Safeguarding competition in mobile communication cooperations - Telefónica, Deutsche Telekom and Vodafone plan to jointly eliminate “grey spots”

Telefónica (o2), Deutsche Telekom and Vodafone plan to enter into mutual cooperations to close gaps in their mobile communication networks, so-called grey spots. Last year Deutsche Telekom and Vodafone had already agreed on a similar cooperation without including Telefónica.

Andreas Mundt, President of the Bundeskartellamt: “In our view, a cooperation between Deutsche Telekom and Vodafone without Telefónica’s participation would be problematic from a competition perspective. We have therefore insisted that the cooperation be extended to include Telefónica. This also ensures the best outcome for mobile telephone users in Germany. If all providers mutually grant access to the networks of other providers to close such gaps in the networks, breakdowns in connection can be best avoided. In this way we also prevent competitive disadvantages for individual suppliers such as in this case Telefónica.”

The aim of the agreements is for the companies to grant mutual access to their 4G networks in areas with low mobile phone traffic and in this way to close smaller gaps (dead spots) in areas otherwise supplied by the respective operators. It is often unprofitable for the companies to expand their own network in these areas. The cooperations affect several thousand base station sites in Germany.

On the initiation of the cooperation between Deutsche Telekom and Vodafone last year the Bundeskartellamt intervened by conducting a proceeding as it was feared that the cooperation could have negative effects on competition. Deutsche Telekom and Vodafone are still the leading mobile network providers in terms of network quality. A purely bilateral, exclusive cooperation between the two companies would enable them to increase their competitive lead without having to build up their own, new sites. Telefónica would practically be unable to equalise this advantage because the cooperation involves sites where additional deployment is generally unprofitable. This would likely reduce the intensity of competition and disadvantage all consumers in the medium to long term. The Bundesnetzagentur was kept continually informed about the proceeding.

The intended cooperations between Deutsche Telekom and Telefónica and between Vodafone and Telefónica are a first step in the right direction. All in all, it must be ensured that cooperations of this kind do not overly restrict the possibilities of competitors to compete in the market. The Bundeskartellamt will ensure this by monitoring the specific design of all three proposed cooperations.

This form of cooperation granting mutual access does not provide for any direct participation of companies which currently do not already have their own widespread network. However, the parties have assured the Bundeskartellamt that the cooperation would not exclude the co-use of the relevant sites in the form of national roaming.

The Bundeskartellamt will monitor the further design of the cooperations to ensure that competition is not disrupted and ultimately that all mobile telephone users in Germany benefit from the economically sensible and relatively cost-effective network improvement