This crisis could be a historic chance for Europe to strengthen its economic, technological and political autonomy after decades of deep dependence on Washington
Donald Trump’s return to the White House has reignited transatlantic trade tensions. His administration introduced tariffs on the European Union, imposing a blanket 10% duty on nearly all imports – along with even steeper rates that remain suspended pending negotiations. These measures threaten billions of euros in EU exports and have prompted Brussels to warn of the severe mutual harm a potential trade war could inflict.
At the same time, Europe is taking steps to reduce its dependence on the United States. Brussels has accelerated the diversification of its economic partners by signing the long-awaited free trade agreement with the South American Mercosur bloc and commercial agreements with countries like Mexico and Switzerland, while also relaunching negotiations with India.
In parallel, Europe’s “technological sovereignty” has become a strategic priority. The EU has presented plans to strengthen its internal industrial capabilities in critical sectors (from AI to semiconductors) and is evaluating the creation of a European digital payment system to serve as an alternative to US-based networks such as Visa and Mastercard.
Historic opportunity
Despite initial shocks, this crisis could represent a historic opportunity for Europe to strengthen its economic, technological and political autonomy after decades of deep dependence on Washington. Although these strategic plans require significant upfront investments (the Draghi plan estimates around €800 billion per year), their implementation could lead to long-term economic and competitive advantages for the EU, ensuring independence from non-European countries.
Among the sectors examined by Mario Draghi in his white paper The Future of European Competitiveness, telecoms emerge as a crucial lever for closing the well-documented productivity gap in digital services – a domain in which the European Union continues to lag global competitors such as China and the US significantly.
This productivity shortfall is largely concentrated in the digital services sector, where the dominance of major US firms in the European market has been enabled, at least in part, by a lightly regulated environment, insufficient safeguards for competitive dynamics, and increasingly high barriers to entry for new players.
In this context, the case of connectivity services and the broader telecoms ecosystem is particularly emblematic. The development of connectivity offerings by telecom operators has been seriously constrained by stringent regulation and antitrust policies aimed at preserving high levels of competition—typically ensuring the presence of at least four operators per EU Member State.
At the same time, national control over security and spectrum allocation has hindered the emergence of pan-European operators capable of harnessing economies of scale within a truly integrated connectivity market, as thoroughly explored in Enrico Letta’s report Much More Than a Market.
Capturing market value
Meanwhile, digital services delivered seamlessly over telecoms networks have steadily captured increasing market value, diminishing the relative worth of connectivity itself. As a result, Europe’s ecosystem has been largely unable to develop digital services independent of dominant American tech giants.
Identifying the strategies that Europe – both policymakers and market actors – can pursue to regain strategic autonomy and boost productivity in digital services is a complex challenge. Yet, the growing geopolitical tensions around trade and technology, sparked by the Trump administration, have added urgency to the issue, heightening public awareness and creating new avenues for action that were previously overlooked.
To explore viable options and map out potential futures in a structured manner, a “grand challenge” is underway within the RESTART research program, funded by the European Union through NextGenerationEU as part of Italy’s National Recovery and Resilience Plan (PNRR). This initiative aims to develop a forward-looking vision for the European telecoms ecosystem. Involving all 32 projects within the program, the challenge seeks to define both the economic trajectories and technological evolution that will shape Europe’s telecom landscape in the years ahead.
A toolkit to respond to unexpected shocks
The aim isn’t just to sketch out possible futures, but to chart development paths and help industry players gear up for the changes ahead. Foresight analysis plays a crucial role in this process: it sheds light on the long-term impact of today’s decisions, flags risks and opportunities on the horizon, and helps shape smart strategies for growth and resilience. At the same time, it gives policymakers a toolkit to respond to unexpected shocks – offering direction in navigating toward the most promising and sustainable outcomes.
The research has been carried out by a team of the Digital Innovation Observatories of the Politecnico di Milano, which recently released the second edition of the white paper A Techno-Economic View of the Future of Telecommunications. The project unfolds in three phases. The first, presented in 2024, offered an in-depth analysis of the European telecomms landscape, revealing its growing complexity. Once defined by a linear, vertically integrated value chain, the sector has transformed into a five-layer ecosystem where players from diverse industries engage in increasingly intricate roles and relationships.
In this new configuration, the dominance of any single actor is steadily eroding. The second phase led to the definition of four evolutionary scenarios, based on a strategic and technological foresight process. The third, ongoing phase focuses on estimating the economic value generated by each scenario and defining operational guidelines for both public and private stakeholders.
The four scenarios outlined in the report range from cautious continuity to bold transformation. At one end of the spectrum is the most conservative vision: a “slow evolution” in which Europe’s telecom operators steadily lose ground, squeezed by shrinking margins, fierce competition, and innovation led by non-European players.
At the other end lies a more ambitious scenario, where a fully unified European market emerges. Here, cross-border mergers and acquisitions give rise to a handful of pan-European champions, capable of competing on the global stage thanks to coordinated investments and harmonized regulation.
Gradual unbundling of infrastructure and services
The third scenario envisions a gradual unbundling of infrastructure and services, paving the way for new business models and positioning a European cloud and AI consortium at the heart of the ecosystem. The goal is to build open, interoperable platforms that foster innovation and reduce dependency on foreign tech giants.
The most transformative scenario goes even further, imagining a fully separated infrastructure layer and the creation of a shared European network. This network would underpin advanced digital services across the continent, supported by unified regulations and strategic public investments in key technologies like AI, cloud computing, and cybersecurity.
Each scenario is constructed by extrapolating specific elements and variables to their extremes, creating a broader landscape of possible futures. This framework also accounts for hybrid outcomes – paths that emerge from combining different factors at varying intensities. Ultimately, the direction Europe takes will depend on political will and strategic choices across the ecosystem. Only some of these paths, however, will lead to greater competitiveness and true technological sovereignty.
Key strategic levers
An example of a key strategic lever that could shift Europe’s trajectory is the potential creation of a European cloud and AI consortium – an initiative designed to challenge US dominance, much like the formation of Airbus in the aerospace sector. Interestingly, this concept emerges across several scenarios and closely mirrors the goals of the Eurostack initiative. Eurostack aims to build a sovereign technological infrastructure, strengthening Europe’s capabilities across the entire digital value chain – from semiconductors to data, computing to connectivity.
Another compelling example is the innovative market structure outlined in the fourth scenario, which imagines a European ecosystem fundamentally different from those of the US or China. At its core is a clear separation between infrastructure and services, supported by a regulatory framework that not only allows for public investment in infrastructure, but also cultivates a vibrant, competitive environment for service innovation across a diverse range of players.
Ultimately, avoiding future of decline will require the EU to adopt a coherent, industrial strategy – one that is shared across Member States – and a regulatory framework capable of shielding the European ecosystem from dominant external players, without compromising competition or citizens’ access to services.
In this context, rising international tensions should not be seen solely as a threat, but also as a timely opportunity to recalibrate the European model. What’s needed now is long-term vision: charting sustainable trajectories, making strategic choices, and investing in Europe to reclaim a leading role in global markets while delivering a digital future that is autonomous, secure, and competitive for its citizens.
About the author
Antonio Capone is Scientific Director of the 5G & Connected Digital Industry Observatory at the Politecnico di Milano
