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Market spotlight

Trends and developments

What is the current state of the telecoms market in your jurisdiction, including any trends and recent developments/deals?

The German telecoms market is dominated by former state enterprise Deutsche Telekom and its strongest competitors Vodafone, United Internet, Telefónica Germany and freenet mobilcom debitel. In 2014 the European Commission and the Federal Network Agency (BNetzA) approved the acquisition of E-Plus by Telefónica Germany from its Dutch parent company KPN.

According to the BNetzA, external sales revenues in the telecoms market amounted to approximately €56.7 billion in 2016. This corresponds to a decrease of €0.7 billion (1.2%) compared to 2015. The external sales revenues of both alternative providers and Deutsche Telekom declined. In the case of alternative suppliers, sales revenues in 2016 fell by €0.3 billion to €32 billion. At €24.7 billion, Deutsche Telekom's external sales revenues were €0.4 billion lower than in the previous year. The share of alternative vendors in sales revenues in the overall market amounted to around 56% in 2016, as in the previous year.

The most important trends in the market are broadband expansion, net neutrality and future planning for 5G frequencies; these will be also important for the connected car business, industry 4.0, smart home technology and the Internet of Things. 

Regulatory framework


What is the primary legislation governing the telecoms market in your jurisdiction?

The main law governing the operation of the telecoms networks and the provision of telecoms services is the Telecoms Act. The act constitutes a technology-neutral regulation and also covers signal transmissions and the Internet (including internet infrastructure). Originally, the Telecoms Act was a sector-specific competition law for the telecom market. After several reforms, the Telecoms Act now also contains rules on consumer protection, data privacy, IT security, data retention and further general regulations regarding the provisioning of telecoms services.

Based on the Telecoms Act, several ordinances have been enacted, including ordinances regarding, numbering (eg, structuring, configuration and administration), allocation of numbering space and respective fees, technical intercepts and emergency calls.


Are any regulatory reforms or initiatives envisaged?

The third act to amend the Telecoms Act entered into force in June 2017. The main purpose of the amendment was to adapt German law to the EU Open Internet Access Regulation (2015/2120), which also amended the EU Universal Service Directive (2002/22/EC). Further, Regulation 2015/2120 contains requirements regarding roaming across the whole European Union.

Universal service obligations

What universal services obligations apply?

The basic premise of the EU Universal Service Directive, which has been amended several times and is fully implemented into German law, is that every citizen must be able to make calls at affordable prices and surf the Internet, regardless of whether he or she lives in a city or remote area.

While the directive does not provide that broadband access is necessary for each citizen, it is disputed whether there should be a right to broadband access. The declared goal of the German government’s Digital Agenda was to ensure comprehensive coverage with broadband connections of at least 50 megabit per second by 2018. However, the existing German law provides neither a right to broadband access nor an obligation for telecoms service providers to expand the broadband infrastructure. The government argues that the EU requirements for universal service and technological neutrality exclude a legal obligation to expand fast internet access.

As federal elections will take place in Germany in September 2017, and as Germany is behind other European countries in broadband deployment, movement on this issue is expected only after the election. 


Which authorities regulate the telecoms sector and what is the extent of their powers?

The competent regulatory authority for the telecoms sector is the BNetzA, which has its seat in Bonn. The BNetzA is the national regulatory authority regarding telecoms-related issues such as rates, spectrum allocation and data privacy. In addition, the Federal Data Protection Officer has authority in telecoms-related privacy matters.

Further, under the IT Security Act 2015, the Federal Office for Information Security observes compliance with the special IT security requirements for critical infrastructure providers. The Federal Financial Supervisory Authority is the competent authority for all activities in the field of mobile payment.

The Federal Cartel Office is responsible for the enforcement of the Competition Act and, as such, is responsible for merger control procedures and the general control of anti-competitive practices.

Foreign ownership


Are there any restrictions on foreign ownership or investment in the domestic telecoms market?

There are no restrictions on foreign ownership or investment in the domestic telecoms market in Germany.

Licensing and authorisation

Licences/authorisations required

What licences/authorisations are required to provide telecoms services?

In general, the provision of telecoms services does not require a licence.

Licences or authorisations are required only with respect to specific business activities in or relating to the telecoms market. For example, a licence from the Federal Financial Supervisory Authority may be required for the provisioning of certain mobile payment services. Further, authorisation from the Federal Network Agency (BNetzA) is required for the use of public ways for telecoms infrastructure. Generally, in areas where only limited resources are available, individual authorisation may be required. This applies to numbers and spectrum in certain spectrum bands.

