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1&1:5G Infrastracture: Difference between revisions
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=== 1&1 5G rationale === | === 1&1 5G rationale === | ||
In January 2019, 1&1 announced that it was going to participate in 5G licenses auction with the intention of becoming German's fourt MNO. The decision will mark a change in business model, which has been relying on a wholesale agreement, called MBA-MVNO. This wholesale agreement came into effect as a result of EU antitrust remedy following E-Plus/Telefonica merger in 2014. The agreement gave 1&1 the right to host its customers on Telefonica network and other networks for a fee. As of September 2019, 1&1 had rented out 20% of Telefonica's hosting capacity. The hosting was mainly for 3G and 4G but had a guaranteed option for 5G products in future. Nevertheless, 1&1 had the option to increase hosting capacity up to 30% until 2030. Additionally, the wholesale agreement had regulatory price protection until 2030. 1&1 also had wholesale agreement with Vodafone for 3G hosting. However, due to better rates in Telefonica's network, 1&1 started migrating its customers from Vodafone network to Telefonica network. | In January 2019, 1&1 announced that it was going to participate in 5G licenses auction-with the intention of becoming German's fourt MNO. The decision will mark a change in business model, which has been relying on a wholesale agreement, called MBA-MVNO. This wholesale agreement came into effect as a result of EU antitrust remedy following E-Plus/Telefonica merger in 2014. The agreement gave 1&1 the right to host its customers on Telefonica network and other networks for a fee. As of September 2019, 1&1 had rented out 20% of Telefonica's hosting capacity. The hosting was mainly for 3G and 4G but had a guaranteed option for 5G products in future. Nevertheless, 1&1 had the option to increase hosting capacity up to 30% until 2030. Additionally, the wholesale agreement had regulatory price protection until 2030. 1&1 also had wholesale agreement with Vodafone for 3G hosting. However, due to better rates in Telefonica's network, 1&1 started migrating its customers from Vodafone network to Telefonica network. | ||
Even though the wholesale agreement requires little capital, carries regulatory price protection and doesn't have a lot of risks, it can lead to margin squeeze in future as the number of users grows. Nevertheless, 1&1 will be subjected to non-discriminatory prices from June 2029. That is why 1&1 had to participate in 5G frequency auction in 2019. 1&1 notes that its own 5G network comes with a lot of advantages which include: | Even though the wholesale agreement requires little capital, carries regulatory price protection and doesn't have a lot of risks, it can lead to margin squeeze in future as the number of users grows. Nevertheless, 1&1 will be subjected to non-discriminatory prices from June 2029. That is why 1&1 had to participate in 5G frequency auction in 2019. 1&1 notes that its own 5G network comes with a lot of advantages which include: | ||
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* More revenue and higher profits. | * More revenue and higher profits. | ||
1&1's bid in the 5G auction was successful. It was able to get 5x10 MHz in 3.6 GHz frequencies. This spectrum will be availble from January 2021 and 1&1 paid 735 million eusos for it in September 2019. Additionally, 1&1 won itself 2x10 MHz1 in 2 GHz frequencies. Usage for this spectrum will start from January 2026 and 1&1 will pay 335 million euros in June 2024 for it. However, as part of the auction requirements, 1&1 will have to fulfill certain obligations. It had to have at least 1,000 5G active antenna sites by 2022. Additionally, it must achieve 25% household coverage by 2025 and up to 50% household coverage by the end of 2025. Despite getting these frequencies, it is critical that 1&1 gets the low-band frequency (800 Mhz) to be auctioned in 2025 in order to be able to offer seemless network experience to its users. This is because a network built on high -band frequencies is incapable of penetrating through walls. If 1&1 is unsuccessfull in the 2025 auction, it will have to lease it from Telefonica. However, as noted by its CEO Ralph Dommermuth during Q1 2022 earnings call, this woud be expensive. It will also reduce their competitive position. | 1&1's bid in the 5G auction was successful. It was able to get 5x10 MHz in 3.6 GHz frequencies. This spectrum will be availble from January 2021 and 1&1 paid 735 million eusos for it in September 2019. Additionally, 1&1 won itself 2x10 MHz1 in 2 GHz frequencies. Usage for this spectrum will start from January 2026 and 1&1 will pay 335 million euros in June 2024 for it. However, as part of the auction requirements, 1&1 will have to fulfill certain obligations. It had to have at least 1,000 5G active antenna sites by 2022. Additionally, it must achieve 25% household coverage by 2025 and up to 50% household coverage by the end of 2025. Despite getting these frequencies, it is critical that 1&1 gets the low-band frequency (800 Mhz) to be auctioned in 2025 in order to be able to offer seemless network experience to its users. This is because a network built on high -band frequencies is incapable of penetrating through walls. If 1&1 is unsuccessfull in the 2025 auction, it will have to lease it from Telefonica. However, as noted by its CEO Ralph Dommermuth during Q1 2022 earnings call, this woud be expensive. It will also reduce their competitive position. | ||
=== 1. Vantage Towers === | === 1. Vantage Towers === | ||