Next Stop: German Telecommunications Modernization Act!

SUMMARY

1. The German Telecommunications Modernization Act is coming
2. What are the objectives of the German Telecommunications Modernization Act
3. The German Telecommunications Modernization Act: What should be done now?

I. The German Telecommunications Modernization Act is coming

Actually, good news for those invested in the German telecommunications sector: German telecommunications law will be comprehensively revised by the Telecommunications Modernization Act in 2021. The Federal Cabinet adopted the bill on December 16^th, 2020. It implements the European Electronic Communications Code (EU Directive 2018/1972) from 2018, which was expected to accelerate broadband expansion. The theoretical plan had been to swiftly implement this directive. In practice, the competent ministries have lost themselves in more and more changes of this law. The draft bill sets the course for a modernized telecommunications regulatory framework in numerous key subject areas for the coming years. First and foremost, we talk about areas such as market regulation, spectrum management, infrastructure rollout and end-user protection.

II. What are the objectives of the German Telecommunications Modernization Act

This far-reaching amendment of the German Telecommunications Act is mainly intended to create the regulatory groundwork for providing an important impetus for a faster, nationwide roll-out of gigabit networks. The aim is to provide targeted incentives for investment and innovation. To safeguard economic and social participation, a legally secured entitlement to telecommunications services will be created for all citizens. The actual implementation of construction measures for the roll-out of gigabit networks is to be accelerated. Especially simplifying approval procedures is supposed to do the trick. Important innovations also relate to the extensive harmonization of consumer protection. The area of spectrum regulation will generally be modernized.

The amendment of the Act focuses on the following measures:

• Implementation of comprehensive new definitions, in particular a fundamental expansion of the scope of the law to include additional service providers.
• Creation of regulatory incentives for the expansion of networks with very high capacity.
• Reorganization of market regulation: Regulatory exemption for co-investment and cooperation models plus the introduction of symmetrical regulation.
• Improvement of information on telecommunications-relevant infrastructures.
• Extensive modernization of frequency management.
• Expansion of shared use rights (also for the upgrading of mobile communications networks).
• Strengthening of the enforceability of requirements for state support of telecommunications networks, including the introduction of regulations on open network access and the binding nature of market investigation procedures.
• Integration of and adaptation to the changing needs of consumers of the

provisions of the German Act for Securing Postal and Telecommunications Services in Special Cases.

• Revision of organizational and procedural issues of the German Federal Network Agency.
• Revision of the fine regime.

III. The German Telecommunications Modernization Act: What should be done now?

Germany is trying to update the legal rules for telecommunications in order to build more competitive market circumstances. Nevertheless, the entire legal process has produced high uncertainty for the sector so far; and the law has not come into force yet. German Parliament is planning to deal with the draft at the beginning of 2021. And the industry has to play along. We believe that there will not be a lot of time to prepare for this. If telecommunications is your business, you have to start to deal with the new situation soon. The draft bill has 465 pages. Take into consideration that you will need sufficient time to implement the comprehensive legal changes.

We expect competitive network expansion to be made more difficult by new state planning bureaucracy. Both traditional telecommunications providers and services as well as web- based (“OTT”) services will be affected by the new regulatory framework now. IT businesses have to be fully aware of this new legal framework. Not only because violations of the Act can be fined severely: Up to 1% of the average worldwide annual turnover. The new law certainly does not only bring risks, it also offers business chances. For instance, just think of the 5G expansion.

Be sure to be ready to comply with the new legal situation when the law comes into effect probably early 2021.

Feel free to contact us for further information!