The debate surrounding the future European Digital Networks Act (DNA) presents a unique opportunity to reconsider the framework that regulates connectivity on our continent. For this reform to guarantee cutting-edge connectivity that drives digital innovation in Europe, it is essential to start from a clear premise: only by thoroughly understanding how connectivity has evolved—technologically, economically and industrially—we can oversee its development with regulations and policies that respond to market realities and keep pace with innovation and technological convergence.
In this context, Telefónica presents the policy brief “Connectivity for European strategic autonomy“, a document that analyses the evolution of connectivity in recent decades and sets out specific public policy recommendations to ensure a balanced, competitive and future-proof network ecosystem. A contribution to the European debate that combines industrial vision, regulatory reality and strategic ambition.
The new telco-edge-cloud paradigm
Connectivity is no longer an isolated infrastructure but has become the fabric on which the digital economy is built. Today, connectivity is entering a new phase. What was once a linear value chain, led by telecommunications operators, has become an interdependent network of actors and technologies. Fibre and 5G networks, cloud and edge computing, artificial intelligence, submarine cables and low-orbit satellites now form an interdependent, global and highly dynamic ecosystem. In this new context, connectivity not only enables services: it determines the competitiveness of businesses, the resilience of societies and Europe’s strategic digital autonomy.
This profound technological change requires an equivalent change in the way public policies are regulated and designed. Current frameworks designed for connectivity, with clear boundaries between networks and services, are no longer adequate for an environment in which those boundaries have become blurred. The debate on the Digital Networks Actmust therefore be approached with a comprehensive and long-term vision: not as an incremental adjustment, but as a structural reform that recognises technological convergence, promotes investment and ensures a balanced, sustainable and competitive connectivity ecosystem for Europe.
European operators are at the heart of this transformation. Investments by other players, although significant, do not replace the need to continue strengthening backbone, aggregation and access networks, where operators continue to play a central role. This means that they remain the main investors in connectivity infrastructure, contributing around 60% of total investment in the European digital ecosystem, ahead of the 30% invested by content and application providers and the 10% invested by equipment manufacturers. At the same time, in a context of accelerated innovation, operators have adapted by migrating to cloud architectures, adopting more flexible OpEx-based business models, developing edge solutions and exploring new proposals such as Network-as-a-Service, as well as alliances with other players in the ecosystem.
Digital Networks Act: an opportunity for European digital sovereignty
This technological dynamism has been driven by a profound reconfiguration of the value chain. Large digital platforms, global cloud providers, infrastructure companies and satellite operators have entered areas traditionally managed by telecommunications. Many of these players operate on a global scale, with far greater financial capacity and, in many cases, under regulatory frameworks that are more lax or asymmetrical in relation to telecommunications operators. Today, a small number of non-European platforms account for more than half of the data traffic on European networks, capturing a growing share of the value generated.
This imbalance is unsustainable. Although all players benefit from the quality and resilience of the networks, not all contribute proportionally to their deployment and maintenance, nor do they operate under the same obligations. The result is growing pressure on the profitability of the telecommunications sector, which limits its capacity for future investment and thus jeopardises the European Union’s digital and strategic objectives.
The current regulatory framework does not reflect this new reality. It is fragmented, sectoral and based on assumptions that no longer hold true. Significant asymmetries persist in areas such as service regulation, taxation, spectrum, privacy and security. As Connect Europe and the GSMA point out, applying rules from the past to a converging ecosystem not only slows down innovation, but also amplifies existing distortions and weakens Europe’s position vis-à-vis integrated global players.
Hence the importance of the debate on the European Digital Networks Act. This future regulation must be the vehicle for a structural reform of connectivity governance in Europe. A reform that takes a horizontal approach, applicable to all players in the value chain based on the services they provide, rather than their historical identity. A reform that encourages investment, fosters innovation and ensures a level playing field.
Reform priorities: investing, gaining scale and competing in the global digital market
Among the priorities, the need for a spectrum policy that is investment‑oriented and based on a long‑term vision stands out, with long‑duration licences, reasonable prices, and no discrimination between technologies and services that compete for the same users. Equally important is the creation of effective and mandatory mechanisms for resolving disputes between operators and major providers of content, applications or cloud services, allowing existing imbalances in negotiating power to be corrected.
But reform cannot be limited to the sectoral level. An update of EU competition policy is also essential. The dominant approach, focused almost exclusively on short-term price reductions and the artificial preservation of market fragmentation, has weakened the sector’s sustainability. Europe needs operators with sufficient scale to compete in a global market dominated by non-European digital giants and to invest sustainably in next-generation networks, edge computing, artificial intelligence and quantum security.
Incorporating an industrial and strategic vision into merger control, reviewing current thresholds and gearing regulatory remedies towards long-term investment and consumer welfare objectives is not a concession to the sector: it is a necessary condition for strengthening European competitiveness and strategic autonomy.
