DUSSELDORF (WiMAX Day). Deutsche Telecom broadband services unit T-Com last week announced that it would not participate in the forthcoming auction of 3.5 GHz spectrum in December, and thus not pursue development of a fixed WiMAX network in Germany.

T-Com stated that its decision not to apply for the WiMAX licenses was made after “a detailed view of the economics and an analysis of the new rules to the frequency assignment in the 3.5 GHz published in October 2006.”

New auction rules favour small operators

In August 2006 the Federal Network Agency (Bundesnetzagentur) in Germany, which is responsible for licensing radio spectrum, released a tender bid for 3.5 GHz frequencies which was subsequently many times over-subscribed. Among the companies who applied to take part in the bidding for the spectrum was Deutsche Telecom.

Initially the Bundesnetzagentur intended to divide the spectrum into 16 regional licenses. However, as was previously reported in WiMAX Day, due to the mammoth interest in licenses for the 3.5 GHz spectrum, the Bundesnetzagentur withdrew the tender. In an effort to accommodate smaller companies that could only afford to bid for licenses in small regions, in October the Bundesnetzagentur further divided the spectrum into 28 regions.

Matthias Kurth, President of the Bundesnetzagentur, stated in a press release that more regional licenses would encourage competition and “the broadband market will be supplemented by additional offers and regional and medium-size companies will become active in areas where fixed Internet broadband is not present.”

The large telcom operators in Germany did not welcome this decision. With up to four WiMAX licenses per region, small companies could compete more effectively against the likes of Deutsche Telecom. Rainer Lüddemann, managing director of the Federal Association Broadband Communication (BREKKO) criticised the new allocation rules and stated: “With the added regions, it is to be expected that many enterprises will withdraw their originally announced application” in the 3.5GHz spectrum auction.

Reaching an unserved population

In March 2006, T-Com conducted WiMAX field studies with 100 customers in the Rhine river regions of Bonn and Swisttal. Following extensive tests of WiMAX in 2005 under controlled laboratory conditions, the intent of the field studies, according to Roland Kittel, Chief Technical Officer of Deutsche Telecom, were to determine “whether the WiMAX technology for T-Com is suitable as additional medium, to further advance the DSL market.”

The field studies were focussed on regions where neither DSL nor fibre connectivity were available. According to reports from T-Com in March and June 2006, the studies were successful in determining the capacity of the technology and also the customers’ acceptance of wireless technology. This was underscored in June 2006 when Deutsche Telecom CEO Walter Raizner told the Financial Times Deutscheland “We regard WiMAX as another key to our commitment for extending broadband supply in the Federal Republic.”

Presently Deutsche Telecom can reach 92% of the territory in Germany with their network of DSL and fibre. Areas in Germany that are not served by DSL and fibre equates to roughly 200,000 additional potential subscribers. Deutsche Telecom have surmised that it would not be economical for the company to invest in WiMAX as a method of attracting these subscribers, especially with substantial regional competition.

Following its announcement last week, a spokesman for Deutsche Telecom further added that “WiMAX is in principle an interesting wide-band technology, however for T-Com it is not a technical and economical alternative.” Thus instead of WiMAX, T-Com would develop close co-operation with the municipalities not served by broadband, and encourage them to “take part in the investments to the DSL development.”