Although there is no general requirement for a licence or authorisation, there are certain notification requirements. Under Section 6 of the Telecoms Act, the provider of a telecoms service is obliged to notify its activities to the BNetzA.

According to Section 109 of the Telecoms Act, each provider of a public telecoms network or a publicly available telecoms service must:

  • implement adequate technical measures to prevent hacking or other disturbances;
  • appoint a security officer; and
  • adopt an IT security concept.

The security concept must be notified to the BNetzA.

If the telecoms service provider exceeds the thresholds of the IT Security Act and the Critical infrastructure Ordinance, it must provide proof of the implementation of specific IT security measures to the Federal Office for Information Security according to Section 8a of the Federal Office for Information Security Act.


What are the eligibility, documentary and procedural requirements to obtain a licence/authorisation?

To fulfil the notification obligation according to Section 6 of the Telecoms Act , a form provided by BNetzA must be completed. As proof of identity, an excerpt from the company register or, in certain cases, an expert from the trade register must be added. In the case of a foreign company, an authorised representative in Germany must be appointed in addition to providing the company address. The representative will be authorised to receive communication from the BNetzA in a legally binding manner. Such authorisation must be demonstrated in writing.

Validity period and renewal

What is the validity period for licences/authorisations and what are the terms of renewal?

Under Section 6 of the Telecoms Act, the notification is valid until the company changes its telecoms services or its address.

Section 8b of the Federal Office for Information Security Act states that the proof of implementation of necessary IT security obligations must be renewed every two years.

Most of the specific authorisations and allocations needed for specific commercial activities are granted for an indefinite period.


What fees apply?

The BNetzA charges fees based on various fees regulations, and the fees are generally relatively low. Section 6 of the Telecoms Act provides that no fees are charged for a notification.


What is the usual timeframe for obtaining a licence/authorisation?

A telecoms service provider can conduct its business in Germany as soon as the notification is filed under Section 6.

Network access and interconnection


What rules, requirements and procedures govern network-to-network access and interconnection?

Every operator of a public telecoms network will, on request, undertake to make an interconnection offer to other public telecommunications network operators.

In general, the the Federal Network Agency (BNetzA) will impose access obligations on a provider with significant market power (SMP), which include:

  • granting fully unbundled access to the local loop;
  • interconnection;
  • open access to technical interfaces;
  • key technologies; and
  • provision of co-location and other forms of infrastructure sharing.

In exceptional cases, the BNetzA may impose such obligation on non-SMP operators which control access to end users in order to secure user communication and end-to-end connectivity.


Are access/interconnection prices subject to regulation?

The BNetzA requires SMP operators to publish a reference offer which sets out the specifics of the access granted. Accordingly, Deutsche Telekom has published a reference interconnection offer which sets the market standards for all interconnections agreements in Germany.

The price for interconnection is subject to approval not only from Deutsche Telekom, but also from all telecom network operators. The BNetzA argues that even if the network is regionally very limited, the operator of such network has SMP with respect to their customers, which are connected to other networks only through the regional telecoms network operator.

In general, the BNetzA approves symmetric fees, which means that smaller network operators charge the same fees as Deutsche Telekom. Nevertheless, a smaller operator may achieve approval for higher fees if it proves that its cost structure differs significantly from Deutsche Telekom.


How are access/interconnection disputes resolved?

If the conclusion of an access agreement (including an interconnection agreement) fails, and provided that one of the parties is required to grant access, both parties can apply to the BNetzA, which will order access, in principle, within 10 weeks.

Next-generation access

Have any regulations or initiatives been introduced or proposed with respect to next-generation access?

The Telecoms Act obliges telecoms providers to make offers (on written request) for the shared use of their infrastructure by operators of public telecoms networks if the infrastructure can be used to set up or develop next generation networks.

On the basis of the BNetzA’s Vectoring decision (2016), in future Deutsche Telekom will continue to be obliged to grant its competitors access to the unbundled subscriber line. However, Deutsche Telekom can refuse access to the subscriber line in areas where it has opened up its connections with the VDSL2 vectoring technology. It must then offer competitors certain substitute products. This part of the Vectoring decision was broadly criticised in Germany because it gives Deutsche Telekom an incentive to improve old copper cable in the ‘last mile’ (ie, from the street cabinet to the end user’s access point). This decision is considered to be one reason why only a few households and companies are endowed with a last mile fibre cable.

