Toothless German regulator capitulates during 4G coverage review

German telco regulator, Bundesnetzagentur, is seemingly searching for its dentures as it lets all three mobile network operators escape punishment for missing coverage obligation deadlines.

While many regulatory authorities might choose to punish telcos for missing coverage obligations, Germany’s Bundesnetzagentur is perhaps offering some colour as to why the country lags behind others in terms of connectivity benchmarking. All three failed to meet commitments made to the regulator in 2015 but have been afforded the opportunity to correct mistakes by the end of 2020.

A regulatory enforcer who does not dish out punishments when telcos fail to meet obligations is as useful as a chocolate teapot in a Saharan Quidditch match.

“Our primary goal remains to ensure that the coverage of mobile broadband is moving forward,” said Jochen Homann, President of Bundesnetzagentur. “We want to see verifiable improvements over the next few months that will ensure that the requirements are fully met by the end of the year. This expressly includes that we may impose fines and fines if necessary.”

A fine might be directed towards the telcos in the future, but that is not the point. If you give these companies an inch, they will take a mile. If this deadline was not actually a deadline, what was it?

This relaxed attitude towards enforcement of obligations perhaps explains why Germany is seen as a laggard in the connectivity stakes.

Looking at OpenSignal’s 4G coverage data, Germany is one of the poorest performing European nations with geographical coverage of 76.9%. These estimates are slightly dated, but the rankings would not have changed that dramatically. But it would be unfair to reserve all the criticism for the MNOs when the broadband service providers are similarly sloppy.

According to the latest estimates from the FTTH Council Europe, Germany has only connected 3.4% of homes to full-fibre broadband, which is only set to increase to 24.8% by 2025. To demonstrate the performance of Germany to date, the UK currently has a higher percentage of full-fibre homes. Being behind the UK today is a pretty embarrassing place to be.

Coverage maps and data does not give the complete picture for a measure on how developed a country’s digital society and economy is, but it is a useful yardstick. As a more traditional country, it would surprise few Germany has been slow to evolve, however when you add into the mix a regulator which does not run a tight ship, it starts to become more obvious as to why.

These telcos are pursuing profits, therefore the urban environments will be favoured in the ROI chase. The regulators have to force telcos to provide connectivity in the most sparsely populated areas, as few telcos care about farmer John or dog walker Jane. This is where Bundesnetzagentur is failing as a regulator; it is not holding the telcos accountable, instead it added some extra slack to the leash.

In the review, Telefónica failed to meet requirements in all 13 federal states and only got to 80% coverage on major transport links. Deutsche Telekom missed the requirements in three states and failed to meet the obligations for main traffic routes with 97% coverage for motorways and 96% for the railways. Vodafone fell short of expectations in four states, while coverage of 96% for motorways and 95% for railways are below the coverage requirement.

The obligations which were agreed were 98% 4G coverage of households nationwide and 97% of households in each federal state with minimum download speeds of 50 Mbps. In addition, all major transport routes would have to be fully covered.

Although some might suggest these obligations were too high, the telcos did have five years to meet the expectations, and they agreed to them in the first place.

Telcos and regulators have to have a working relationship. Collaboration is a buzzword, but it is perfectly suitable and should be appreciated by all markets. However, there also needs to be a bit of fear to ensure the dynamic works effectively. The regulator is a watchdog, not an industry partner, and the prospect of swift and measured punishment needs to be a realistic possibility.

A self-regulating industry almost always fails in some way or another, and that is effectively what situation is created when you have a toothless regulator.