be awarded (cf procedure BK1a-09/002) which should likewise be assigned until this date. Towards the end of a period of validity there is a greater risk of impeding investments in new technologies as there was the danger that the

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technology could not be depreciated. If a party having acquired ‘new’ frequencies had planning security covering a period until the end of 2025 whereas the competitor and holder of a UMTS licence had to bear the risk that the usage right would already expire in 2020, this would give the owners of the new frequencies a competitive advantage. The Chamber has come to the following conclusion: The existing UMTS/IMT 200 frequency usage rights are not restricted to the UMTS standard. At the same time, however, the systems that may be used are defined unnecessarily as only technology from the IMT family can be used. To implement the WAPECS concept and achieve the regulatory targets specified in section 2 (2) TKG, this commitment to technology from the IMT family will be abolished upon application by the frequency assignment holders. Some respondents stated that the Chamber did not provide any information on the actual implementation measures. The Chamber wishes to point out that to begin with, all companies concerned will be notified of this decision. They will be informed that they are entitled to submit an application for a modification of their frequency assignment forthwith. Upon receipt of such an application the Federal Network Agency will cancel the restriction to technologies from the IMT family. A restriction to FDD systems, as suggested by some respondents, is deemed not possible by the Federal Network Agency for legal reasons but would at any rate be inexpedient at this point in time due to a pending decision by the Commission. For the time being the principle in section 1 TKG applies according to which the regulatory measures taken by the Federal Network Agency must be technology neutral. Unless there are good reasons for regulating technical systems differently, non-discriminatory treatment must be abided by. The scope of the technology neutrality principle also covers duplex schemes. Since in this case there seem to be no reason for excluding a particular duplex scheme – nor were such requests made in any of the comments presented -, the Chamber sees no need for such an exclusion. It is worth noting in this connection that the request for a restriction to FDD was not made by an existing frequency user but by a manufacturer. However, in view of the technical specifications expected from the European Commission the Chamber presently sees no reason for a restriction to FDD. In June 2009 the European Commission issued a mandate concerning the 2 GHz range to the CEPT on the basis of the Radio Spectrum Decision. Under this mandate, technical minimum requirements (block edge masks) similar to those for the 2.6 GHz band under the Commission’s decision 2008/477/EC of 13 June 2008 on the harmonisation of the frequency band 2500 MHz to 2690 MHz for terrestrial systems capable of providing electronic communications system in the Community (Official Journal European Union No. L 163 of 24 June 2008, page 37) are to be made available for the 2 GHz range by June 2010. It is assumed that following the CEPT’s response to this mandate, activities will be defined and declared mandatory by a Commission decision which will necessitate a modification of the frequency usage conditions for the 2 GHz range. Some respondents emphasized that dividing the spectrum into paired and unpaired spectrum should be left to the market players. The Chamber wishes to point out that to ensure efficient and interference-free use, it may be expedient to specify the duplex ranges within a regulatory framework. Such specifications, which are harmonised at international level or within the European Community, are drawn up in the course of a procedure which permits participation in their evolution. The Chamber therefore deems it appropriate to transpose internationally agreed band plans at national level but at the same time not to preclude – where possible from a technical viewpoint - the use of paired and unpaired spectrum provided that no detrimental interference is caused to neighbouring frequency users. Flexibilisation of existing frequency usage rights will be undertaken in such a way that existing uses will not be impaired. It is also not the Federal Network Agency’s intention to curtail

