5G regulation and law in Austria

1. What is the state of 5G deployment in your country?

Austrian auctioned 5G frequencies in 2019 and 2020, mainly to major operators A1, Hutchison Drei and Magenta Telekom, but also to smaller, regional bidders. Expansion of 5G network infrastructure has been progressing steadily ever since.

The roll-out will particularly focus on areas that have had less connectivity, something operators have committed to address with their network deployments.

Magenta claims to be the most advanced, and expects to supply 5G to almost 40% of households and businesses at 1,200 locations across all regions by the end of 2020. It can be assumed that the other two major providers have similar coverage. The operators use different GHz spectrum bands (see question 5) and use the NSA (Non-standalone Standard) for new built network infrastructure and the DSS (Dynamic Spectrum Sharing) standard to upgrade existing (LTE) infrastructure. Magenta in particular will upgrade existing infrastructure to accelerate the 5G roll-out.

2. Are telecoms companies monetising 5G investments - or are the services provided to consumers at similar prices to 4G? 

In 2019, consumer 5G tariffs were more expensive than 4G tariffs. With the expansion or upgrade to 5G, tariffs have become cheaper over the past year, and it’s fair to assume that prices will level off over time. Nevertheless, the network roll-out will, in one way or another, be somewhat financed by consumers, as the operators must pay for both the frequencies and the infrastructure, without contributions from the state. However, since the 5G spectrum was drastically cheaper than 4G, tariffs may not be significantly higher.

3. Has 5G been launched for industrial purposes? For which sectors?

'Industry 4.0 Austria’ is partly owned by the government, and in October 2020 met the Ministry for Climate Protection, Environment, Energy, Mobility, Innovation and Technology to discuss the importance of 5G for industrial production. Applications discussed included autonomous mobile robots for warehousing and logistics, networked tools in production, predictive maintenance, augmented/virtual reality (AR/VR) applications, sensor and video monitoring, life tracking, big data analysis and connections to local private clouds.

According to experts who spoke at the event, many companies are implementing and planning 5G applications. They are increasingly coordinating efforts at a national and international level, for example in the 5G ACIA (Alliance for Connected Industry and Automation).

See the link here.

5G campus solutions, which enable new industrial applications and digital production processes, seem to be of particular interest.

A big topic is industrial 5G, especially in intelligent factories and the Industrial Internet of Things although it could take another two years for these to go into effect.

4. What is being done to ensure that a wide range of operators and industrial companies, from small to large, have access to frequencies?

There have been two 5G spectrum auctions, in the pioneer band and the following multi-band. These were open to A1, Hutchison Drei and Magenta Telekom, as well as smaller, regional operators.

The frequencies were significantly cheaper than those available in the previous LTE auction, in which operators paid EUR 2bn (although they received  EUR 1bn in subsidies). This time, each auction raised just over EUR 200m, meaning that smaller operators had a genuine opportunity to acquire frequencies.

Furthermore, the operators received discounts for deploying 5G in rural areas.

5. What public tenders have awarded spectrum licences? 

After the 2019 auction of frequencies in the 3.5 GHz range in the pioneer band auction, packages in the 700 MHz, 1.5 GHz and 2.1 GHz ranges were tendered in the 2020 multi-band auction.

In the 2019 auction, 39 blocks of 10 MHz each were allocated in 12 regions in the 3410 MHz - 3800 MHz range.

In the 2020 auction, usage rights were allocated for 27 packages in the 700 MHz (six blocks), 2100 MHz (12 blocks) and 1500 MHz (nine blocks) ranges.

In some regions, smaller companies such as MASS Response, LIWEST, Salzburg AG and Holding Graz acquired a significant amount.

See the link here.

5.1 What were the criteria for awarding each of the tenders?

The auctions took the form of an open, simultaneous, ascending, multiple-round procedure. To participate, applicants had to demonstrate that they fulfilled the ancillary provisions to use the frequency. Special consideration was given to technical capabilities and economic prerequisites, experience in communications and related business areas, as well as technical expertise.

There were also additional requirements for mandatory network interconnection as well as a minimum bid for each region and additional coverage requirements with minimum standards for rural regions. To participate in the auction, applicants had to secure the lowest minimum bid for a 10 MHz block in the auction (in the case of the 2019 auction EUR 19,700). There were also spectrum restrictions for the providers (between 150 and 190 MHz) and a ban on price-fixing.

5.2 What are the conditions of the spectrum licence? 

The usage rights were granted for a period of approximately 20 years and grouped in 12 regions, in order to give local ISPs the opportunity to enter the market.

Frequencies were allocated in a technology-neutral way, to adapt usage conditions to future 5G standards.

The three major players could bid for nationwide continuous frequency bands that are useful for densely populated regions.

Firstly, in the award phase, bids for the desired amount of MHz in the twelve regions were submitted in several clock rounds. If spectrum remained unsold after the clock rounds, it could be allocated in another round of bidding. The winners of the allocation phase then bid in the allocation phase for the specific blocks they needed.

Each frequency assignment holder must operate a certain number of 5G sites from a certain point in time (to be set on a case by case basis by the national regulator). This method aims to ensure effective use of frequencies, prevent frequency hoarding and encourage the expansion of 5G infrastructure.