However, even according to the Vectoring decision, there is an exception to the refusal of access by Deutsche Telekom: a competitor can continue to access the last mile in a defined area if it is more involved in the digital subscriber line development of street cabinets than Deutsche Telekom. 

Infrastructure access

Land access

What rules and procedures govern telecoms operators’ access to land (both public and private) to install, maintain and repair infrastructure?

The Federal Network Agency (BNetzA) will transfer, on written application to the provider of a public telecoms network, a right of use of public traffic ways (ie, public ways, squares, bridges and public waters) for telecoms lines serving public services. Where such use is not possible or only at disproportionately high expenses, the operator will have a right of shared use of other installations already existing where this shared use is economically reasonable and no major additional construction work is needed.

In regard to private property, the owner must accept the installation, operation or renewal of telecoms lines on its property insofar as:

  • on its property, a line or instalment that is secured by a right is used also for a telecoms line and the usability of the property is not thereby additionally restricted on a lasting basis; or
  • the property is not, or not significantly, affected by such use.

A property owner having to acquiesce in such use may claim appropriate pecuniary compensation of the operator of the telecoms line or the owner of the network if the use of its property or the income from it is affected beyond what is reasonable. In addition, one-off compensation may be claimed, provided that no previous lines could be used for telecoms purposes.

Rights over access to public and private land can be enforced at the courts, according to the general procedural rules. Thus, the civil or the administrative courts may have jurisdiction. 

Infrastructure sharing

Are infrastructure sharing agreements among operators popular and/or encouraged by the regulatory authorities? Which infrastructure sharing structures/agreements are commonly used? Do any regulations apply?

The regulators’ initial plan was to promote the parallel development of infrastructure by all telecoms service providers.

In general, all elements of infrastructure can be shared provided that a physical separation of usage is possible.

Infrastructure sharing is mainly driven by private agreements between competitors in order to share the cost for infrastructure investments. A classic example is mast-sharing agreements among mobile operators to mitigate the huge investments in spectrum. However, each operator must still maintain physical control over its own network, including the spectrum used.

Sharing of passive infrastructure is also encouraged in order to enhance the deployment of broadband infrastructure.

Pricing and consumer protection

Retail pricing

What rules govern retail pricing for telecoms services?

The market for end customer prices is not subject to regulation.

Consumer contracts

What rules govern consumer service contracts?

Agreements with end users are not subject to regulation by the Federal Network Agency (BNetzA), but the Telecoms Act sets out certain requirements for such agreements – for example, Section 43b sets out the term and Sections 43a and 93 set out the information which must be given to a consumer in the agreement. However, agreements and the conclusion of such agreements must adhere to mandatory German law. For example, the Telecoms Act contains certain requirements regarding price announcements and further consumer protection issues. Further, general consumer protection law (eg, the consumer’s right to withdraw from a distance selling contract within 14 days) must be met.

In addition, agreements are subject to the strict German terms and condition law.

Particularly in the field of value added services, an industry code limits the possibilities to offer and to provide products to end customers.

Disclosure requirements

Are telecoms service providers bound by any consumer disclosure requirements?

The Transparency Ordinance entered into force in January 2017 and sets out the following duties for telecoms service providers:

  • supplying the customer with a standardised product information sheet containing all relevant information on the purchased service package;
  • providing information on the actual data transfer rate in comparison to the rate stated in the service contract; and
  • providing information on minimum contract duration on each customer bill.

Further, under Section 6 of the Telecoms Act, in a publicly accessible register the notified information is visible to everyone.


Issues and concerns

Are there any particular competition issues or concerns in the domestic telecoms market?

The Federal Cartel Office (FCO) is generally responsible for the enforcement of the Competition Law, while the Federal Network Agency (BNetzA) is responsible for certain sector-specific competition issues regarding telecoms service providers. If the thresholds of Article 1 of the EU Merger Regulation are exceeded, the European Commission must rule on merger control (rather than the FCO).

Regarding the market definition and analysis to be conducted by the BNetzA pursuant to the Telecoms Act, the BNetzA will make decisions in conjunction with the FCO. Regarding proposed remedies, the BNetzA will listen to the FCO, but is not required to adhere to the FCO’s view. Pursuant to the Telecoms Act, the BNetzA must accommodate the comments of the European Commission and the Body of European Regulators for Electronic Communications regarding market regulation in cooperation and consultation proceedings.

