EU’s Digital Networks Act: Infrastructure Push Or Another Regulatory Straitjacket?

Submitted By Thomas Kolbe

The European Commission has presented the final draft of the Digital Networks Act. The legislation is intended to establish an EU-wide framework for investments in broadband expansion and telecommunications infrastructure. Whether this approach will succeed in mobilizing private capital on a larger scale, however, remains questionable.

With the Digital Networks Act (DNA), an important European Union infrastructure framework is entering its final legislative phase. Following preparatory consultations last year, the European Commission has now published its official proposal, aimed at harmonizing national telecommunications networks across member states under uniform rules. The objective is to close the substantial technological gap with leading digital economies such as the United States and China, and to provide businesses with a reliable legal framework to accelerate the rollout of 5G technology and fiber-optic networks. Responsibility for the project lies with EU Technology Commissioner Henna Virkkunen.

DNA to Refocus Subsidy Policy

The DNA will replace the existing European Electronic Communications Code (EECC) and establish the structural framework for competition, cybersecurity, and the development of digital networks. If the European Commission succeeds in reaching an agreement with the European Parliament and the Council—widely considered likely—the regulation could enter into force as early as January 2027. The final text would then still need to be transposed into national law by the member states.

At the EU level, the Digital Europe Programme provides the financial framework for digital infrastructure expansion between 2021 and 2027, with a total budget of approximately €7.6 billion. The program supports projects in cybersecurity, cloud solutions, and digital infrastructure. In addition, the Connecting Europe Facility (CEF Digital), launched a year ago with a volume of €865 million, specifically promotes gigabit broadband and 5G projects across the EU.

At the level of individual member states, funding is still predominantly driven by public investment. In 2025, for example, Germany invested approximately €4 billion of public funds into digitalization, of which around €2.9 billion was allocated specifically to broadband expansion. The private sector complemented this with more than €10 billion invested in fiber and mobile network deployment.

Across the EU, member states have outlined measures in their digital roadmaps amounting to a cumulative volume of €288.6 billion. Approximately €205.1 billion of this total comes from public budgets, with the remainder attributed to private investments and co-financing by companies and regional actors. EU-level programs such as Digital Europe, CEF Digital, Horizon Europe, InvestEU, and the IPCEIs further supplement these national funds, targeting network and technology projects.

In comparison with the United States, a markedly different investment profile emerges. There, private capital dominates, with transaction volumes exceeding $200 billion in digital infrastructure. Public spending, particularly in research and development, amounted to around $145 billion, including significant allocations in defense and technology.

In the U.S., private enterprise is the primary driver of investment, whereas Europe traditionally relies on centralized planning and state involvement. What the Digital Networks Act can realistically achieve in terms of mobilizing additional private capital—given the extensive national efforts already underway—remains uncertain. From an economic perspective, little may change: Europe continues to be a difficult and heavily regulated environment in which investments are more complex and less flexible than in the United States.

EU-Wide Applicability and Affected Companies

The DNA will apply across the EU and directly affect telecommunications and infrastructure companies. In Germany, this primarily includes Deutsche Telekom, Vodafone Germany, and Telefónica Germany (O2), which operate extensive mobile and fixed-line networks and hold key spectrum licenses. Fiber-optic providers, regional network operators, and municipal utilities investing in high-speed network expansion will also fall under the new regulatory framework.

One positive aspect is that the DNA grants companies longer and more stable spectrum rights, improving planning security for investment decisions. However, it remains to be seen how transparency requirements, EU-mandated non-discrimination rules, and security provisions will be shaped in the subsequent regulatory process—and how the new EU compliance structure will function in practice.

From a consumer perspective, the expansion of 5G and fiber technology would ideally result in stable and reliable networks, particularly in Germany, where coverage gaps persist. Legal certainty for major network operators and investment incentives for infrastructure development benefit consumers, while smaller providers may also gain from more uniform market rules.

Opportunities and Risks for Competition and Innovation

The legislation fundamentally reshapes the framework for the EU’s digital infrastructure without immediately generating new costs—welcome news given strained public budgets. A unified European regulatory framework could reduce national uncertainties and eliminate cross-border discrepancies, potentially lowering transaction costs for companies.

However, the European Commission’s initiative under the DNA must be viewed with caution. Negotiations to date indicate that Brussels intends to retain the option of intervening in pricing structures, access obligations, and security requirements. This could lead to the emergence of a new bureaucracy that deeply interferes with investment processes, favoring large incumbents while effectively excluding new competitors from market entry.

Moreover, centralized coordination of spectrum at the EU level could restrict competition if existing market players benefit disproportionately from political proximity. It remains to be seen whether the regulatory framework will become a barrier to market access—or whether it will succeed in genuinely stimulating innovation within the EU economy.

About the author: Thomas Kolbe, a German graduate economist, has worked for over 25 years as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.