1&1 Transitions Mobile Customers to Own Network, Relies on Vodafone Roaming

German telecommunications provider 1&1 has successfully migrated its mobile customer base to its proprietary network infrastructure, marking a significant milestone in the development of Germany's fourth independent mobile network. While this transition fulfills a regulatory requirement, most 1&1 customers continue to rely on roaming agreements with Vodafone due to the relatively small scale of 1&1's current network coverage.

Historically, 1&1 operated as a virtual network operator, leasing access primarily from O2 to provide mobile services to its customers. This arrangement changed following the acquisition of radio frequencies in 2019, enabling 1&1 to begin constructing its own mobile network using advanced Open-RAN technology, which allows for flexible integration of hardware from diverse suppliers.

The rollout of 1&1's network has faced several challenges, especially in meeting state-mandated coverage milestones. Initial progress was slow, with only a handful of base stations operational at the start of 2023, far short of the expectations set by regulators. Since then, the network has expanded to over a thousand stations, but remains modest in comparison to established competitors such as O2, which operates tens of thousands of sites nationwide.

Despite the limited coverage, 1&1 fulfilled its obligation to transition from a mobile virtual network operator to a full-fledged mobile network operator by ensuring that its more than 12 million mobile subscribers are now technically connected via its core network. This move is intended to foster increased competition and consumer choice in Germany's telecommunications sector.

However, the limited footprint of 1&1's infrastructure means that customers continue to connect to Vodafone's network when outside the range of 1&1's own antennas, thanks to a national roaming agreement. This arrangement ensures continuity of service and prevents disruptions for users as the company continues to expand its network presence across the country.

From a business standpoint, the shift to operating its own network has had a mixed impact on 1&1's financial results. While the company reported an increase in mobile customers, with the total rising to nearly 12.5 million by the end of September, fixed-line broadband subscriptions declined, resulting in a net decrease in that segment. Overall revenue remained steady at just over 3 billion euros for the first nine months of the year, but operating profit declined due to higher expenditures associated with the ongoing network rollout.

The development of a fourth mobile network is seen as a positive step for market competition, offering consumers greater choice and potentially more competitive pricing. Nevertheless, 1&1 faces the challenge of rapidly expanding its network infrastructure to reduce reliance on roaming agreements and to establish itself as a robust alternative to the established players in the German market.

As the company continues to invest in network expansion and technology, the coming years will be crucial in determining its ability to provide widespread and reliable service independently. The progress made so far demonstrates both the technical and regulatory complexities involved in establishing a new nationwide mobile network, as well as the potential for increased competition in Germany's telecommunications sector.