Op-Ed: Will Europe's Digital Networks Act Benefit AI and Startups?

      As Europe accelerates into the AI era, its policymakers are establishing new frameworks for the continent's digital future. The European Commission's proposed Digital Networks Act (DNA) aims to significantly transform the EU's telecommunications landscape, impacting artificial intelligence infrastructure, equitable connectivity, and the startup ecosystem.

      This proposal is part of a broader initiative to prepare Europe for the "Digital Age" and seeks to modernize network construction and regulation, covering everything from 5G towers in rural areas to fiber connections between data centers.

      It's a bold vision for a more interconnected and innovative Europe, but it faces a complex landscape of competing interests and unresolved challenges.

      The context of a connectivity overhaul

      For years, EU leaders have advocated for the establishment of a genuine single market for digital services. The DNA is integral to this strategy, aligning with Europe's Digital Decade goals to achieve universal high-speed internet by 2030.

      So, what does this mean? It seems Brussels aims to transform the fragmented structure of 27 national telecom systems into a cohesive network. The primary goal of the Act is to "harmonise the EU connectivity sector by addressing delays, inconsistencies, and fragmentation," eliminating barriers to cross-border operations and boosting investment in high-capacity networks.

      This follows the rationale of earlier EU technology regulations; just as the Digital Markets Act focused on regulating Big Tech gatekeepers, the Digital Networks Act zeroes in on the underlying digital infrastructure.

      This reform is not unexpected. A white paper from the Commission in 2024 cautioned that the absence of cutting-edge digital infrastructure would hinder Europe's digital economy. It depicted dire scenarios: doctors unable to conduct remote surgeries, smart farms, and autonomous vehicles limited by slow connections.

      Secure and sustainable networks are considered one of the fundamental aspects of the EU's 2030 digital agenda. The DNA represents Brussels' effort to address these challenges by enhancing investment, standardizing regulations, and ensuring every part of Europe can access the opportunities of the digital age.

      Telecom investment with conditions

      At its essence, the Act offers telecom operators long-desired benefits. A significant provision would grant carriers unlimited radio spectrum licenses, ending the practice of auctions that require telcos to periodically renew their rights.

      For Europe's major mobile operators, this change provides assurance: they can invest in 5G and future 6G networks without the fear of their spectrum expiring. Regulators assert this will "increase investment predictability" and expedite network deployment.

      In theory, more cell towers could be established in remote regions, and companies might have greater flexibility to trade or lease unused frequencies to new entrants. However, there is a caveat.

      The DNA links permanent licenses with "use-it-or-share-it" requirements to prevent spectrum hoarding. If an incumbent is not utilizing its spectrum in, for example, a rural area, it may be obliged to share it or risk losing it, enabling a competitor or community network to serve that region. This approach underscores the importance of connectivity equity: Europe does not want limited wireless spectrum being underutilized while some communities lack service.

      The mantra is broadband for all, and extended license durations will come with responsibilities to ensure coverage.

      Another aspect tightens the oversight of dominant players. Under current propositions, if a telecom operator holds significant market power (SMP) in one area, such as fixed broadband, regulators could broaden that designation to include related markets, like mobile services.

      In practice, this means that large incumbents could face additional obligations, from transparency to pricing controls, for their entire range of services. The goal is to prevent larger firms from using their dominance in one sector to suppress competition in another.

      This may create opportunities for smaller internet providers or innovative ISPs to compete, enhancing consumer choice and encouraging new market entrants.

      Not everyone is supportive of these developments. A group of six member states, including France, Germany, and Italy, has voiced concerns, urging Brussels not to centralize control over spectrum and mergers.

      Spectrum auctions have historically been protected as national interests (as they can generate revenue), and national capitals are cautious of a one-size-fits-all approach from the EU. These governments are also apprehensive that promoting pan-European telecom mergers could hamper domestic competition. In their joint memo, they warn that while creating a level playing field between telecoms and tech companies is an admirable objective, “this does not necessarily imply the same regulations should apply” to both sectors.

      This highlights that despite its ideals of a single market, the DNA must confront political realities: Europe's telecom transformation cannot proceed without agreement among its diverse national markets.

      Net neutrality and the "Fair Share" dispute

      One of the most contentious discussions surrounding the Digital Networks Act has revolved around who should finance next-generation networks. Telecom corporations have long advocated for a "fair share" contribution from Big Tech, arguing that bandwidth-intensive services like Netflix, YouTube, and cloud platforms should contribute to the infrastructure that facilitates their content delivery.

      The draft Act avoids implementing any direct "network usage fee" on content