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frequency rights entitled to retain their status quo. On the contrary, flexibilisation will extend rights since unnecessary commitments are abolished. The Chamber does not consider it necessary to take a decision on an extension of the time limit at this point in time. At present, the licences protected according to section 150 (3) and (4) TKG are limited until 31 December 2020. Thus, a remaining licence term of around 10 years is still available. The remaining licence term, together with the consequences resulting from the flexibilisation of the UMTS/IMT 2000 licenses, is sufficient for the licensees. Contrary to the investment volumes associated with medium to long-term transfer of GSM networks, a period of more than 10 years seems to be adequate for the investments to pay off and reasonable in terms of planning and investment security for the companies concerned. Irrespective of this, the Chamber considered – to ensure comparability of the regulatory framework conditions in each frequency band (in this case the 2 GHz band) - aligning the expiration dates for the existing rights with the licence terms for the rights to be awarded in procedure BK 1a-09/002. However, the Chamber came to the conclusion that this decision is not yet due some 10 years before expiry of the currently valid licence term and that regulatory scope for development would be unnecessarily restricted at an inopportune time. In some of the comments presented on the draft of this decision the suggestion was made that the UMTS licences be extended at least until 2025. The Chamber wishes to point out that the Federal Network Agency will address the issue of an extension in time before expiry of the current time limit. Affected companies are also entitled to submit an application for extension under section 55 (8) TKG. The Chamber upholds the view that a decision at this point in time would be premature. Existing UMTS licensees still have ten years left to them. The period is deemed long enough for making informed decisions on investments. A competitive distortion visà-vis those companies acquiring usage rights in the 2 GHz band extending until 2025 in the award proceedings BK1a-09/002 is not deemed to exist because these frequency usage rights will have been acquired at a later point in time.

Activity 5 The Federal Network Agency will flexibilise frequency usage rights for wideband private mobile communications/trunked radio in the frequency band 450 MHz upon application as quickly as possible.

The following issues were raised: A large majority welcomed the proposed flexibilisation of the frequency usage rights for wideband private mobile communications/trunked radio in the 450 MHz frequency band. The endorsement is largely based on the fact that it supports the technology and service-neutral award of frequencies. It was also pointed out that the frequencies in this band are well-suited to providing a contribution to nationwide broadband coverage which, however, is rendered much more difficult by the current restriction to private mobile communications and trunked radio. One respondent stated that in endorsing the matter he assumed it would not be permitted for existing uses to be impaired by the flexibilisation or that existing usage rights be restricted in any way.

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Another respondent urged that the market participants be allowed to divide the spectrum into paired and unpaired spectrum to ensure adequate possibilities for access to spectrum by the new technologies based on OFDMA, such as WiMAX. Concluding, some respondents noted that the draft provided no information on the exact implementation measured deemed necessary by the Federal Network Agency for flexibilisation. One respondent pointed out that the flexibilisation of these frequencies could affect neighbouring frequency uses.

More specifically, Activity 5 would affect the following railway radio frequencies: 

Band H

457.425 MHz - 458.300 MHz



Band I

467.425 MHz - 468.300 MHz



Band L

419.730; 419.770 and 419.790 MHz (20 kHz channel spacing)

The respondent hence requested that interference-free frequency use be ensured so that operational requirements under railway legislation may be complied with. The security relevance of the railway radio services and the specific linear topology of the railway radiowave propagation area necessitate a higher coverage quality level (quasi-permanent connection), a feature to be taken into account in co-existence analyses. The respondent emphasized the Federal Network Agency’s obligation to ensure interferencefree frequency use. This obligation derives not only from the TKG but from international regulations such as the ITU Radio Regulations as well. The question as to which frequency ranges could cause interference to railway radio applications also depends on the radio technologies deployed, especially bandwidth, duplex scheme, RF and antenna characteristics, air interface and protocols, and on operational behaviour. The term “neighbouring” hence will probably not only relate to adjacent frequency bands but should be deemed to cover all frequency ranges potentially likely to cause interference to each other. In view of this situation, the respondent suggested that legal measures ensuring the interference-free operation of railway radio applications such as mandatory coordination, possibly involving restrictions as to choice of location, transmitting power or the transmit characteristic (RF or antenna characteristic), be taken into consideration. The Chamber has come to the following conclusion: The current frequency assignments for wideband private mobile communications/trunked radio in the frequency band 450 MHz are not restricted to the use of specific technologies. However, the purpose of use determined pursuant to section 55 (1) sentence 3 TKG implies that frequencies may be used solely for wideband private mobile communications/trunked radio. To implement the WAPECS concept and to achieve the regulatory targets specified in section 2 (2) TKG, this restriction on the intended use to solely wideband private mobile communications/trunked radio will be abolished in favour of wireless access for the offer of telecommunications services upon application by the frequency assignment holders. Some respondents stated that the Chamber did not provide any information on the actual implementation measures. The Chamber wishes to point out that to begin with, all companies concerned will be notified of this decision. They will be informed that they are entitled to submit an application for a modification of their frequency assignment forthwith. Upon receipt of such an

