Yesterday, at the FT-Connect Europe Forum, much of the discussion revolved around a question that goes far beyond the telecommunications sector: is Europe creating the right conditions to invest, innovate, and compete in the new digital economy? The answer depends on several parallel policy files, particularly the Digital Networks Act, the review of the Cybersecurity Act, new merger guidelines, and initiatives linked to European technological sovereignty such as CADA.
The geopolitical context leaves little room for delay. Technology is no longer solely a matter of innovation or productivity; it has also become a question of economic security, resilience, and strategic autonomy. European competitiveness and technological sovereignty can no longer be separated. Without the capacity to invest, Europe will deepen its dependencies precisely in the layers that will determine its future: connectivity, cloud, edge computing, cybersecurity, and artificial intelligence. The diagnosis has already been made. Draghi and Letta placed it at the centre of the agenda: fragmentation, lack of scale, and investment gaps. What is missing are decisions, and those taken in the coming months will shape investment for the next decade.
At Telefónica, we believe Europe must move from diagnosis to execution centred around three priorities: better rules for investment, scale with purpose, and a new social contract. These are not separate debates, but interconnected decisions.
Firstly, better rules, not just fewer rules. The Digital Networks Act. Connectivity can no longer be viewed solely as a sector-specific market. Networks are the infrastructure upon which artificial intelligence, the cloud, edge computing, cybersecurity, and much of the digital transformation of our economy are built.
The Digital Networks Act should not simply update telecommunications regulation. Connectivity is the infrastructure that enables AI, cloud, edge computing, cybersecurity, and much of the digital transformation of the economy.
The DNA should therefore become an opportunity to advance a technologically strong Europe, with a simpler, more predictable, and investment-friendly framework.
Simplification matters. But simplification does not merely mean reducing the number of rules. It means creating better, more coherent rules designed around Europe’s objectives: investment, innovation, resilience, and competitiveness. In practice, this means harmonised implementation, clearer investment signals, and fewer overlaps between regulations.
Anyone deploying fibre or 5G knows that networks are planned over ten to twenty years. Regulation should adopt the same horizon.
Secondly, scale with purpose. Europe needs companies with sufficient scale to invest, and that scale is built in the markets where companies compete.
In telecommunications, scale depends on customer take-up. Deploying and operating networks requires a critical mass of users. When operators integrate, they seek to achieve greater scale in their relevant markets, generating higher returns that can be reinvested in innovation and network deployment.
This is what we ask of the new merger guidelines: recognition that in-market scale is a legitimate path to increasing investment capacity at national level, while future consideration can also be given to pan-European or global scale.
Competition policy must continue to protect consumers. Yet in today’s environment, consumers are also protected when companies can compete effectively in 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 key question is whether it enables firms to invest more, innovate more, and offer better services. The draft guidelines already point in this direction. The challenge for the Commission is to ensure that investment and innovation carry real weight in merger assessments, allowing pro-competitive scale to emerge.
Acquiring Scale Also Means Acquiring Responsibilities
Here is a third idea which we believe is particularly important: a new social contract around scale and investment. If Europe creates the conditions for companies to improve their profitability and competitiveness, businesses can respond with greater investment, better networks and services, more innovation, highly skilled employment, and stronger European technological capabilities.
This balance is important because it helps overcome the false choice between competitiveness and consumer protection. A more competitive Europe should also deliver tangible benefits for citizens and businesses.
One Conversation, Not Three
The Digital Networks Act, competition policy, and regulatory simplification are all part of the same discussion. They should not be treated as separate debates. Together, they should answer a common question: what capabilities do we want Europe to have in ten or twenty years, and what framework do we need today to finance and develop them?
Looking ahead to 2036, do we want European AI to run on infrastructures that Europe can choose, audit, and protect?
This is where technological sovereignty becomes a practical concept. 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 infrastructures, diversified suppliers and supply chains, reduced excessive dependencies, and the capacity to make independent decisions about the technologies that underpin its 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 from Europe and with Europe. This open model of sovereignty does not seek to close markets, but to strengthen resilience, preserve alternatives, and ensure Europe retains the freedom to decide who it builds with, which dependencies it accepts, and which critical capabilities it must maintain.
Europe has the market, talent, companies, and industrial 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 freedom to choose.
Ultimately, that is what technological sovereignty is about: not doing everything alone, but having the strength, alternatives, and partnerships necessary for Europe to decide, invest, and compete.
Better rules, scale with purpose, and measurable commitments. Which of the three can no longer wait?
