'5G' — 'fifth generation' — is the latest, high-speed generation of cellular mobile communications and the government will require winning bidders to offer 5G service to at least 98 percent of German households, motorways and rail lines.
Germany, Europe's biggest economy whose wireless networks rank 46th in the world for download speeds, wants to close the sizeable digital gap by making the shift to the ultra-fast 5G system.
Although Germany has a reputation for falling behind when it comes to technology, its plans for high speed internet appear to show its ahead of the curve this time.
However, it's a long game: as anticipation for 5G grows, telecoms are still rolling out their 4G capacity. Germany hopes 4G will be available across all of its most important railways by 2022, according to business daily Handelsblatt.
It is estimated that 4G usage in Europe will peak in 2023 and that 5G will be available to about three-quarters of Europeans by 2025. However some 5G services could launch before the end of the year.
Hamburg is already trialling the super speedy 5G data service after it was chosen as one of two European test cities, along with Venice. 5G promises download speeds 10 to 20 times faster than we have now.
The BNA (Federal Network Agency) was due to start the auction in Mainz at 10am on Tuesday and the process will allocate 41 different frequency blocks.
Four operators are in the running, among them Germany's three main mobile network providers — Deutsche Telekom, Vodafone and Telefonica Germany (O2) — plus United Internet (1&1), a German company specialising in internet services.
Dispute with US
It came as a transatlantic dispute rages over security concerns surrounding giant Chinese telecoms equipment maker Huawei.
The United States has threatened to end intelligence sharing with Berlin if it does not exclude hardware made by Huawei from the infrastructure, arguing that Chinese equipment could help Beijing spy on Western companies and governments.
Attempting to play down the row on Monday, Jochen Homann, chairman of the German Federal Network Agency (BNA), said: “No matter whether a supplier comes from Sweden or China, companies must meet certification requirements and security checks.”
Chinese firm Huawei is not one of the bidders but provides the four German companies with essential hardware — such as antennas and routers.
The US has accused Beijing of using Huawei's 5G network gear as a Trojan horse, forcing operators to transmit data to the regime, but Washington has not provided evidence to support their suspicions.
Huawei has strenuously denied allegations its equipment could be used for espionage.
Chinese Foreign Minister Wang Yi on Monday lashed out at what he called “abnormal, immoral” attacks on Huawei and demanded a “fair and just competition environment” for Chinese firms.
US-led attempts to encourage other nations to ban Huawei equipment from their telecoms infrastructure suffered a setback when Chancellor Angela Merkel's government decided against imposing company specific-restrictions on the 5G auction.
US fears of security compromise
According to media reports, US ambassador to Germany Richard Grenell last week warned that Washington could stifle intelligence cooperation unless Berlin agreed a Huawei ban.
In a letter, Grenell told Peter Altmaier, Germany's economy minister, that intelligence-sharing cooperation could cease if Berlin allows the Chinese firm to be part of the 5G network.
The threat escalated last week when NATO's Supreme Allied Commander in Europe, US General Curtis Scaparrotti, warned Germany that NATO forces would cut communications if Berlin works with Huawei.
“We're concerned about their (Germany) telecommunications backbone being compromised in the sense that, particularly with 5G, the bandwidth capability and ability to pull data is incredible,” Scaparrotti told the House Armed Services Committee last Wednesday.
“If it also is inside of their defence communications, then we're not gonna communicate with them.
“And for the military that would be a problem.”
Merkel has tried to reassure senior figures in Washington by saying Germany would consult with the US over whether to use Huawei tech, but would “define our standards for ourselves”.
However, Germany's Federal Intelligence Service (BND) shares some of the US fears.
BND security experts have asked the government to take China's overall strategy into account, including a law on forced cooperation in security matters, according to a report in Der Spiegel magazine.
Other media outlets claim Berlin is drawing up a catalogue of measures, for all 5G providers, to change the telecommunications laws.
These measures range from a non-espionage clause to the requirement of testing all components and the obligation to publish source code used in infrastructure.
In some cases, the government could insist equipment already installed is replaced, which could exclude Huawei from the infrastructure without pronouncing a formal ban on the Chinese firm, according to Handelsblatt.