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application the Federal Network Agency will change the purpose of use in the frequency assignment to wireless access for the offer of telecommunications services. Flexibilisation of existing frequency usage rights will be undertaken in such a way that existing uses will not be impaired. It is also not the Federal Network Agency’s intention to curtail frequency rights entitled to retain their status quo. On the contrary, flexibilisation will extend rights since unnecessary commitments are abolished. The Chamber is further of the opinion that the protection rights of those parties using frequencies dedicated to applications of public railways will not be affected by the flexibilisation. The technical parameters are not changed by the flexibilisation, the purpose limitation of the frequency assignments in terms of section 55 (1) sentence 3 TKG will merely be changed from wideband private mobile communications/trunked radio to wireless access for the offer of telecommunications services. As far as the comments on provisions in the Radio Regulations are concerned, reference is made to the relevant statements on Activity 2. Some respondents emphasized that dividing the spectrum into paired and unpaired spectrum should be left to the market players. The Chamber wishes to point out that to ensure efficient and interference-free use, it may be expedient to specify the duplex ranges within a regulatory framework. Such specifications, which are harmonised at international level or within the European Community, are drawn up in the course of a procedure which permits participation in their evolution. The Chamber therefore deems it appropriate to transpose internationally agreed band plans at national level but at the same time not to preclude – where possible from a technical viewpoint – the use of paired and unpaired spectrum provided that no detrimental interference is caused to neighbouring frequency users. Nor does the Chamber consider it necessary in this flexibilisation instance to make a decision on extending the licence term just now in this regard either. The existing frequency usage rights remain valid until 31 December 2020. The remaining licence term is considered adequate for exercising the frequency usage rights granted. Reference is made to the considerations on which Activity 4 is based for further justification. Flexibilisation of the existing usage rights is to be provided regardless of the possibility of the Federal Network Agency taking administrative measures in individual instances to implement the frequency order. The intended flexibilisation is rather associated with the expectation that the legal obligation to use the frequencies assigned is met immediately in line with the purpose associated with the assignment. Activity 6 The Federal Network Agency will flexibilise frequency usage rights for broadband wireless access (BWA) in the band 3.5 GHz upon application as quickly as possible.

The following issues were raised: A large majority welcomed the proposed flexibilisation of the BWA frequency usage rights in the range 3.4 GHz to 3.6 GHz. The primary reason given is European harmonisation toward a technology and application neutral award of frequencies (WAPECS concept). In other European countries this spectrum had meanwhile been awarded also for mobile use. With regard to the frequency range around 3.5 GHz, it was pointed out that flexibilisation should also allow for the use of future, innovative, mobile terrestrial radio technologies such as LTEAdvanced with other and much broader channel bandwidths since the band 3.4 GHz to 3.8 GHz is not just of interest to BWA services in the short term but will also be of considerable importance to IMT-Advanced in the long term.

