Germany’s 5G Spectrum Auctions Are Underway—And They’re Being Powered by Fax Machines

March 19, 2019, 12:07 PM UTC

Europe’s largest economy is taking its first steps towards building a next-generation mobile network. Germany’s 5G bandwidth spectrum auctions began Tuesday morning at the Federal Network Agency (Bundesnetzagentur) in Bonn, with four telecoms companies bidding on 41 spectrum bundles.

Just as 4G networks made it possible for smartphones to become a part of our everyday lives, 5G networks are expected to enable the full potential of the Internet of Things, including autonomous driving. The procedure to award these slices of the future takes a surprisingly old-fashioned form, however.

The four firms, Deutsche Telekom, Telefónica, Vodafone and Drillisch 1&1, are bidding via a secure network from separate rooms in a former army barracks, Reuters reports. Having surrendered their smartphones upon entering, the representatives can only discuss strategy with their head offices via fax machine.

Despite being renowned worldwide for their technology, Handelsblatt reports that two-thirds of German companies regularly use faxes, whereas only half of them use video conferencing technologies — and just one-third use messaging services or online collaboration tools. The simple reason is that Germans consider faxes more secure than digital messaging and that faxed documents carry legal weight with banks and insurance companies, while emailed documents do not.

Vodafone Germany CEO Hannes Ametsreiter tweeted Tuesday morning: “The network of the future waits behind this door. The #5G auction is starting, and our bids are submitted from this strictly secured auction room In Düsseldorf [sic]. I’m going in there now. My phone, unfortunately, has to stay outside.”

The 41 spectrum bundles are being auctioned simultaneously, with one hour allotted for each round of bidding. Bidding will take place from 8 a.m. to 6:30 p.m., with a lunch break from noon to 2 p.m.

The auctions are expected to take at least three weeks and could raise as much as €5 billion ($5.7 billion) for Germany’s federal government. Germany’s last spectrum auction in 2015 raised €5.1 billion from three bidders: Deutsche Telekom (DTEGF), Vodafone (VODPF) und Telefónica (TEF).

Drillisch 1&1’s entry into the 5G auctions was not certain until January. The subsidiary of United Internet (UDIRF) currently relies on using other telecoms’ networks as a “virtual” mobile network. CEO Ralph Dommermuth arranged €2.8 billion in funding for the 5G spectrum auction in the hope of becoming Germany’s fourth mobile network.

Starting bids for each 5G spectrum block ranged from €1.7 million to €5 million. In the first round of bidding Tuesday, Drillisch 1&1 came out stronger than any of its competitors with high bids of more than €20 million for numerous spectrum blocks.

The 5G auctions come after months of uncertainty. A German court last week dismissed lawsuits from the telecoms operators, who had argued that the government’s requirement to provide high-speed coverage to 98% of German households by 2022 was too demanding. Regulators also had to clarify rules on network equipment following U.S. pressure to ban China’s Huawei Technologies on national security grounds. Germany decided instead to impose stricter requirements on all hardware vendors.