The last significant merger in Germany was finalised in 2014 when the European Commission and the BNetzA approved the acquisition of E-Plus by Telefónica Germany from its Dutch parent company KPN. This approval was given on condition that Drillisch, a smaller mobile operator, was allowed to take over 20% of the network capacity of Telefónica Germany.

Sector-specific regulation

Do any sector-specific competition regulatory/legal provisions apply (eg, special conditions for dominant telecoms market players)?

As described above, companies with significant market power must share infrastructure on the basis of standardised agreements, which must be authorised by the BNetzA.


Are there any requirements for structural, functional or accounting separation of operators’ activities?

At present, no structural, functional or accounting obligations apply to any operator.

Section 40 of the Telecoms Act authorises the BNetzA to order a functional separation of the operators of telecoms infrastructure and third services. However, Section 40 presupposes that no effective competition is created by other measures (eg, final control and access control). As, according to the BNetzA, there is effective competition (even though there are companies with significant market power), the BNetzA has never made use of the Section 40 authorisation.



What rules and procedures govern spectrum allocation?

In general, any use of spectrum requires a prior allocation of the spectrum by the Federal Network Agency (BNetzA).

The allocation of spectrum is governed by the Telecoms Act, the Frequency Ordinance and the frequency usage plan.

Spectrum allocations will always be made for specific purposes as set out in the Frequency Ordinance. The use of spectrum for non-designated purposes is not permitted.

If sufficient spectrum is available for a specific purpose, allocations will be made for the general public by publication in the BNetzA’s Official Gazette. If the demand for spectrum in a specific band is higher than availability, the BNetzA may tender or auction spectrum to the interested parties.

Spectrum allocations are usually limited in time. If spectrum is allocated individually, the term will be decided by the BNetzA, but is usually 10 years. Spectrum allocations for the public for specific purposes are not limited in time; however, the BNetzA has discretion to revoke the allocation based on the interests of users.

The BNetzA published a so-called ‘spectrum compass’ in July 2016. The aim is to provide an overview of the existing frequency-regulating fields of action. The usage rights of spectrum in the 2 gigahertz (GHz) and 3.5GHz bands will be allocated by the end of 2020 and 2021/2022, respectively. According to the spectrum compass, this spectrum is needed to expand digital infrastructures and for the introduction of 5G. The 3.5GHz band is of particular interest for the introduction of 5G, since a lot of spectrum is available there. 


What fees apply to spectrum allocation/authorisation?

The BNetzA charges fees and contributions for spectrum assignment and usage. The exact charges are listed in the Frequency Fee Ordinance and the Frequency Protection Contributions Ordinance. 


Can spectrum licences be transferred, traded or sub-licensed?

The right to use a specific spectrum cannot be transferred, traded or sub-licensed. It is possible to transfer a licence only through the merger of an entity which holds the right to use. Even in these cases, an application regarding the amendment in the right to use has to filed with the BNetzA. The BNetzA may prohibit further use if the requirements for granting a right to use are no longer given or if competition is reduced significantly by the merger.

Voice over Internet Protocol


How is Voice over Internet Protocol (VoIP) regulated in your jurisdiction?

Even though the Federal Network Agency has announced plans to enact regulations on this issue several times, at present there is no specific regulation of VoIP.

Telephone numbers


How are telephone numbers allocated in your jurisdiction?

On application, the telephone numbers of all number ranges are allocated by the Federal Network Agency (BNetzA) to network operators or service providers. Network identifying codes (ie, carrier codes) are made available by the BNetzA to network operators on application, provided that they demonstrate that they operate a telecoms network.

Voice over Internet Protocol service providers are entitled to obtain ranges of geographic numbers for allocation to their customers, provided that the customers demonstrate that they have their business location or residence within the area code for which they request a geographic number.

Geographic numbers will be allocated to a network operator, and activated and made available by the network operator for use by end users. Other number ranges (eg, numbers for premium rate, mass traffic and operator services) can be applied for and allocated to the service provider directly by the BNetzA. In this case, the service provider will enter into an agreement with a network operator to ensure the activation of the number and that it can be reached from third-party networks on the basis of existing interconnection agreements.

Number portability

What rules govern telephone number portability?

Consumers have the right of number portability under Section 46 of the Telecoms Act.

Privacy and data security

Net neutrality

What is your jurisdiction’s regulatory stance on net neutrality?

