With this post, we continue a series focused on the Digital Networks Act, in which we will present Telefónica’s perspective on how to ensure that the regulatory framework helps drive innovation and growth in the European Union telecommunications sector.
As EU policymakers discuss the Digital Networks Act (DNA), attention is focused on its proposals to modernise Europe’s connectivity framework. But beyond the regulatory details, the initiative also marks an important milestone in a broader policy conversation: how to ensure sustainable investment in the infrastructure that underpins Europe’s digital future.
A changing digital ecosystem
The digital ecosystem of today looks very different from that of twenty years ago. Data traffic has increased dramatically, new digital services have emerged, and a small number of global content and application providers now account for a significant share of internet traffic.
At the same time, telecom operators such as Telefónica continue to invest heavily in deploying, upgrading and maintaining the networks that make those services possible. Fibre, 5G and future connectivity technologies require continuous investment to meet growing demand while ensuring quality, security and resilience.
This evolution has sparked an important policy debate. As traffic generation becomes increasingly concentrated in a handful of players, are the existing frameworks still fit for purpose? And how can Europe create the conditions needed to sustain investment across the digital value chain?
These questions are not just about telecoms. They are about Europe’s competitiveness, technological leadership and ability to deliver on its digital ambitions.
Recognition matters
The DNA acknowledges that the relationship between network usage, investment and traffic growth deserves policy attention. By introducing a framework for dialogue between network operators and large traffic generators, the proposal signals that these issues could not be solely solved through commercial negotiations; in this case asymmetric bargaining power is a question with much broader implications for Europe’s digital future.
The value of the proposal is not only in the specific mechanism it introduces, but also in the recognition that sustainable digital infrastructure requires cooperation and constructive engagement across the ecosystem.
More broadly, the DNA reflects an evolution in policymaking. The debate is gradually moving beyond whether network contribution is a legitimate issue and towards how different actors in the digital ecosystem can help create the conditions for sustainable investment. This represents a more constructive and forward-looking approach than the often-polarised discussions of recent years.
Infrastructure is becoming a common policy challenge
The discussion around the sustainability of investment in infrastructure is not unique to telecommunications. As digitalisation accelerates, policymakers around the world are increasingly examining how infrastructure costs should be allocated when a small number of users account for a disproportionate share of demand.
A recent example can be found in the debate surrounding energy infrastructure and artificial intelligence. The rapid growth of AI services and hyperscale data centres is placing unprecedented demands on electricity networks, prompting discussions on how the costs of expanding capacity should be shared. While the sectors are different, the underlying question is remarkably similar: how can investment in critical infrastructure remain sustainable as demand becomes increasingly concentrated among a limited number of actors?
At its core, this reflects a broader policy objective: ensuring that infrastructure investment remains robust while protecting end users from bearing a disproportionate share of the costs. Whether the infrastructure in question is electricity networks, transport systems or digital connectivity, policymakers are increasingly exploring ways to align infrastructure usage with investment incentives.
From this perspective, the debate around the conciliation mechanism should not be viewed solely as a telecommunications issue. It forms part of a wider conversation about how Europe can support investment in the strategic infrastructure required for its digital future. As data traffic continues to grow and digital services become ever more central to economic and social activity, ensuring that the connectivity ecosystem remains sustainable is in the interest of all stakeholders.
Turning dialogue into effective outcomes
Telefónica welcomes the fact that the DNA opens the door to dialogue between network operators and large traffic generators. However, significant asymmetries remain between telecom operators and a small number of very large traffic generators. Where bargaining power is uneven, voluntary processes may not be sufficient to create balanced and predictable conditions for negotiation.
Market realities to date demonstrate that the largest traffic generators have shown little willingness to negotiate commercial agreements. Against this backdrop, it is difficult to see how a purely voluntary conciliation mechanism would generate different outcomes. Absent a more robust framework, existing market imbalances are likely to remain, reducing the mechanism’s effectiveness and its capacity to contribute to the DNA’s objectives of fostering sustainable investment.
Therefore, Telefónica asks for a formal dispute-resolution mechanism through which:
· Disputes can be reviewed within a clear and predictable process
· Regulators can intervene when negotiations fail
· Outcomes are binding on both parties
Such an approach would provide greater certainty, improve the effectiveness of negotiations and help create a more predictable environment for long-term infrastructure investment.
The question is not whether Europe’s digital future requires world-class networks; it clearly does. The real question is whether the DNA will provide the tools necessary to sustain the investment those networks require. If voluntary processes are unable to overcome existing market asymmetries, Europe risks missing an opportunity to strengthen the foundations of its digital economy. A more effective framework would not only support network investment, but also contribute to the competitiveness, resilience and technological leadership that Europe seeks to achieve.
In our next post, we will examine resilience and security within the context of the DNA.
