Mastering Europe's digital infrastructure needs: the future of European telecoms legislation

In this blog, we look at the future of European telecoms legislation, including the possibilities for a Digital Networks Act during the 2024-2029 mandate.

Commissioner Thierry Breton and Commission Executive Vice-President Margrethe Vestager presented a White Paper on 21 February 2024 entitled “How to master Europe’s digital infrastructure needs?”. The paper highlights several challenges for Europe’s telecoms sector, namely market fragmentation, a lack of investment, and poor infrastructure security, as well as some potential routes forward, including the possibility of legislation. This blog summarises the challenges identified by the Commission, as well as the three ‘pillars’ of solutions which it has prescribed, and the next steps. 

The EU has ambitious goals for the telecom sector and for connectivity by 2030. Before the publication of the White Paper, it was expected that the Commission would publish a Digital Networks Act (DNA) as the overall solution to the ongoing issues in European telecoms. However, the DNA has yet to be proposed. The White Paper published by the Commission offers the first glimpse into the directions in which an eventual DNA legislation could go. 

Definite Issues and Possible Solutions 

While presenting the White Paper, Ms Vestager noted that European telecoms operators do not currently consolidate cross-border, not because of obstacles from competition authorities but due to the burdens presented by different regulatory regimes in Member States. To address this problem, the Commission wants to explore changes to the industry to achieve a true EU single telecoms market. 

The Commission has suggested work on three specific areas, or pillars, to reach this goal: a potential overhaul of the regulatory framework, investment in network infrastructure, and improving security and resilience. 

Pillar I: Creating the “3C Network”: Connected Collaborative Computing 

In Pillar I, the Commission explores restructuring the way in which investments are made in network infrastructure. The paper suggests creating a so-called "3C network", connecting stakeholders from the semiconductor, computational capacity, radio, connectivity infrastructure, and data management sectors.  

The aim of this 3C Network is to ensure a more efficient use of resources and synergy among all telecoms actors in the ecosystem, while keeping the EU market competitive and innovative. In the long run, the Commission believes that these actors could all act as part of a single supply chain. 

The White Paper suggests setting up large-scale pilots which develop end to-end integrated infrastructures and platforms for telco, cloud and edge computing, with these pilots later being used to develop more innovative technologies and AI applications. 

The text argues that Europe needs to make massive investments in connectivity capacity to create the more collaborative computing ecosystem which is envisaged. This could be achieved through a coordinated, financial support framework which would draw on national, public, and private investments. 

Pillar II: Completing the Digital Single Market 

Pillar II argues that updated and harmonised telecoms regulation could foster the growth of telco companies and allow them to achieve scale. It tackles three discrete issues and suggests several solutions. 

The first issue is that, at present, the EU takes a fragmented approach to radio spectrum management. The Commission acknowledges that previous attempts to coordinate spectrum management and governance through the European Electronic Communications Code were unsuccessful, since the code was given in the form of a Directive, and Member States were not obliged to implement its guidance. To correct this, the Commission suggests that Europe should increasingly integrate its ‘spectrum governance’ – a term which refers to radio spectrum being used to its most efficient extent for public benefit – as well as introduce a harmonised, European system of spectrum licences. 

Secondly, to facilitate progress towards a digital single market, Commissioner Breton suggests that the country-of-origin principle could be implemented. This would mean that if a telecoms operator is compliant with legislation in the Member State in which it is established, it should have access to the whole EU market.  

Finally, the Commission suggests transitioning from copper infrastructure to fibre networks, which should boost intra-EU connectivity and contribute towards the EU’s sustainability goals. 

Pilar III: Secure and resilient digital infrastructures for Europe 

The third pillar focuses on protecting European telecoms infrastructure. The Commission suggests placing a greater emphasis on trusted suppliers and developing security standards for end-to-end connectivity to combat threats to the physical security of infrastructure, particularly of underwater cables.  

The white paper notes the potential risk of excessive dependency on third countries. As telecommunication technologies continue to develop, the EU’s industries have become more intertwined with those in other markets. The Commission warns that opening the traditionally ‘closed’ telecoms networks could bring opportunities but increases the risk of excessive EU dependence on larger non-EU providers. 

Conclusion and what’s next 

A first consultation on the paper closed on 30 June 2024, however, results from a second consultation are expected to be published later this year. Member States within the Council of the EU are currently drafting a response to the Commission’s White Paper and are expected to discuss this response in the coming weeks.  

The Commission’s White Paper overall underscores the multifaceted challenges faced by the European telecoms sector and offers some potential pathways forward. As discussions evolve, it is evident that the Commission’s priorities are to foster innovation, competitiveness, and security within Europe’s telecommunications landscape.