Net neutrality has become one of the main aims of regulation since 2012. According to the former Section 41a of the Telecoms Act, the federal government was authorised to adopt legal regulation to establish the principles of non-discriminatory data transmission and access to content and applications. Nevertheless, as this authorisation was never used as Section 41a was removed from the amended Telecoms Act 2017.

The 2017 amendments to the Telecoms Act, which were mainly driven by the EU Open Internet Access Regulation (2015/2120), enforce the following goals:

  • End users must have access to information and content through their internet service provider.
  • End users musthave the possibility to use and provide applications and services through the Internet.
  • End users must be able to select out of different rates with specific data volumes and specific speed

The Federal Network Agency (BNetzA) will be granted rights to interment if business models may restrict the open internet.


Are there regulations or restrictions on encryption of communications?

German law does not provide an express encryption requirement. However, the general requirements on IT security – derived from Section 109 of the Telecoms Act, Article 32 of the EU General Data Protection Regulation and Section 8a of the Federal Office for Information Security Act – require the consideration of technical measures for data security. As the encryption of communication is a state of the art data security measure, a de facto obligation to encrypt communication exists. However, there is no case law on the question of which encryption process is sufficient in which case.

Data retention

Are telecoms operators bound by any rules or requirements on the retention of consumer communications data? If so, for how long must data be retained?

On April 8 2014 the European Court of Justice (ECJ) declared the EU Data Storage Directive 2006 null and void. The German act which implemented the directive into German law was declared null and void by the Federal Constitutional Court in March 2010. However, the new Data Retention Law was enacted in December 2015 and entered into force in May 2017. According to the new act, the following data must be stored by each telecoms provider:

  • location data when initiating mobile internet usage – to be stored for four weeks;
  • the telephone numbers called and the time and duration of all calls – to be stored for 10 weeks;
  • for all text messages, the target mobile station international subscriber directory number and the time of sending and receiving – to be stored for 10 weeks; and
  • assigned internet protocol addresses of internet users and the time and duration of internet use – to be stored for 10 weeks.

Various associations have challenged the new Data Retention Act. In June 2017 the North Rhine-Westphalia Higher Administrative Court ruled that the new Data Retention Act violates EU law and does not fulfil the requirements set out by the ECJ. As a result of this ruling, the BNetzA considers the data retention obligations to be suspended.

Government interception/retention

What rules and procedures govern the authorities’ interception of communications and access to consumer communications data?

Telecoms operators providing telecoms services must provide for the technical systems to allow call interception. Details are regulated in the Telecommunications Interception Ordinance and a technical directive. Exceptions apply to operators with only a small number of end customers. At present, operators must maintain the necessary technical equipment for interception at their own costs. The Telecommunications Interception Ordinance covers any forms of telecoms including traditional telephone calls, Voice over Internet Protocol calls, emails and text messages.

Under the Telecommunications Interception Ordinance, operators providing telecoms services must transmit the intercept, including the relevant data to the competent authority. Operators must configure their interception equipment in such a way that it can implement a judicial order without delay (the same applies if the competent authority requires that an interception measure be switched off prematurely). The intercept itself is made by the operators and not by the competent authorities.

Source telecoms surveillance is implemented by the competent authorities themselves (eg, by installing so-called ‘Trojan horses’ on the target’s computer).

Data security obligations

What are telecoms operators’ general data security obligations to consumers?

Section 109(1) of the Telecoms Act contains a general obligation for all telecoms service providers to implement adequate technical and organisational measures to protect personal data and to protect the telecommunications secrecy. The technical and organisational measures must be state of the art. Similar requirements derive from the EU General Data Protection Regulation and the EU ePrivacy Regulation, and it remains unclear which regulation or act will primarily apply in the future in this respect. Against the background of the potentially high administrative fines according to the General Data Protection Regulation and the ePrivacy Regulation, this is not only an academic question. However, as neither regulation nor Section 109(1) of the Telecoms Act provide specific and detailed IT security requirements, it must be assumed that their requirements are basically identical.

According to Sections 109(2) and (3), a provider of a public telecoms network or publicly available telecoms service must appoint a data security officer and adopt a IT security concept. The security concept must be revealed to the BNetzA.

If a telecoms service provider exceeds the thresholds of the IT Security Act and the Critical Infrastructure Ordinance, it is subject to the specific IT security requirements of the Federal Office for Information Security Act and the respective ordinances.