Major regulatory decisions

Our business activities are largely subject to national, European, and U.S. regulation, which is associated with extensive powers to intervene in our product design and pricing, particularly in Europe. We were still subject to extensive regulation in our mobile and fixed-network businesses in 2022.

Regulation

European roaming regulation. July 1, 2022 marked the entry into force of the new Roaming Regulation for the European Union, which expands and extends the existing Roaming Regulation until 2032. The Roam like at Home principle introduced in 2017, initially for a period of five years, which allows consumers to make calls at domestic terms and conditions and use data volumes within the European Union, will now apply for a further ten years. New rules were also added on transparency, and the new regulation will ensure that the quality of roaming services is not lower than mobile services at home. New, lower price caps through 2031 were set for inter-operator tariffs for corresponding wholesale services, to be re-examined in 2024/2025. Steps to tighten regulation on voice calling and text messaging (SMS) between EU member states that had been discussed earlier were not included in the final regulation.

Approval of rates for copper-based wholesale services in Germany for 10 years. The Bundesnetzagentur published its final ruling on June 28, 2022, setting out the rates for unbundled local loop lines (ULLs) for the period from July 2022 to June 2032, for the first time for a period of 10 years. Starting July 1, 2022, a rate of EUR 10.65/month applies for the (longer) copper line section between the end customer and the main distribution frame in the Telekom building and of EUR 6.92/month for the (shorter) copper line section between the end customer and the cable distribution box on the street. These rates are to increase by 4 % as of July 1, 2027 to EUR 11.08/month and EUR 7.20/month, respectively.

Bundesnetzagentur’s decision on access regulation including FTTB/H network access. On July 21, 2022, the Bundesnetzagentur published its decision on the future regulation of access to Deutsche Telekom’s copper and fiber-optic network. The decision was preceded by consultations held at national and international level. Existing regulation of FTTB/H networks will be eased, by putting an end to “ex ante” and access regulation in the future. Non-discriminatory access will instead be secured under the Equivalence of Input (EoI) principle enshrined in the new Telecommunications Act (Telekommunikationsgesetz – TKG). Under the new system, wholesalers would have access to the same material and human resources as Deutsche Telekom’s sales teams. The Bundesnetzagentur will further abolish the traditional “ex ante” regulation of layer 2 (VDSL) products and tie charges to a notification obligation. The commitment agreements agreed through the end of 2031 have been examined in more detail and have passed the replicability test. The decision also includes the requirement for Deutsche Telekom to grant access to ducts and poles. The specific access conditions will be determined in subsequent proceedings.

Adoption of the Federal Government’s Digital Strategy. On August 31, 2022, the Federal Cabinet of Germany adopted the Federal Government’s Digital Strategy 2025. The strategy brings together the key policy areas for the cross-cutting topic of digitalization and prioritizes the implementation of projects that are expected to unlock the greatest potential when it comes to advancing digitalization. One of its goals is to digitalize all public and healthcare services by 2025. A modern legal framework is also planned, which will support the development of the data economy and improve the use of data through connected virtual data rooms. The Gigabit Strategy adopted on July 13, 2022 plays a central role, promising greater speeds and improved framework conditions for building out the networks. The aim is to achieve nationwide coverage with fiber to the home (FTTH) and the latest-generation mobile communications standard by 2030. Specific action includes the introduction of expedited approval processes, the more widespread use of alternative cable-laying technologies, and the creation of a central information database (Gigabit-Grundbuch) that will improve transparency on the availability of infrastructure that can be shared. The federal states and municipalities play a key role in the implementation of these measures. A new Advisory Board for the Digital Strategy of Germany has been set up to provide monitoring and support. With the expertise of the Advisory Board and with the help of a database, the 135 targets of the Digital Strategy are to be continuously assessed in terms of progress and the need for change. The Federal Government has also announced an international digitalization strategy, which is expected in the next year.

