More power in the hands of the European Commission and other central agencies but a lack of bold leadership: GSMA sums it up as “evolution where revolution was required”
The European Commission published its proposed Digital Networks Act, designed to update, simplify and harmonise the European Union’s regulatory approach to telecoms infrastructure. This includes mobile, fixed, non-terrestrial networks, cloud and their associated ecosystems.
The goal is to encourage investment and ensure access to reliable, secure, fast digital infrastructure across the bloc as the foundation of a safe, connected and prosperous EU. If all goes to plan, it will supersede the European Electronic Communications Code (EECC), simplifying compliance with regulatory obligations and thereby reducing the burden of compliance.
The document is over 600 pages long so it will take a considerable time to digest. One probable bone of contention is immediately clear: in its drive to streamline and accelerate progress of the EU’s digital infrastructure, the DNA will consolidate power in the hands of the Commission and other EU agencies like BEREC – which is not universally popular – and some new central agencies.
As Luke Kehoe, Industry Analyst at Ookla, put it, “The European Commission’s Digital Networks Act is a surgical intervention rather than the ‘game-changing’ revolution promised in the [Thierry] Breton era.
“The rhetoric of a Telecoms Single Market remains, but the text reveals a pragmatic, aggressive shift of power from national capitals to Brussels in spectrum governance and satellite authorisation, framed as reducing fragmentation and boosting sovereignty in a fraught geopolitical context where telecoms infrastructure has become a core pillar of European industrial strategy and security. [Also see this recent report from Vodafone.]
“For operators, the DNA offers a clearer path to scale but stops short of the ‘fair share’ payments they lobbied for.”
Doesn’t go far enough
Laszlo Toth, Head of Europe at the GSMA [which represents mobile operators around the globe], commented, “Europe’s ability to compete in the digital age will unfortunately not be turbocharged by the proposed version of the DNA.
“While the ambition of the approach to spectrum licensing is welcome, ultimately this is not matched across the rest of the proposals. This would leave the connectivity industry continuing to struggle to secure the investment needed to underpin the continent’s growth, innovation and security.
“We now must work with the Parliament, Commission and Member States to build on these proposals and deliver a DNA that can return Europe to a digital leadership role.” The GSMA also described the DNA as “evolution where revolution was required”.
An end to transposition?
The shift of power to the Commission is demonstrated by a big change from previous regulation – whereas directives were ‘transposed’ into the national regulatory and legal frameworks of each of the 27 Member States, in future obligations must be applied directly rather than interpreted. This is on the grounds that transposition caused fragmentation due to the lack of uniform implementation, which for example, can prevent, cross-border cooperation and integration.
Similarly, in the interests of speed and simplicity, the proposed ‘Single Passport Authorisation’ means that the provision of networks and services across the EU only has to be notified by one of the Member States involved rather than them all. This does not apply to so-called over-the-top services – in official parlance ‘number-independent interpersonal communication services’.
The Body of European Regulators for Electronic Communications (BEREC) is to set up a harmonised template for notifications and Member States cannot impose extra or separate notification requirements. However, conditions for authorisation will encompass compliance with cybersecurity rules (see separate article on proposals to update the Cybersecurity Act, published on the same day as this draft of the DNA).
Ookla’s Kehoe comments, “The single-passport authorisation is the headline development,” but warns, “Whether this enables genuine cross-border business models (or simply reorganises paperwork) depends on how ‘mutual assistance’ provisions [laid out in the draft] work in practice.”
Despite the drive for greater harmonisation, telcos and communication service providers will still be subject to individual Member State’s requirements, which are likely to differ considerably, and national enforcement. Having two masters is always a tough gig.
Vapours over cloudcos…
Another controversial area is the DNA’s approach to US cloud giants and content providers. Ahead of the publication of the draft DNA, there were accusations of watering down proposed rules to counter the dominance of US cloud giants and make them pay for the costs they create for others (European telcos call this ‘fair share’) which had been badly received by the US Administration.*
In November on a trip to Brussels, Howard Lutnick, the US Commerce Secretary, told the EU bluntly that it must loosen its proposed tech regulations if it wants the US to lower tariffs on its steel and aluminium. He also said that the EU should “solve” outstanding cases against Google, Microsoft and Amazon and “create a framework that we are comfortable with,” according to a report in the Financial Times [subscription needed].
