Europe wants to achieve digital sovereignty, be competitive and have a strong capacity for innovation. Broadband, 5G and, looking ahead, 6G are seen as the backbone of these ambitions. With the Digital Networks Act (DNA), the European Commission appears to be proposing a fundamental modernisation of the telecoms’ framework. Less fragmentation, more investment, greater planning certainty, more Europe.
However, a detailed analysis of the DNA — and, in particular, its interactions with other proposals such as the Cybersecurity Act (CSA2) and its new resilience and security requirements — suggests that the focus remains largely on regulatory measures. The result is a highly fragmented framework which, in some respects, could limit the ability of the market and investors to realise their potential. In this context, the proposal is unambitious in terms of structural reforms that decisively boost competitiveness and the integration of the single market.
Grand objectives, little ambition
The Commission frames the Digital Networks Act as part of an industrial policy strategy: Europe needs efficient and resilient networks to survive global competition. The basis for this was the reports by Mario Draghi and Enrico Letta, which have become the Commission’s working guidelines. However, there is a gap between the objectives and the proposals.
Instead of significantly simplifying the regulatory framework, its scope is considerably expanded. Whilst the current European Electronic Communications Code (EECC) has 127 articles, the draft DNA exceeds 200. Simplification is quite another matter, even if the integration of other regulatory frameworks into the DNA is envisaged.
However, the underlying policy rationale is significant. The EU’s approach continues to rely heavily on regulation as the primary lever for market development, rather than on mechanisms designed to incentivise investment. Whilst national specificities are recognised in theory, in practice they are subject to centrally managed harmonisation of rules.
A glimmer of hope in spectrum policy, but with uncertainty
The strongest aspect of the DNA is undoubtedly its spectrum policy. Longer or even indefinite licences, ‘renewal by default’, and greater European coordination alongside moderation of licence and fee prices send fundamentally positive signals. Investments in 5G SA and 6G require planning certainty; in this respect, the DNA effectively addresses a key problem from the past.
But here too, there is a certain tension with the intended objectives. Numerous exceptions to the principle of automatic renewal, a seven-year transitional period and unclear applicability to hundreds of licences expiring before 2035 undermine precisely the legal certainty that is actually intended to be strengthened.
Europe does not have a problem of knowledge, but of implementation: a spectrum policy more favourable to investment would be possible if this approach were prioritised.
Copper network switch-off: regulation at odds with reality
The regulatory burden is particularly evident in the issue of migrating from copper to fibre-optic networks. The DNA sets a mandatory deadline for the switch-off of copper networks at European level in 2035. What is intended to be an acceleration of fibre-optic roll-out entails considerable risks.
The starting points in Member States are fundamentally different. Whilst countries such as Spain have reached a high level of maturity in FTTH, Germany is clearly below 20% fibre-optic penetration in the end-user segment. The date set by the EU does not take these realities into account.
Another key aspect is that the DNA links the phase-out of copper to ensuring service provision to end-users but largely ignores the role of properly functioning wholesale markets. Without competitive wholesale products, there is a risk of massive market distortions, which could even lead to a new monopolisation of fibre. A market trend that can already be observed in Germany.
Rather than facilitating a market-driven migration, the current approach favours a transition guided by regulation. This is risky from an industrial policy and regulatory perspective.
Access regulation: the need for approaches adapted to new networks
When it comes to access regulation, too, the DNA remains stuck in the mindset of the 2000s. Maintaining the current approach may make sense in some markets, but it acts as a one-size-fits-all tool for very different situations and does not work in Germany.
Particularly problematic is the prioritisation of wholesale access to passive infrastructure as the primary and least intrusive remedy. In markets without competitive duct and shared-use infrastructure covering the entire territory – such as Germany – this model simply does not work.
Wholesale access products will, in the vast majority of cases, be the most proportionate, effective and investment-friendly instrument. This is particularly true in countries such as Germany, where households are typically connected solely via cable or copper infrastructure. However, on this point, the DNA is ambiguous. Price regulation may be possible, but it must be accompanied by clear guidelines. The result is uncertainty, both for investors and for competitors.
Net neutrality and privacy in electronic communications
One of the main shortcomings of the DNA lies in the areas of the Open Internet and ePrivacy. Instead of adapting these regulations to technological and market developments, the DNA perpetuates the status quo.
Net neutrality rules remain virtually unchanged, thereby ignoring 5G SA features such as network slicing or on-demand quality. Innovation is permitted, but only under conditions that make it, in effect, uneconomical.
Even more illogical is the clinging to ePrivacy. In addition to the General Data Protection Regulation (GDPR), a sector-specific data protection regime persists that affects exclusively telecoms providers. This regulatory asymmetry distorts competition and no longer fits within a cloud- and platform-based economy. Driving digital innovation in Europe requires the removal of special sector-specific regimes, not their preservation.
CSA and resilience: is dual regulation better?
The logic of European regulation is particularly evident in the interaction between the DNA and the Cybersecurity Act (CSA2), NIS2 and the CER Directive.
Instead of opting for horizontal, risk-based security regimes, the DNA establishes additional sector-specific requirements regarding network resilience and security: new institutions, new reporting and planning obligations, new European strategies — often with unclear demarcation from existing regulatory frameworks.
The result is not greater resilience, but greater complexity. Operators must comply with multiple, partly contradictory requirements. Investment decisions thus become riskier, not more sound.
Precisely in the case of security-critical infrastructure, it is important to combine an appropriate regulatory framework with trust in the operators’ expertise and responsibility.
The structural challenge of digital value creation
Another issue that has been correctly identified, but which should be addressed more effectively, is the imbalance between network operators and major traffic generators.
A small group of global platforms generates the bulk of data traffic yet does not contribute to the costs of network expansion, operation and resilience. The DNA acknowledges this problem by proposing a voluntary arbitration mechanism. However, voluntariness is of little help when structural market power prevails. Without binding negotiation and dispute resolution mechanisms – which would be a clear solution from a market economy perspective – the approach lacks effectiveness.
Greater trust, more proportionate regulatory approaches
The Digital Networks Act offers an opportunity to rethink European telecoms policy: moving towards a more investment-oriented approach; moving away from sector-specific over-regulation and towards horizontal, technology-neutral rules.
Instead, the DNA reinforces a familiar pattern: ambitious objectives and fragmented instruments. Combined with the CSA2, NIS2 and other initiatives, this does not create an agile, investment-friendly environment, but rather a regulatory tangle.
The DNA fails to bring about structural relief for the telecoms sector. Instead, the focus has been on ad hoc fixes within a regulatory paradigm that is ill-suited to the new realities of the digital ecosystem. At the same time, with its detailed provisions on access, end-user rights and network operation, it maintains a level of oversight that is not in line with either the market maturity of many Member States or the investment needs of modern gigabit and mobile networks.
The CSA2 and the accompanying resilience requirements introduce additional challenges. Instead of opting for horizontal, risk-based security frameworks such as NIS2, additional sector-specific obligations, new governance structures and overlapping competences are emerging. This does not increase security, but rather regulatory friction, and absorbs resources that would be needed for network expansion and innovation.
Europe will not achieve its digital ambitions by constantly creating new rules, but through trust in markets, competition and entrepreneurship. As long as regulation is primarily limited to managing risks rather than facilitating investment, Europe will not achieve its digital ambitions, either in global competition or in its own internal market. Unfortunately, the DNA, in its current form, does not represent a decisive step forward, but rather a foundation upon which to continue building a regulatory framework that strengthens the European digital market.
Original article: Standpunkt zur EU Telekommunikationspolitik:Digital Networks Act zu unambitioniert?, BASECAMP O2 Germany
