At the FT-Connect Europe Forum, much of the discussion centred on a question that goes far beyond telecommunications: is Europe creating the conditions needed to invest, innovate and compete in the digital economy? The answer depends on several policy files currently being negotiated in parallel, notably the Digital Networks Act, the revision of the Cybersecurity Act, the new merger guidelines, and broader initiatives linked to European technological sovereignty, such as the Cloud and AI Developement Act (CADA).
The geopolitical context leaves no room for delay. Technology is no longer only about innovation or productivity; it has also become a matter of economic security, resilience and strategic autonomy. For this reason, the competitiveness of European companies and technological sovereignty can no longer be separated. Without the capacity to invest, Europe will deepen its dependencies in the very technologies that will shape its future: connectivity, cloud, edge computing, cybersecurity and artificial intelligence. The diagnosis has already been made. Draghi and Letta placed fragmentation, lack of scale and investment gaps at the centre of the agenda. What is missing now are decisions, and those taken in the coming months will shape much of the investment landscape for the next decade.
At Telefónica, we believe three decisions are needed: better rules, scale with purpose and a contract based on commitments. Three decisions, not three debates.
Better Rules, Not Just Fewer Rules
The Digital Networks Act should be more than an update of telecoms regulation. Connectivity can no longer be viewed as a purely sector-specific market. Networks are the infrastructure that underpins artificial intelligence, cloud computing, edge computing, cybersecurity and much of our economy’s digital transformation.
The DNA should therefore be an opportunity to advance towards a technologically advanced Europe, supported by a simpler, more predictable and investment-friendly framework.
Simplification matters, but simplification does not simply mean fewer rules. It means better rules: regulations that are more coherent and designed to promote investment, innovation, resilience and business competitiveness. In practice, this means consistent implementation, initiatives that provide long-term certainty for investment and fewer overlaps between regulatory frameworks.
Anyone deploying fibre and 5G understands that networks are planned over ten- or twenty-year horizons. Regulation should follow the same logic.
Scale with Purpose
Europe needs companies with sufficient scale to invest, and that scale is built in the markets where they compete. In telecommunications, deploying and operating networks requires a critical mass of customers. When operators consolidate, they seek greater scale in their relevant markets, generating returns that can be reinvested in innovation and network deployment.
This is what Telefónica asks of the new merger guidelines: recognition that in-market scale is a legitimate route to increasing investment capacity at national level, while still allowing for future consideration of pan-European and global scale.
Competition policy should continue to protect consumers. However, in today’s environment, consumers are also protected when companies can compete successfully through investment, innovation, quality and resilience.
Scale is not an objective in itself, but it is increasingly a prerequisite for investing and competing in technology markets. The challenge for the European Commission is to ensure that investment and innovation capacity genuinely carry weight in merger assessments and contribute to the creation of companies with pro-competitive scale.
A Contract Based on Measurable Commitments
A third key idea is the need for a new social contract around scale and investment. Greater scale also means greater responsibility.
If Europe creates the conditions that allow companies to improve their profitability and competitiveness, businesses can continue to respond with more investment, better networks and services, greater innovation, more skilled jobs and stronger European technological capabilities.
This balance helps overcome the false dichotomy between competitiveness and consumer protection. A more competitive Europe must also deliver tangible benefits for citizens and businesses.
One Strategic Conversation
The Digital Networks Act, competition policy and regulatory simplification are all part of the same broader conversation. They should not be treated as separate debates. Together, they raise a fundamental question: what capabilities do we want Europe to have in ten or twenty years’ time, and what framework do we need today to finance and develop them? Looking ahead to 2036, do we want European AI to run on infrastructure that Europe can choose, audit and protect?
This is where technological sovereignty acquires a concrete meaning. Sovereignty is not autarky; it is the ability to choose. For Europe, sovereignty does not mean doing everything alone or producing every technology domestically. It means having robust critical infrastructure, diversified suppliers and supply chains, reduced strategic dependencies and the ability to make decisions about the technologies that underpin our economy and security.
Europe’s response should combine domestic capabilities with diversified supply chains and trusted partners under a “Made with Europe” approach: building technology in Europe and with Europe. This is an open form of sovereignty that seeks to strengthen resilience, preserve alternatives and ensure that Europe retains the freedom to choose its partners, manage its dependencies and preserve critical capabilities.
Europe has the market, the talent, the companies and the industrial and technological base. There is already broad consensus on many of the challenges. The real challenge now is execution.
Moving from diagnosis to decisions.
From regulation to investment.
From scale to technological capability.
And from technological capability to the ability to choose.
Because, ultimately, technological sovereignty is not about doing everything alone. It is about having the strength, alternatives and partnerships necessary for Europe to decide, invest and compete.
Better rules. Scale with purpose. Measurable commitments. Which of the three can least afford to wait?