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In some cases the request was made that in line with the results from WRC-2007 and also Commission decision 2008/411/EC the frequency range 3.4 GHz to 3.8 GHz be envisaged primarily and to an increasing extent for terrestrial mobile use. It was also requested that market participants be entitled to divide the spectrum into paired and unpaired spectrum to ensure adequate possibilities for spectrum access for the new technologies based on OFDMA, such as WiMAX. It was also noted that the draft did not provide any information on the actual implementation measures deemed necessary by the Federal Network Agency for flexibilisation. Concluding, two respondents pointed out that the mobile uses evolving from flexibilisation may not cause any interference to existing and future satellite service applications. Satellite operators in Europe are concerned about the Federal Network Agency’s intention to flexibilise the 3.5 GHz band and open it up for mobile applications. The C band is being used for worldwide satellite communications services. Moreover, new systems are being developed for this band. The operators fear that the introduction of closely meshed BWA systems with high transmitting powers could lead to incompatibilities between the BWA and satellite systems. This is claimed to apply especially to the German earth stations in Fuchsheim and Leeheim. It was also demanded that the earth station in Fuchsheim be able to communicate without interference with S band satellites in the frequency range 1550 MHz – 5200 MHz should this be required at a later point in time. The Federal Network Agency was called upon to bear ITU and CEPT documents in mind when determining protective measures for earth stations. The expectation was also voiced that the Federal Network Agency take care of international coordination requirements of earth stations not located on federal territory. This should also entail a cooperation agreement with neighbouring frequency administrations. The Chamber has come to the following conclusion: The frequencies for Broadband Wireless Access (BWA) have been assigned according to the formerly applicable Frequency Usage Plan. According to the Frequency Usage Plan (as of: May 2006) frequencies were dedicated to fixed link radio as part of the allocation to the fixed radiocommunication service. The decision of the Chamber in procedure BK 1-05/008 was based upon these legal requirements (cf Ordinance 42/2006, Official Gazette Federal Network Agency 20/2006, page 2051 [3084]). As a result, this restriction affects the frequency usage rights assigned. This follows from section 55 (1) sentence 3, (5) sentence 1 para 1 TKG. Nevertheless, it was clear at the time of the above mentioned Chamber decision that the intention was to abolish the usage restrictions that are no longer required as part of the flexibilisation of frequency regulation. With its decision BK 1-05/008, the Chamber provided as follows (cf Ordinance 42/2006, Official Gazette Federal Network Agency 20/2006, page 2051 [3084]):

The Frequency Usage Plan has to be taken into consideration when determining the objectively relevant market according to section 61(4) sentence 2 para 2 TKG. The current Frequency Usage Plan only permits usage for the fixed radio communication service in the relevant frequency band so that the use of frequencies is restricted to this. However, it can already be foreseen that developments in this sector are aimed not only at portable but also mobile applications and that the market for broadband wireless access will expand accordingly. It is therefore intended to extend the use of frequencies to mobile applications as soon as possible in line with legal requirements to ensure an adequate and long-term planning basis for all parties concerned with regard to possible frequency uses.

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The allocation of frequencies in the band 3.4 GHz to 3.6 GHz to the mobile radiocommunication service means that the National Table of Frequency Allocations has been adjusted as necessary (cf above on C. VI.). In addition, the Federal Network Agency has completed the required amendment of the Frequency Usage Plan. Following completion of the plan modification procedure (cf ordinance 33/2009, Official Gazette Federal Network Agency 15/2009, page 2985), the frequency bands concerned are now dedicated to wireless access for the offer of telecommunications services. Hence the second condition for making frequency usage rights more flexible is met. Upon application by the frequency assignment holders the Federal Network Agency will initiate the required steps to align the existing frequency assignments with the more flexible requirements of the frequency plans. In addition to opening up the usage purpose, slight adjustments are to be made to the frequency usage conditions. Some respondents stated that the Chamber did not provide any information on the actual implementation measures. The Chamber wishes to point out that to begin with, all companies concerned will be notified of this decision. They will be informed that they are entitled to submit an application for a modification of their frequency assignment forthwith. The changes to the usage rights will be made as soon as possible after receipt of such an application. The frequency usage rights will be flexibilised in such a way that any technology can be deployed provided it complies with the relevant technical parameters. Hence it is basically conceivable that LTE and IMT systems may also be used. Insofar as wider channel bandwidths are rendered technically possible – an issue raised by some respondents -, the Chamber wishes to point out that the Federal Network Agency bases its frequency usage rights in principle on the frequency usage conditions, especially channel arrangements and block edge masks, harmonised at international level or within the European Community. Until such plans become available for LTE-Advanced and IMT-Advanced for the frequency band concerned, they cannot be incorporated in the revised frequency usage conditions. In the course of the activities at plan level preparatory to the flexibilisation of the frequencies at 3.5 GHz, the results of WRC-07 and decision 2008/411/EC were transposed into national law. Contrary to the request made in some of the comments presented, no priority has been given to terrestrial mobile use. Such a step would not be technology-neutral and in the opinion of the Chamber would constitute a violation of decision 2008/411/EC, especially Art. 3 of that decision. For purposes of clarification the Chamber wishes to point out that the frequencies from 3660 MHz to 3800 MHz – which are also covered by the decision 2008/411/EC – are not affected by this decision since there are no frequency usage rights in that range that could be flexibilised (see also A above). There, flexible frequency assignments are possible. As already announced, the Federal Network Agency will adapt the rules published in ordinance 1/2009, Official Gazette 3/2009, page 527, on the assignment of frequencies and the conditions of use for frequencies in the range 3600 MHz to 3800 MHz for the implementation of broadband wireless access to the revised version of the Frequency Usage Plan as soon as possible. Some respondents emphasized that dividing the spectrum into paired and unpaired spectrum should be left to the market players. The Chamber wishes to point out that to ensure efficient and interference-free use, it may be expedient to specify the duplex ranges within a regulatory framework. Such specifications, which are harmonised at international level or within the European Community, are drawn up in the course of a procedure which permits participation in their evolution. The Chamber therefore deems it appropriate to transpose internationally agreed band plans at national level but at the same time not to preclude – where possible from a technical viewpoint – the use of paired and unpaired spectrum provided that no detrimental interference is caused to neighbouring frequency users.