Well arguably the US got what Lutnick demanded in the shape of the Digital Ecosystem Co-operation and voluntary conciliation procedure instead of implementing a fair-share deal under which those who create costs (the handful of hyperscalers to create the vast majority of network traffic requiring massive investment in infra to carry it) must cover them.
Instead, the draft DNA proposes that BEREC should publish guidance to promote cooperation among those who provide electronic communications networks and closely related sectors, like content providers and cloudcos. It also proposes to introduce a voluntary conciliation procedure.
The voluntary nature of the proposal has led to some, like the GSMA, feel betrayed, but Kehoe has a more nuanced response, saying the fair-share “debate has been sidestepped rather than resolved. So-called ‘large traffic generators’ face no binding fees. Instead, an ‘ecosystem cooperation’ framework offers voluntary conciliation with no enforceable outcome.”
…or keeping your powder dry?
In Kehoe’s view, it’s not necessarily the end of the road for ‘fair share’ as the Commission retains the option of future intervention without triggering conflict with the August 2025 US-EU trade agreement. After all, the temperature is plenty hot enough at the World Trade Forum at Davos. “The fight has been deferred, not decided, and could be repurposed quickly if political conditions shift,” according to Kehoe.
And there are other possible takes on this too: Simon Dumbleton, CTO for World Wide Technology (via55), argues, “The more interesting shift is commercial. With regulatory solutions off the table, telcos will need to rethink how they capture value – moving beyond connectivity alone.
“That could mean closer commercial cooperation, leveraging trusted billing relationships, bundling digital services, or acting as distribution partners for large traffic source offerings. The future lies in creative partnerships rather than regulatory confrontations.”
Arguably, having got precisely nowhere despite lobbying efforts for more than a decade, maybe telcos do need to move on.
Is BEREC the right instrument?
Perhaps a more concerning aspect of the Digital Ecosystem Co-operation is making BEREC responsible for its oversight (among other things like the Radio Spectrum Policy Board – see below). Some would say it is not fit for purpose. For instance, in 2019, after a year-long investigation in which it had to fight for access to information at every step, Strand Consult accused BEREC of a lack of transparency and focusing on the wrong parameters and parties for its work on network neutrality.
Strand found that BEREC’s preferred group of stakeholders were the advocacy organisations AccessNow, EDRi, ISOC, and BEUC, all of which apart from BEUC received funding from Google. Strand also found operators were often unfairly penalised due to assumptions about what consumers wanted and a misplaced focus on transmission speeds, over other factors like reliability and coverage.
Today in an interview with Mobile Europe, John Strand, founder and CEO of Strand Consult said, “If you are giving BEREC bigger responsibilities, it must deliver. In my view, we need a new organisation, to reimagine, recreate and rebrand BEREC to make it fit for purpose.”
Interestingly, there is also scope to harmonisation information gathering powers and requirements in the draft DNA, such as allowing the Commission to propose methodologies regarding the collection of information, and guidance for BEREC and proposed Radio Spectrum Policy Board (RSPB – see below). This could also be interpreted as putting more power in the hands of the Commission and its agents.
Net neutrality not much revisited
On which subject, the DNA is to include the EU’s net neutrality framework, established a decade ago, pretty much as it stands including for zero-rating rules, which have been contentious. Although zero-rating is legal, “some countries and regulatory authorities want to criminalise it, prosecuting operators for traffic management practices rather than commercial ones to avoid time-consuming economic assessments which often favour the operators,” according to the Strand research.
Regulation 2015/2120 was formally adopted by the European Parliament and Council in October/November 2015. Implementation began in 2016. However, net neutrality will potentially be strengthened in terms of enforcement as it is proposed that ISPs will be obliged to report on their safeguarding of the principle every two years. At the moment, they only have to provide proof of safeguarding net neutrality if requested to do so.
