What makes funk so expensive?

Mobile surfing in Germany: why are mobile flat rates so expensive?

Fast LTE tariffs with a lot of data volume are sometimes more than twice as expensive in Germany as in other EU countries. Why is that? An attempt to explain.

You can get a cheap mobile phone tariff for making calls and text messages for just a few euros. Mobile surfing is comparatively expensive in Germany. In particular for unthrottled LTE tariffs with a lot of data volume and surf flat rates, German customers have to dig much deeper into their pockets than users in other EU countries.

The major providers Telekom and Vodafone are calling for around 80 euros in this country for their top tariffs. In return, customers receive full LTE speed and unlimited data volume. In the neighboring countries there is a comparable service for a fraction of the price, as an exclusive listing of the comparison portal Verivox for t-online.de shows (see table).

In an EU comparison, mobile phone prices in Germany are very high. (Source: t-online / Benjamin Springstrow)

One should not forget that the LTE coverage in all of the EU countries listed above is better than in Germany. As an evaluation by the cellular network analysis company Opensignal shows, users in many parts of Germany have no LTE reception most of the time. On average, the LTE coverage in the area is just under 66 percent. Some rural and border regions are significantly lower.

In other words: Of all the countries shown, users in this country pay the most for their LTE tariff - but they get the least of it. How can that be justified? Experts give different answers. We summarize the most important explanations.

Reason 1: Network expansion is expensive

Telekom, Vodafone and Telefonica are investing massively in the expansion of the mobile network. The goal: 99 percent of households should be supplied with fast LTE by the end of 2021. To do this, thousands of new cell phone masts have to be erected and put into operation. According to official data from the federal government, an LTE transmission system costs around 170,000 euros.

The choice of the location is crucial, explain the mobile communications experts from Verivox: "It is important that the masts are positioned in such a way that the entire covered area can be reached roughly equally well by the radio waves. If there is a mountain 'in the way', it will be difficult. " A few meters could mean that a nearby place is more difficult to reach. In less densely populated and inaccessible regions of Germany in particular, the network is therefore poor and expansion is very expensive.

Reason 2: The frequencies devour billions

In Germany, the mobile radio frequencies are awarded by the state in an auction process. That always leads to discussions. Critics say that this artificially increases costs for network operators.

Many experts still cite the proceeds from the UMTS auction from 2000 as the main reason for the high mobile phone prices in Germany. At that time, network operators paid a total of 50.8 billion euros for UMTS licenses - much more than in other countries.

That is why there are repeated calls for the auction process to be dispensed with and for frequency allocation to be linked to state requirements instead. The connection between the high license fees of yesteryear and the high surfing tariffs of today is far from proven. After all, the UMTS auction was almost 20 years ago.

Many economic experts are of the opinion that the auction process has proven itself. It is definitely worth it for the state: the 5G auction again raised more than 6 billion euros. Ultimately, only the network operators would benefit from free allocation.

Reason 3: Important sources of income have collapsed

Another political decision has certainly had a positive impact on consumer prices: At the end of 2018, roaming charges in other EU countries were abolished. This means that an important source of income for the provider has disappeared. To this day, companies are trying to limit the damage and creating exceptions for foreign use, for example with so-called zero-rating tariffs. Others invent purely national tariffs.

The slow extinction of SMS is also affecting cell phone providers. The old-fashioned short message was once considered the industry's "cash cow" because it caused practically no additional costs. Nevertheless, the providers could charge a few cents for each short message. Today people prefer to use WhatsApp and a flat rate. The data tariffs are charged for this.

Reason 4: Germans are too frugal

There is not much money to be made on the German mobile communications market, at least not from private customers. Providers experience this again and again. Because the Germans are extremely economical in their mobile data consumption.

German customers consume an average of 2.5 gigabytes per month. That's not a lot. Suitable tariffs can be found for a few euros. More money could be made with premium tariffs. But only very few Germans allow themselves the expensive data flat rates. "In Germany, such flat rates are only demanded by private customers in the low single-digit range," said a Verivox spokeswoman.

One can of course argue about the cause and effect: Would customers surf more mobile if fast LTE tariffs were cheaper and the fast network was actually available everywhere?

Ultimately, this is where the cat bites its tail: The low demand can be explained on the one hand by the high prices and poor network coverage. Conversely, the network operators without customers willing to pay lack the money (and the incentive) to drive the network expansion.

And now?

At the weekend, the federal government will meet for a digital retreat in Meseberg. There she also wants to adopt a new mobile radio strategy, with which the last dead spots are to be removed and the network quality to be improved. The state wants to spend a lot of money on this and, if necessary, even erect radio masts itself. You can find out more about the plans here.

How this will affect cell phone prices is unclear. In any case, the federal government wants to stick to the model of license auctions. There is also no requirement for regional or national roaming. This would favor these low-cost providers and could increase the price pressure on the three large providers. Critics fear, however, that the investment incentive for the network operator will be lost. Because when the prospect of big profits dwindles, building a new radio mast is hardly worthwhile.

With its new package of measures, the Federal Government is making it clear what it currently has priority: It absolutely wants to ensure that the network expansion proceeds faster - at any cost. It may therefore remain expensive for customers.

more on the subject

  • Subjects:
  • Digital,
  • Cellular,
  • Network policy,
  • Smartphone,
  • LTE,
  • Consumer prices,
  • Deutsche Telekom AG,
  • Vodafone,
  • Digital tips,
  • Roaming,
  • Germany