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A decision on extending the current expiration dates beyond 31 December 2021 is not required at the present time. The award procedure as well as the frequency assignment procedure were based upon the initial restriction of usage options and the later flexibilisation described herein. This procedure was rendered transparent by the Federal Network Agency right from the outset and has been known to the frequency assignment holders since that time. In addition, the frequency usage rights can still be exercised for over 10 years. This remaining period is adequate and reasonable for planning and investment decisions. Reference is made to the considerations on which Activity 4 is based for further justification. Flexibilisation of the existing usage rights is to be provided regardless of the possibility of the Federal Network Agency taking administrative measures in individual instances to implement the frequency order. The intended flexibilisation is rather associated with the expectation that the legal obligation to use the frequencies assigned is met immediately in line with the purpose associated with the assignment. Some respondents pointed out that the flexibilisation of the frequency usage rights in the range 3400 MHz to 3600 MHz may not cause interference to the satellite service. In this connection the Chamber wishes to point out the following. The frequency range 3400 MHz to 4200 MHz is earmarked in the Frequency Band Allocation Table Ordinance for the fixed satellite service (direction Space – Earth) and other services. According to the provisions in the Frequency Usage Plan, no frequency use by the fixed satellite service is planned for the frequency sub-range 3400 MHz to 3600 MHz (3.5 GHz range) in Germany. These frequencies were already used in 1998 throughout the country for point-tomultipoint radio relay for local loops. In 2006 the frequencies were awarded for wireless access after a public consultation (BK1-05/008). According to the Frequency Usage Plan, the frequency sub-range 3600 MHz to 3800 MHz will no longer be fully available to the fixed satellite service after the introduction of BWA. However, existing and coordinated receiving installations of the fixed satellite service enjoy protection. In single cases new installation are possible, especially at existing sites. For the protection of existing and coordinated receiving installations of the fixed satellite service against interference from BWA transmitters the compatibility analyses drawn up within the ITU and the CEPT will be observed, especially with regard to the findings described in ECC Report 100. The calculation methods which will be applied to the individual cases take the technical parameters and antenna configurations at the sites of the earth stations to be protected and at the sites of the planned BWA transmitters into account. Co-channel or adjacent channel operation of the BWA stations and the earth stations is also taken into account. The Federal Network Agency is of the opinion that the calculation method taken as a basis also guarantees that the deployment of mobile BWA transmitters will not cause any interference to the earth stations. In the international frequency coordination of the BWA transmitters due consideration will be given to the coordination agreements with neighbouring countries.

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The frequency range 3800 MHz to 4200 MHz is available in Germany for the fixed satellite service. In this frequency range, international frequency coordination follows the procedures in the Radio Regulations (Annexes 9 and 11). National frequency coordination ensures the compatibility between the earth stations and the fixed satellite service applications operated in this frequency range. Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway President's Chamber

Dr. Henseler-Unger Assessor

Bonn, 12.10.2009

Kurth Chairman

Kindler Assessor