New plans from the EU Commission: The Digital Networks Act

Europe's new regulatory framework for digital networks will fundamentally change the telecommunications industry.

Digital infrastructures form the backbone of a competitive and sovereign Europe. However, the existing regulatory framework for telecommunications networks is increasingly reaching its limits: Uncoordinated frequency allocations, sluggish fiber optic expansion, security risks in the 5G environment and geopolitical tensions highlight the need for reform. Against this backdrop, the European Commission is planning to introduce a Digital Networks Act (DNA) by the end of 2025. The aim is to create a modern, investment-friendly and secure regulatory framework for the EU's digital connectivity as a successor to the current Electronic Communications Code and a strategic response to current challenges.

In the following, the regulatory starting conditions and objectives of the DNA are explained, which result in particular from the ongoing evaluation of the European Electronic Communications Code (EECC), the Commission's Telecoms White Paper and accompanying studies.

I. Starting point

The Digital Networks Act initiative is part of a comprehensive readjustment of European network policy. The starting point is the Commission's finding that the existing regulatory framework, including the EECC Directive introduced in 2018, does not sufficiently meet its strategic objectives. Despite far-reaching requirements to promote high-performance networks, harmonize spectrum policy and strengthen competition, practical implementation in many member states has fallen short of expectations.

As a result, a complex problem area has emerged: For example, the nationwide expansion of fiber optics has stalled, as has the Europe-wide coordinated introduction of 5G and, in perspective, 6G technologies. Investment barriers and regulatory uncertainties are burdening the industry, as are national solo efforts in the allocation and use of frequencies. In addition, there are unresolved issues regarding the cyber security of network components, particularly with regard to high-risk providers from third countries, as well as increasing security policy challenges in the area of transnational submarine cable infrastructure.

Another central point of conflict is the relationship between network operators and large digital platforms. While telecommunications companies are pushing for large content providers to contribute financially to the constantly rising network costs, some politicians and civil society are warning of a restriction of net neutrality and functioning market mechanisms.

With the DNA, the Commission is aiming for more efficient, coherent and legally secure regulation of European networks in order to accelerate investments, minimize security risks and strengthen the EU's ability to act in strategically sensitive infrastructure areas. The DNA is not only intended to modernize technical requirements, but also to create structural incentives for competition, innovation and cross-border connectivity with the aim of securing digital networks as the critical infrastructure of the future.

II. Key content

Against the backdrop of these structural challenges, the Digital Networks Act concretizes a large number of regulatory reform projects with which the European Commission is responding to the failures of the previous framework. The DNA is not aimed at a complete reorientation, but at a targeted further development and standardization of existing regulations, in particular by replacing the EECC Directive with a directly effective statutory regulation.

The content of the proposed legislation can be broken down into five key areas of reform:

1. Copper switch-off and accelerated fiber optic roll-out

A central goal of the DNA is the systematic migration from copper to fiber optic networks. The Commission is aiming for a nationwide deactivation of existing copper infrastructures by 2030 with an interim target of 80% of connections by 2028. This measure not only serves energy efficiency, but above all the consolidation of investment-friendly market structures in favor of modern Very High Capacity Networks (VHCN). At the same time, the Commission emphasizes the need for a socially responsible transition and wants to protect consumer interests through graduated deadlines and accompanying protection mechanisms.

2. Harmonization of spectrum policy and spectrum management

Another key area concerns the EU-wide coordination of the allocation and use of radio spectrum, particularly with regard to 5G, 6G and satellite communications. The DNA is likely to propose the introduction of timed auctions, extended license periods and a "use it or lose it" clause to recover idle resources. The Commission is also examining a uniform EU licensing procedure ("country of origin" principle) for core network operators in order to enable cross-border economies of scale. These measures are aimed at a more efficient allocation of scarce frequency resources and the promotion of European network expansion from a single source.

