Germany probes 1&1 claim against Vodafone

Germany’s Federal Cartel Office is looking at whether Vodafone, through its Vantage Towers unit, has broken competition law by effectively blocking rival 1&1’s 5G network rollout.

The Bundeskartellamt is acting following a complaint to that end from 1&1. The telco, which is working to become a credible fourth MNO in Germany, claims that Vantage Towers is impeding its rollout by failing to provide access to its sites as per a contract between them. The regulator will now examine whether Vodafone or Vantage has violated German or EU competition law through its actions.

“It is clear that to develop its own mobile phone network a company has to make high investments and take entrepreneurial risks when taking such a step. It is a key task of competition law to set fair rules of play for companies’ business practices,” said Andreas Mundt, President of the Bundeskartellamt, when announcing the investigation.

“Powerful and dominant companies must not unfairly impede other companies. We will therefore scrutinise whether there are sound reasons for a delay in the provision of antenna locations for 1&1,” Mundt said.

On the face of it, the evidence looks pretty damning – 1&1 has the use of hardly any Vantage sites – but the key element of the investigation will be as Mundt stated: whether the passive infrastructure specialist has good reasons for its actions.

In late 2021 1&1 contracted Vantage Towers to supply 3,800 sites by the end of 2025, possibly rising to a total of 5,000, in a deal valued at “in the high three-digit to lower four-digit million euro range,” according to Vantage.

The companies did not share details of any interim targets between the inking of the deal and end-2025, but under the terms of its spectrum licences, secured in 2019, 1&1 was required to roll out 1,000 5G sites by the end of last year, amongst other obligations. The towers company admitted it could not meet its customer’s year-end target during the course of last year, and 1&1 named and shamed Vantage in September, describing it as an obstacle to its network rollout.

In the end, 1&1 managed just five operational 5G sites by end-2022, some of which were supplied by Vantage, it said. To rub salt into the wound, Vodafone’s German unit had 1,600 5G antenna sites based on Vantage Towers infrastructure at the same date, 1&1 was keen to point out earlier this year, when it lodged its complaint with the Bundeskartellamt.

In that complaint it explained that Vantage had presented a new rollout schedule at the end of last year, but had once again reneged on it, informing its client that it would not meet its new targets and that further delays would ensue. The first quarter of 2023 in particular would see the new expansion goals missed by “a wide margin,” 1&1 said.

It did not disclose any reason from Vantage – presuming it had one or more – for the latest delay. But it made it clear that it was now treating the issue as a deliberate move to block its 5G rollout.

“An end to Vodafone’s preferential treatment of Vantage Towers’ roll-out activities for Vodafone at the expense of 1&1’s network roll-out thus still does not appear to be in sight,” it said.

Whether there really is preferential treatment going on will be for the Bundeskartellamt to decide.

The fact that Vodafone Germany has so many more active sites on Vantage’s network than it has supplied to 1&1 really does not look good, but those figures alone do not serve as proof that foul play is afoot.

That said, clearly there is no issue with the sites themselves, so Vodafone and Vantage will have some explaining to do as to why they have been unwilling or unable to hook 1&1 up.

In the meantime, the Federal Cartel Office’s investigation does not preclude 1&1 from regulatory sanction for failing to meet the rollout targets outlined in its licences. Telecoms regulator the Bundesnetzagentur is still looking at the possibility of fining 1&1 for not reaching that 1,000 sites target, and as yet we don’t know when it is likely to make a call.

One way or another, there are a few telecoms companies potentially on the receiving end of censure in Germany.

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