Space and spectrum
As direct-to-device (D2D) rapidly gains momentum, the draft proposes a single EU authorisation for satellite services to support the greater scale and number of satellite constellations. This authorisation will refer to a new European Table of Allocation of Satellite Frequencies which the Commission is to set up.
Kehoe notes this is where “the Commission has been boldest. EU-level authorisation for satellite constellations eliminates regulatory fragmentation that advantaged non-European operators. For IRIS² and future European LEO ventures, this is a direct play for technological sovereignty, aimed at exerting control over non-EU constellations like Starlink and Kuiper/Leo. It positions the Commission as gatekeeper for pan-European spectrum access.”
The cost of spectrum, its fragmented allocation and terms of use are also to be harmonised. These issues have been a huge issue for telcos, including that the high prices charged by some national administrations that damaged telcos’ ability to invest in infrastructure.
The Commission is striving to streamline the allocation and grant licences of unlimited length, which will be subject to regular reviews. Other proposed changes include allowing spectrum sharing and obliging operators that don’t use their allocated frequencies to share them. Kehoe observes the spectrum proposals are a mixed blessing, applauding the shift towards indefinite-term licences which cause uncertainty around the recurring auction cycle and discourage investment. It would also stop some Member States as treating spectrum auctions as cash cows.
On the other hand, “it introduces mandatory EU-level scrutiny of significant national assignments. Member States will consider this centralisation (and a serious loss of autonomy) by stealth while the Commission will call it coherence. Both are correct,” Kehoe states.
Changes to the governance of digital infra
The DNA proposes the creation of an Office for Digital Networks (ODN) in Riga, Latvia, which will bring changes to the governance framework. The ODN is to support BEREC and assist the proposed new RSPB which is expected to replace the Radio Spectrum Policy Group and assume its workload.
The ODN will also be responsible for drawing up an EU Preparedness Plan for Digital Infrastructures which reflect the rising focus on cybersecurity and risks to the ICT supply chain. The Preparedness Plan will complement the proposed revised Cybersecurity Act (the draft for which was also published today) and other cybersecurity rules including NIS2.
“The resilience framework is the least glamorous but potentially most consequential section,” says Kehoe. “Operators face obligations ensuring network availability during crises, including emergency comms continuity and public warning systems. BEREC must produce a Union Preparedness Plan while the Commission gains cross-border incident coordination. None of this would have seemed urgent five years ago. With submarine cable vulnerabilities exposed in the Baltics and GNSS [Global Navigation Satellite System] interference now routine in Eastern Europe, it is well overdue.”
Status quo
ECTA (the European Competitive Communications Association which represents communications service providers who are not Tier 1) commented in a statement that it is pleased the EU’s “ex-ante access regulation will remain in place where needed to ensure competition and address market failures. ecta will nevertheless assess whether the Commission’s proposal effectively safeguards the competitive landscape that has driven Europe’s connectivity and innovation.
“ecta maintains that Europe’s long-term competitiveness requires a vibrant, diverse and innovation-driven, telecommunications ecosystem. Ensuring a broad range of market participants of all sizes and encouraging a wide variety of products and services is vital to empowering the entire European economy and unleashing its digital potential.”
Finally, in this round-up anyway, the copper switch off deadline will be pushed out from 2030 to the end of 2035. Five years is a long time in telecoms.
What will come out the other end?
The proposed DNA next goes before the European Parliament (pictured) and Council of Ministers for approval. Expect a lot of wrangling between them and the Commission, resulting in many amendments and compromises, due to internal differences of opinion and priorities, and prickles about national sovereignty. This is not to mention some powerful external influences, from oversea governments to trade bodies like the GSMA.
* [Note that the White House recently said Big Tech should cover its own rising electricity costs as demand soars to power data centres for AI. Clearly covering the costs you cause is applicable in the US where voters got the poll later this year, but not in the EU.]
