At the end of March, Europe’s leaders met under a clear message: One Europe, One Market. It is a recognition that competitiveness, security and resilience cannot be built on 27 fragmented regulatory regimes.
Yet in connectivity — the infrastructure on which every digital, industrial and security ambition depends —Europe still governs as if fragmentation is desired. While energy and capital markets are treated as strategic imperatives for integration, the same clarity of purpose often seems to be missing when leaders express their ambitions for any genuine ‘Connectivity Union’.
This is surprising. Connectivity is the artery system of a modern economy — carrying the oxygen for productivity, innovation and growth. Without advanced, secure and resilient networks, ambitions around artificial intelligence, industrial modernization, defence readiness and public service delivery do not materialize.
The consequence is that Europe’s economic progress is constrained by the pace of the slowest, and its security and resilience by vulnerabilities of the weakest.
So if Europe really wants world-class connectivity by the end of this mandate, it needs to apply its own “One Europe, One Market” logic to connectivity innovation, investment and scale.
The consequence is that Europe’s economic progress is constrained by the pace of the slowest, and its security and resilience by vulnerabilities of the weakest.
And yet Europe is attempting to tackle that fragmentation through three largely disconnected debates — the Digital Networks Act as sector reform, the Cybersecurity Act revision as security doctrine and merger policy as competition theology. These should be considered three components of a unified effort to shape the sector.
Connectivity investment in Europe is financed almost entirely by private capital. Investment flows when there is regulatory stability, market opportunities and a credible prospect of long-term sustainable returns.
The DNA must make Europe a place to innovate
The Digital Networks Act (DNA), the first draft of which was proposed in January, was intended to reset Europe’s connectivity framework by modernizing rules and closing persistent investment and innovation gaps. That objective remains urgent. Europe’s deployment of advanced 5G standalone and associated advanced connectivity use cases remains far behind the United States and parts of Asia, with direct consequences for industrial competitiveness, innovation and defence applications.
While the draft DNA contains some welcome steps, especially on spectrum and fiber migration, its overall approach in many other areas remains too incremental to close that gap. If the DNA is to succeed, it must do three things:
—First, the DNA must enable innovation, not freeze networks in a regulatory model designed for the past. Open internet rules should continue to protect customers, but they must also reflect how modern networks are used today, including for advanced enterprise and industrial services. The same services should be regulated in the same way, regardless of how they are delivered.
—Second, for innovation to be scaled in Europe, the DNA must deliver a real single market. Beyond passporting, applying the country-of-origin principle to cross-border telecoms operations, especially for business services, would materially reduce the burden of complying with 27 overlapping national regimes.
—Third, Europe must lower the cost of doing business. That means prioritizing spectrum policy reform, accelerating copper switch-off where fiber is available and removing overlapping legacy rules that no longer reflect today’s digital ecosystem.
Europe does not need more political statements around strategic autonomy. It needs policy that unlocks European innovation and allows businesses to redirect scarce capital to drive the new capabilities that Europe needs within this mandate.
Security policy that strengthens networks
No serious policymaker or corporate leader disputes the need to strengthen cybersecurity. Europe’s networks are critical infrastructure and must be protected accordingly. But any security policy that ignores investment or technological realities risks undermining the very resilience it is meant to deliver.
As currently framed, elements of the second Cybersecurity Act combine very broad scope with compressed timelines that do not reflect how large-scale infrastructure transitions actually occur or how businesses defend against ongoing threats of espionage or sabotage.
A more effective approach already exists. Backed by common EU standards and certification, and the strengthening of ENISA, Europe should build on the logic of the 5G Toolbox, applying a phased, risk-based framework aligned with equipment lifecycles and existing national security assessments. This allows security risks to be addressed without exhausting the capital needed for modernization.
Handled well, security policy can become a competitive advantage that strengthens trust, resilience and deterrence across the single market. The price of getting it wrong is high: slowed deployment of the AI-ready, future proof networks Europe needs, less resilience and an even greater innovation gap compared with global peers.
Scale is essential for competition and innovation
Today’s merger rules were built for a different phase of market development. They focus too heavily on short-term price effects on current generation technology. And they have not sufficiently recognized the role of investment and the race to deploy new technology as the main driver of consumer welfare in highly dynamic markets like mobile communications. The result is a fragmented market structure leading to under-investment, weakening Europe’s ability to compete in the global digital market.
Handled well, security policy can become a competitive advantage that strengthens trust, resilience and deterrence across the single market.
True competition in connectivity is about unlocking capital to invest faster, deploy more advanced networks, enable more innovation, and deliver higher quality of service and coverage. This is what gives consumers and businesses the best value for money.
Reform of merger policy is therefore needed to take a longer-term view, recognizing that only operators of sufficient scale can consistently invest in new network capabilities. This should allow in-market consolidation where it strengthens investment incentives and network quality, while using targeted behavioral remedies to safeguard consumer outcomes.
Done well, this approach can intensify competition and competitive rivalry between stronger players, delivering higher quality connectivity, more resilience and innovation— and better outcomes for consumers and businesses.
At its core, the revised merger guidelines must allow for a better functioning equilibrium between investment and competition, where these become truly mutually reinforcing. This is a better outcome for consumers, just as it is for Europe’s competitiveness and security ambitions.
A political choice this mandate must make
If Europe is serious about completing the single market, then its connectivity framework cannot remain split across three siloed discussions.
The choice is now squarely political. Europe must build the conditions that enable next-generation networks to flourish, or fragmentation will continue to hold the continent back.
That means accelerating pro-innovation reform under the DNA, aligning cybersecurity rules with real-world deployment cycles and risk-based approaches, and enabling market structures that unlock private capital and investment at scale.
Europe must build the conditions that enable next-generation networks to flourish, or fragmentation will continue to hold the continent back.
No-one is questioning Europe’s ambitions. Telecoms operators share this vision. What is now at stake is whether this mandate will be remembered for building the connectivity infrastructure Europe’s economy, security and citizens increasingly depend on.
Disclaimer
POLITICAL ADVERTISEMENT
- The sponsor is Vodafone Group plc.
- The entity ultimately controlling the sponsor is Vodafone Group plc.
- The political advertisement is linked to EU public policy by advocating for reforms to the Digital Networks Act, Cybersecurity Act, and EU merger rules to promote a single telecoms market, increased investment, and regulatory changes in Europe’s connectivity sector.
More information here.