Ongoing court case on the approval under merger control law for the joint venture Glasfaser NordWest. Telekom Deutschland and EWE founded the joint venture Glasfaser NordWest in 2020. The aim of the joint venture is to provide up to 1.5 million households and business locations with fast internet. On September 22, 2021, Düsseldorf Higher Regional Court overturned the approval granted by the Federal Cartel Office (Bundeskartellamt) under merger control law. The Bundeskartellamt, EWE, and Telekom Deutschland have each lodged a complaint against the decision of the Düsseldorf Higher Regional Court to not allow an appeal. The Federal Court of Justice has not yet ruled on these complaints. If the Düsseldorf Higher Regional Court’s decision becomes final, the case will be referred back to the Bundeskartellamt for a new decision on approval and any further conditions. The joint venture can continue building out FTTH until the Bundeskartellamt decides otherwise.

Spectrum

In the United States, the assignment phase of Auction 110 ended on January 4, 2022. In this auction, the U.S. Federal Communications Commission (FCC) allocated a total of 100 MHz in the 3,450 to 3,550 MHz band. T‑Mobile US paid USD 2.9 billion (EUR 2.6 billion) to secure itself a total of 199 licenses. The bidding phase of FCC Auction 108 in the United States ended on August 29, 2022, whereupon T‑Mobile US was awarded a further 7,000 2.5 GHz licenses for which it paid a total of around USD 0.3 billion (EUR 0.3 billion). The U.S. Federal Communications Commission has not yet granted the licenses acquired at the auction. In the first quarter of 2022, OTE successfully participated in the auction for frequencies in the 430 MHz band in Greece, securing spectrum for around EUR 1.2 million. In Slovakia, the 3.x GHz auction was brought to a successful conclusion in May 2022, with Slovak Telekom securing 100 MHz for EUR 16 million. The four established mobile network operators agreed to a reshuffling of the 1,800 MHz band, which means they can each now use 2 x 20 MHz blocks of contiguous spectrum. In connection with the reshuffle, the spectrum licenses were extended for 15 years for a fee of EUR 8.9 million per network operator. In Poland, the extension of the 2,100 MHz licenses has been completed and the new licenses were sent out on October 11, 2022. In November 2022, Romania awarded 5G spectrum in the 700 MHz, 1,500 MHz, 2,600 MHz, and 3,400 to 3,800 MHz bands. Telekom Romania Mobile Communications did not participate in the auction. The usage rights in the 2,100 MHz band were also extended in the Czech Republic in December 2022.

The regulatory authority in Croatia opened the bidding phase of the multi-band auction on January 17, 2023. On December 20, 2022, the Polish regulatory authority UKE published a draft award procedure for the 3,400 to 3,800 MHz band, kicking off the procedure, which had hitherto been held up by an ongoing legislative process, and which is now expected to be completed in the first half of 2023. Awards for the 700/800 MHz and 26,000 MHz bands could follow in 2023. In the Czech Republic, the procedure to extend the 900/1,800 MHz GSM license, which expires in 2024, is expected to begin in the course of 2023. Meanwhile, in Slovakia, a procedure to extend or award spectrum in the 900 MHz and 2,100 MHz bands is expected for 2023. In Austria and Hungary, the millimeter wave spectrum in the 26,000 MHz band is also expected to come up for award in 2023. No further details are available at present.

In Germany, the usage rights for 800 MHz, 1,800 MHz (partial), and 2,600 MHz are due to expire at the end of 2025. The Bundesnetzagentur still sees a considerable need for clarification on a range of issues and in September 2022 launched a consultation on a position paper containing a proposed award concept. A final decision on this has not yet been made.

In the United States, on August 8, 2022, T‑Mobile US reached agreements with Channel 51 License and LB License on the acquisition of licenses in the 600 MHz spectrum for an aggregate purchase price of USD 3.5 billion (EUR 3.4 billion). The agreements are subject to approvals by the regulatory authorities and certain other customary closing conditions. The transactions are expected to be completed between mid and late 2023.

The following table provides an overview of the main ongoing and planned spectrum awards and auctions as well as license extensions. It also indicates spectrum to be awarded in the near future in various countries.