5.3 What is the price and how is it calculated?

In the 2019 pioneer band auction, the bidders paid a combined EUR 188m (A1 Telekom: EUR 64.346m; Hutchison Drei: EUR 51.91m; T-Mobile: EUR 56.903m; MASS Response: EUR 1.845m; LIWEST: EUR 5.328m; Salzburg AG: EUR 4.359m; Holding Graz: EUR 2.998m)

In the 2020 multi-band auction, Magenta Telekom acquired 100 MHz of spectrum for a EUR 86.7m. Specifically, Magenta Telekom acquired 2x20 MHz in the 700 MHz band, 1x20 MHz in the 1500 MHz band and 2x15 MHz in the 2100 MHz band. Hutchinson Drei acquired 2x10 MHz in the 700 MHz band, 2x20 MHz in the 2100 MHz band and 1x30 MHz in the 1500 MHz band for EUR 49.5m. A1 acquired 2x25MHz in the 2100 MHz band and 1x30 MHz in the 1500 MHz band for around EUR 65.6m. In some regions, MASS Response, LIWEST, Salzburg AG and Holding Graz again acquired some frequencies.

See the link here.

The pricing was calculated on the minimum bidding amounts for the respective regions and was adjusted accordingly in the course of the multi-phase bidding process. The prices were significantly lower than those of the LTE auctions.

6. Is there a long-term spectrum plan or announcements for future tenders? 

All the relevant 5G auctions have taken place, in the pioneer-band auction (2019) and the multi-band (2020).

7. If 5G specific rules are drafted, what do they say?

The regulator has set specific rules for the tenders, and also made some comments.

See the link here.

Apart from that, the Austrian Telecommunications Act sets out nearly all the relevant regulatory standards for 5G. Nevertheless, the regulator has taken up the European Commission's proposed measures for secure 5G roll-out and issued a regulation on the basis of the current Telecommunications Act (Austrian Network Security Regulation). This imposes obligations on providers of electronic communications networks and services relating to minimum security measures, taking into account 5G networks, and information requirements in the event of security incidents. The regulation lays down more detailed provisions to ensure telecom network security At the same time, it is implementing many of the EU's catalogue of measures to increase cyber security in 5G networks. For further information, see point 11.

8. What focused 5G network or spectrum sharing regulation exists?

The 5G rules on network or spectrum sharing are the general ones of the Telecommunications Act.

The Austrian Telecommunications Act in particular also regulates the physical expansion of the network (establishment of communication lines). In this context, new lines can be laid over third-party properties and existing infrastructure - masts, empty conduits, shafts, lines, etc - can be shared. The regulatory authority may issue guidelines for compensation for network expansion.

9. Are 5G network sharing or spectrum sharing agreements in place? 

An obligation to network/spectrum sharing already exists by law (Section 48 f of the Austrian Telecommunications Act).

Accordingly, every public communications network operator must make an interconnection offer to other operators upon request. In this context, all parties must enable and improve communication among the users of different networks.

It can therefore be assumed that providers have already agreed to 5G network sharing and spectrum sharing.

10. What are or will be the rules for granting competitors access to new 5G networks once they are deployed?

Sec 48 f regulates the obligation to network/spectrum sharing agreements. Operators are thus obliged to grant competitors access to their own networks to provide interoperability among different 5G networks.

11. What comments have been made regarding 5G cyber-security and possible use of Chinese technology, including regulation?

As in many European countries, there are no formal legal restrictions on Chinese technology. Huawei is one of the relevant network suppliers for 5G deployment in Austria. Despite US sanctions, Huawei is still involved in the expansion/upgrade of the networks, in addition to Ericsson, Nokia and Cisco.

The regulatory authority, RTR, says it has no safety reasons to exclude Huawei from the network expansion. It has published a new regulation on network security in the course of the 5G auction, to ensure security throughout the country's telecom infrastructure. RTR drafted the regulation in cooperation with the relevant public authorities, suppliers and operators, thus creating clarity on the security criteria for 5G deployment.

The Austrian Network Security Regulation essentially contains three points:

  • The reporting obligations for network operators and service providers are clearly regulated in the event of significant security incidents.
  • There are specific requirements for minimum security measures.
  • There are special security requirements for 5G networks.

Furthermore, operators must pursue a "multi-vendor strategy", to encourage them to purchase hardware from several suppliers and therefore avoid dependence on one provider as well as ensure network security.

Austrian operators would likely refrain from cooperating with Huawei in the event of a union-wide approach, but are unlikely to do so themselves, because Huawei Technologies Austria works with about 230 local suppliers of hardware components and services. Thus, over the past five years, Huawei has achieved a local investment and procurement volume of EUR 190m. In principle, experts assume that excluding Huawei, or Ericsson and Nokia, could result in severe GDP losses. Annual investment costs would increase, and network deployment would be delayed.

Huawei is therefore likely to remain a significant factor in the 5G expansion.

See the link here.

Portrait of Egon Engin-Deniz
Egon Engin-Deniz
Partner
Vienna