As European countries progressively open and grow their wireless markets, the contest for licenses is hot. But in Germany, only one group entered a bid for a second personal communications network license by deadline, which leaves questions as to the viability of launching a fourth wireless system in the country’s advanced and competitive mobile phone market.
Germany is already home to two Global System for Mobile communications 900 MHz cellular operators and one Digital Cellular Service 1.8 GHz operator. Penetration is about 6 percent.
The sole entrant for the new 1.8 GHz license is a joint venture of London-based British Telecommunications plc and Viag AG, based in the Bavarian region of Germany. AT&T Wireless Services Inc., Unisource, Daimler-Benz of Germany, Stet of Italy and others were reportedly interested, but bids never materialized.
Malarkey Taylor Associates-Economic Management Consultants International Inc. of Europe said a few factors drew hesitation from other telecom players. The size of Germany and its wireless voice market means “the fourth contender would have to invest large amounts of money in marketing (and) advertising to secure market share,” said the London-based research and consulting firm. “While they could pursue a phased rollout strategy, it would still have to be rapid enough to be able to compete with the existing incumbents: Mannesmann (Mobilfunk GmbH), T-Mobil and E-Plus,” added MTA-EMCI Europe.
Germany’s D1 and D2 GSM cellular networks are operated by T-Mobil, a division of Deutsche Telekom AG, and a Mannesmann/AirTouch Communications Inc. joint venture, respectively. The current PCN operator, E-Plus, is a venture of Veba AG, Thyssen AG and BellSouth Corp.
BT-Viag press spokesman Paul Sharma said, “We’re really the only major consortium in Germany without a license.” This fact in itself may explain why other operators did not place bids. The market requires a strong German partner.
A few months ago, one European publication reported that AT&T Wireless wanted to ally with a German partner in order to enter that market.
Recently Mark Schultz of AT&T Wireless’ international division confirmed the company would not pursue the German PCN license. Also, AT&T Wireless may have shied from the license as AT&T Corp.’s international division recently formed a new venture with Mannesmann AG, which has a GSM system.
MTA-EMCI added that timing factored into the licensing picture. A recent wave of mobile telephony licensing across Europe means less capital is available to invest in Germany.
Under current rules of the Post and Telecommunications authority, Germany cannot accept any late bids. The PCN license is expected to be awarded late first quarter or early second quarter 1997.
Sharma said BT-Viag is working on meeting the German Ministry’s financial and buildout criteria for the license.