3. Cybersecurity and exclusion of high-risk providers

In the area of network security, the DNA is pursuing the goal of establishing uniform and binding requirements for securing critical components (particularly in 5G/6G networks). In particular, the focus is on excluding high-risk vendors (HRVs) such as Huawei and ZTE. A graduated package of measures is planned, which could lead to mandatory EU-wide security certification. In addition, the aim is to revise the Cybersecurity Act in order to increase the transparency and effectiveness of existing instruments

4. Sovereignty and resilience of the submarine cable infrastructure

In view of growing geopolitical tensions, the Digital Networks Act attaches particular importance to the security and strategic management of undersea cable connections. The European Commission is considering the establishment of a Union-wide governance system for submarine networks, which includes both a central project classification in the form of a list of "Cable Projects of European Interest" (CPEI) and targeted investments in maintenance and repair capacities. This project is to be flanked by the development of uniform safety standards for submarine cable systems. The aim is to consolidate Europe's technological sovereignty and at the same time ensure that this critical communications infrastructure can be effectively protected against acts of sabotage, espionage and hybrid threats.

5. Network cost contributions and fairness in platform traffic

The controversial issue of large content providers (large traffic generators, LTG) such as Netflix, Meta or Google contributing to the financing of the network infrastructure could be addressed in the DNA not through direct levies, but through the establishment of a dispute resolution mechanism. The plan is to establish a procedural system in which national regulatory authorities or BEREC can mediate in deadlocked negotiations between network operators and platforms. This is intended to safeguard contractual freedom on the one hand and avoid lengthy court proceedings on the other

III. Effects on companies

The Digital Networks Act will have far-reaching legal and economic implications for companies in the telecommunications, infrastructure construction and technology sectors. Even if the DNA does not represent a complete reorganization of the legal framework, it will create new regulatory requirements and obligations in key areas, combined with considerable adjustment requirements at an operational, technical and strategic level.

In connection with the planned copper switch-off, network operators and infrastructure companies must develop migration plans at an early stage, prepare customer communications, create technical transitional solutions and at the same time push ahead with investment-intensive fiber optic projects. Although the Commission has announced a phased approach, companies, particularly in less densely populated regions, will be confronted with the question of how to reconcile security of supply, economic efficiency and regulatory compliance.

The planned harmonization of spectrum allocation also has direct consequences for market players. While the prospect of standardized licensing conditions, longer terms and a possible EU-wide approval model could create economies of scale and planning security in the long term, it also requires close monitoring of regulatory developments in all member states, especially for providers with multinational commitments. Companies that are active in cross-border networks or satellite-based services should therefore review their strategic positioning and license portfolios at an early stage with regard to the expected requirements.

In the area of network security, the DNA will set new standards that are likely to go beyond existing national security regulations. The introduction of uniform security certifications for network components, particularly in the sensitive 5G and later 6G environment, as well as possible exclusion criteria for high-risk providers will require network operators and suppliers to consistently reassess existing supply chains, contractual relationships and testing processes. At the same time, companies with an EU-compliant security architecture and trustworthy supply structure can use this as a competitive advantage.

With regard to the submarine network infrastructure, the DNA opens up new prospects for cooperation and funding, for example within the framework of strategically classified projects (CPEI) or joint European repair and protection capacities. For providers of deep-sea infrastructure, maintenance service providers and security technology suppliers in particular, this could open up targeted opportunities for publicly co-financed projects or long-term partnerships with public authorities.

Finally, the DNA also affects providers of digital content and platform services, even if not in the form of a levy, but via a new procedural regulation for dispute resolution in traffic and network cost issues. Companies with high data volumes should be prepared for the possibility of more regulatory moderated disputes with network operators in the future, especially if commercial agreements are delayed. Although the design of this mechanism remains open, increasing administrative complexity is to be expected, combined with the need to incorporate regulatory risks and compliance structures more strongly into strategic contract design.

IV. Conclusion

With the Digital Networks Act, the EU Commission is launching a paradigm shift in the regulation of digital infrastructures. The draft is aimed at more binding requirements, greater investment security and stronger European coordination - from frequency allocation to network security and fiber optic migration.

For companies, this means that existing processes, network infrastructures and business models must be checked for regulatory compatibility at an early stage and adapted if necessary. Those who position themselves strategically now can not only minimize risks, but also benefit specifically from new funding, cooperation and market opening potential. This applies in particular to operators, equipment suppliers, platform providers and all those involved in central digital infrastructure in Europe.

This article was created in collaboration with our student employee Emily Bernklau.