Germany: The New Telecommunications Act - Part 2 - Licences and Licensing Procedures

Last Updated: 18 September 1996
The new German Telecommunications Act distinguishes between telecommunication services subject to a licence, services to be notified to the authorities and so called free services. Licences, which have been granted under the regime of the now basically obsolete Telecommunications Installations Act (FAG) like those for mobile telephone services or satellite telecommunications services, however, will remain in force.

Licences will be granted by a regulatory body. They are required for those areas, which were previously subject to the state monopoly, namely the provision and the operation of the public (fixed, mobile or satellite) network as well as voice telephony services. This licensing requirement is considered necessary in order to ensure an effective basic telecommunications service, in particular in catastrophe and crisis situations, to ensure telecommunication privacy and to ensure a universal network with general geographical coverage. A license will only be required, however, for the operation of public networks crossing property limits i.e. where the network is to be used to provide telecommunication services to the public and for the provision of voice telephony services to the public based on self-operated telecommunication networks (Section 6 TKG). The commercial provision of any other form of telecommunication services e.g. the operation of corporate networks, the provision of data transmission, telefax- and video conference services, the provision of terminal equipment, the resale of voice telephony without the operation of a network etc. does not require a licence and only needs to be notified to the relevant regulatory body (Section 4 TKG). Neither a licence nor a notification is needed for any other non-commercial telecommunication activities.

For practical and administrative reasons, services which require a licence are divided into four licence categories: mobile telephone services to the public (licence class I), satellite services to the public (licence class II), telecommunication services to the public which do not fall within licence classes I or II i.e. the operating of public telecommunication networks (licence class III) and, finally, voice telephony services, which, however, does not include the right to operate a public telecommunication network (licence class IV). Each of the licence classes can be combined in any manner. Thus, a service provider can either restrict the services it provides to one licence class (e.g. the operation of the telecommunication network) or it can provide services in all four licence classes. Radio frequencies, which are necessary for the operation of a transmission path within a licence will be allocated in a special procedure for such frequencies (Section 44 ff. TKG).

Any applicant is basically entitled to a licence (Section 8 TKG). The Act does not require a potential licencee to satisfy any particular requirements. However, a licence will be denied, if the applicant does not have the necessary reliability, capacity and the technical expertise to provide the services subject to the licence. The same applies, if the regulatory body does not have at its disposal a sufficient number of radio frequencies, which could be allocated to the applicant. It should be noted that there are no particular limitations with regard to foreign applicants. Therefore, the German telecommunication market will be open to all foreign undertakings. It is also possible for foreign undertakings to acquire shareholdings/partnership shares in German telecommunication undertakings.

A fee is charged for the granting of a licence (Section 15 TKG). The number of licences that can be granted is basically unrestricted, although special restrictions apply to radio frequency networks (Section 10 TKG). Here, the number of licences that can be granted depends on the number of frequencies available. If there is a shortage in the number of available frequencies, the licences for these radio wave based services will be admitted to a special procedure (Section 11 TKG). Pursuant to this procedure, the licences will primarily be auctioned in an objective, transparent and discrimination-free manner. An auction will not take place, if the auction procedure is unsuitable. This would be the case, if a competitor in the same geographical and pertinent market has already been granted a licence without an auction. Then a public tender will apply. This latter procedure will also be followed for the allocation of radio frequencies for the connection of telephones. The legislator has stipulated that applicants who can show that they can provide services over a large geographical area will be given priority treatment. This has already been criticized by the European Commission who has pointed out that granting an applicant absolute priority does not conform to the list of permissible licence restrictions laid down in the relevant EU Directives. It, therefore, remains to be seen whether this criticism has any effect on the tender policy of the regulatory body.

A licence need not cover the whole of the territory of the Federal Republic of Germany or a Federal State. It is possible to apply for a limited geographical area. It can, therefore, be expected that licensed telecommunication services will be offered in a number of smaller market segments rather than in one large market. The demand by the Federal States that licensed areas should be a combination of more developed areas and weaker infrastructure areas was rejected during parliamentary debates as not being compatible with EU-Directives. The current rules may lead to a particular service provider acquiring a dominant market position in a particular market segment and, thus becoming subject to the provisions of the TKG which govern dominant market positions.

Once a licence has been granted, it can be transferred to a third party in writing and only with the prior consent of the regulatory body (Section 9 TKG). The regulatory body may object to such a transfer only for the same grounds for which it could object for granting the original licence. In the case of legal succession other than by transfer, the regulatory body has to be notified in order for it to decide whether the licence should be revoked or not.

Like every other administrative act, licences are subject to revocation according to the general rules laid down in the Administrative Procedure Act. In addition to this, special grounds for revocation are laid down in Section 15 TKG. According to this rule, the regulatory body may revoke a licence at its sensible discretion, if the licencee does not comply with its obligations under the licence, especially in the event of an infringement of telecommunication secrecy, data protection rules or criminal law. The same applies in the case of a legal succession or if the use of the licence is transferred to a third party and the successor could have been denied a licence.

A competitor who was denied a licence in the auction or tender proceedings may bring legal proceedings before the competent administrative court in Cologne. The same applies, if the regulatory body refuses to grant a licence to an applicant. A licencee, whose licence has been revoked, can also bring an action to set aside the revocation.

For further information please contact Dr. Markus Deutsch, Gleiss Lutz Hootz Hirsch & Partners , Gartnerweg 2, 60322 Frankfurt, Germany, Fax: +49 69 955 14 198 - or enter text search 'Gleiss Lutz Hootz Hirsch & Partners' and 'Business Monitor'.

The article is correct to the best of our knowledge at the time of publication. However, it is written as a general guide. Therefore specialist advice should be sought as regards your specific circumstances.

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