Europe’s digital infrastructure ambitions face regulatory headwinds as industry groups warn proposals may widen the global investment gap.
For business leaders assessing their long-term European operations, the current regulatory direction suggests potential delays in network modernisation and rising compliance overheads.
The GSMA, representing mobile operators, has issued a sharp assessment of the European Commission’s recent efforts (specifically, the Digital Networks Act (DNA) and the Cybersecurity Act revisions.) They argue that while the intent to bolster security is right, the execution threatens to curb the capital expenditure needed for next-generation connectivity.
Europe’s digital infrastructure deficit
High-performance connectivity like 5G Standalone (5G SA) is a prerequisite for advanced enterprise use cases, from industrial IoT to real-time logistics. Yet, Europe’s deployment trajectory remains sluggish. The GSMA notes that nearly seven years into the 5G era, the continent trails other major regions.
By comparison, more than three-quarters of people in China already access 5G SA connectivity—a technology driving innovation and new monetisable services. The US is similarly evolving its connectivity use cases faster than Europe.
This connectivity deficit impedes economic performance. As the Draghi and Letta reports highlighted, digital connectivity drives Europe’s economy. Without comparable infrastructure, European enterprises risk being unable to leverage the same operational efficiencies as their international peers.
Laszlo Toth, Head of Europe at the GSMA, comments: “Europe’s ability to compete in the digital age will unfortunately not be turbocharged by the proposed version of the DNA.”
Digital Networks Act: Evolution vs revolution
The Digital Networks Act was expected to reform Europe’s investment challenges. Yet, industry consensus suggests the proposal represents “regulatory evolution where revolution is required” to boost Europe’s digital infrastructure.
A primary concern for network operators is the financial health of the sector. Operators continue to invest in infrastructure despite diminishing returns and a market value that has shrunk over the past decade. The GSMA argues that the current DNA proposal fails to alter the status quo sufficiently.
While the Commission prioritised “simplification” over the past year, the resulting legislation appears to have achieved the opposite. The GSMA describes this as “complexification,” citing additional sector-specific rules, new administrative bodies, and reporting obligations.
For enterprise leaders, this signals potential downstream costs and supply chain rigidity as operators grapple with duplicated compliance layers alongside outdated ePrivacy Directive rules.
Despite broader criticism, the DNA offers one area of progress: spectrum licensing. The proposal outlines a ‘Single Market’ approach to spectrum, a resource the GSMA calls the “lifeblood of the connectivity industry.” For large-scale enterprise deployments depending on wide-area coverage, a unified spectrum policy could provide greater investment certainty.
The cybersecurity trade-off
Parallel to the DNA, the proposed revision of the Cybersecurity Act introduces further operational complexity when it comes to Europe’s digital infrastructure. Mobile networks function as both a frontline defence and a target. However, heightened security standards bring costs that risk diverting funds away from network upgrades.
The GSMA supports the objective of reinforcing Europe’s cybersecurity, but insists measures must be “strictly risk-based and operationally workable.” The industry views the current proposals as a blanket approach, treating all equipment elements as equally sensitive, which they deem “unnecessary and disproportionate.”
For a CISO, this debate highlights a potential bottleneck. If operators must direct capital toward broad, non-risk-based compliance, the rollout of secure network features may slow. The GSMA warns that “unrealistic timelines” could lead to service disruptions and high additional expenses.
A missing component in the DNA proposal is a binding mechanism to address the relationship between network operators and large traffic generators. The current proposal introduces a voluntary conciliation mechanism, which the GSMA argues falls short of addressing “significant and persistent bargaining power asymmetries.”
Without a binding conflict resolution framework, the playing field remains unlevel. This impacts the overall investment capacity of the telecoms industry, potentially limiting resources available for R&D.
The industry message is that current legislative proposals require refinement to prevent Europe from falling further behind. Laszlo Toth notes that without changes, the connectivity industry will continue to struggle to secure the investment needed to underpin the continent’s growth.
The GSMA calls on EU member states and the European Parliament to build upon the DNA proposal. The goal remains a regulatory environment that balances security with financial reality, ensuring Europe’s digital infrastructure is funded to support enterprise innovation.
Until such a balance is struck, enterprise leaders in Europe should anticipate a market characterised by uneven 5G deployment and regulatory friction.
See also: Why bridging Private 5G security gaps protects enterprise networks
Want to learn more about the IoT from industry leaders? Check out IoT Tech Expo taking place in Amsterdam, California, and London. The comprehensive event is part of TechEx and is co-located with other leading technology events including AI & Big Data Expo and the Cyber Security Expo. Click here for more information.
Telecoms is powered by TechForge Media. Explore other upcoming enterprise technology events and webinars here.
