The Digital Network Act proposal: new developments on competition, consolidation and the single market

Avv. Innocenzo Genna
Italian Department for Digital Transformation Rome
inno@genna.eu

The author writes in a personal capacity and the views expressed are not necessarily those of his organisation

Introduction

On 21 January 2026, the European Commission published the long-awaited proposal for a Digital Network Act (DNA),^[1] namely the proposal to reform the EU regulatory framework for electronic communications. The current body of rules, the European Electronic Communications Code (EECC or the ‘Code’),^[2] dates back only to 2018, but its essential structure can be traced to the 2002 EU framework that followed immediately after the first liberalisation of 1998.^[3]

The DNA has been tabled by the Commission in the form of a regulation, with direct applicability and thus only limited scope for national adaptation, and will replace the current Code, a directive (Directive 2018/1972). This change of legislative instrument complicates the coordination between the two texts and narrows the room for manoeuvre of the Member States. It is therefore not surprising that many national governments had already anticipated, in the debate preceding the adoption of the proposal, their opposition to the regulation option, perhaps also out of concern for a complete overhaul of the current rules and in order to preserve a greater negotiating margin.

The issue thus remains open, although it is reasonable to assume that the Commission, likely supported by Parliament, will stand firm on the choice of the regulatory form. At the same time – and this could soften the stance of some Member States – the DNA proposal ultimately turned out to be less disruptive than expected. The Commission’s draft confirms the regulatory evolution of the EU telecoms regime, introducing some significant innovations, but it does not bring about the revolution that had been feared in light of the activism of former Commissioner Breton, who was very close to the views of some large telcos (having himself served as CEO of Orange between 2002 and 2005).

In particular, as regards the most hotly debated and controversial issues in the preparatory phase – namely access to networks and infrastructure-based competition and consolidation – the DNA appears much more cautious than anticipated. The approach of the new Commissioner in charge of digital policy, Finland’s Virkkunen, has proved rather pragmatic and less prone to the headline-grabbing moves that characterised her predecessor Breton, albeit without abandoning some innovative policy positions that this article will attempt to unpack.

This article focuses only on certain aspects of the DNA: competition, access regulation, consolidation and the Single Market.

Competition in networks

Although competition is formally downgraded from an objective of the framework to an instrument for market development, the DNA does not diminish its importance; in fact, it even tones down the emphasis on access deregulation that had dominated much of the debate ahead of the proposal. The relationship between investment and competition – which legislative technique translates into a given degree of access regulation – is typically divisive among telecoms stakeholders.

The coexistence of different roles (incumbents/alternative operators, pan-European/national/regional players, B2B/consumer), markets (fixed/mobile, fibre/copper, innovative and legacy services) and levels of infrastructure development (varying across Member States) makes it difficult to take a holistic approach, since many competitive dynamics relating to telecoms infrastructure depend on local factors. The DNA proposal acknowledges this and confirms the legal status quo of the 2018 Code, which is centred on the work of national regulators responsible for implementing and ensuring the suitability of EU rules within their domestic context.

To balance the preservation of the status quo, however, the DNA signals a certain preference for symmetric regimes and ‘light-touch’ regulatory measures, a choice that will certainly fuel debate along the legislative process. By contrast, the co-investment provision is repealed,^[4] falling victim to the complicated and Byzantine drafting that emerged from the compromise painfully reached by the 2018 co-legislators.

Wholesale-only operators and network separation

The preferential regime for wholesale-only operators is largely preserved.^[5] This is significant, since the Commission initially seemed intent on scrapping the provision, on the basis of ‘simplification’ arguments that were anything but clear.

In practice, Article 80 has rarely been applied by European regulators, but it has nonetheless played an important role as an instrument of industrial policy, sending an important signal to investors about the opportunity to differentiate wholesale and retail business models, which follow distinct investment logics. That said, this signalling function has been undermined by a policy stance of the European Commission (already under Kroes in 2012) which, instead of supporting and promoting the wholesale‑only model as one might have expected following the introduction of the provision into the 2018 Code, pushed for deregulation of access networks in general, irrespective of whether the operator was a wholesale player or vertically integrated.

This inconsistent stance ultimately eroded the regulatory privilege of the wholesale‑only model, as vertically integrated incumbents realised that they could obtain deregulation simply by waiting, rather than by structurally separating their networks. Among the victims of this incoherent policy we find not only Article 80 on wholesale-only operators, but also Articles 77 and 78 of the Code on functional and voluntary separation, which – unsurprisingly – have hardly ever been applied and are now repealed in the DNA proposal. What we are facing, therefore, is not ineffective legislation, but rather an inconsistent approach by the previous Commission to Code provisions whose purpose was not only to govern concrete cases, but also to present the market with virtuous investment models.

In any event, while the preservation of Article 80 appears uncontroversial and settled in the DNA proposal, a debate is under way on possible amendments. Some commentators see overly generic elements in the provision, such as the lack of a distinction between passive infrastructure and active equipment, the inclusion or otherwise of legacy assets, and potential price-squeeze risks stemming from wholesale price increases. Yet an overly detailed regime would risk undermining the exceptional nature of the provision vis-à-vis the general access framework. At this stage, it is, therefore, difficult to predict whether the provision will undergo substantial changes.

The Commission’s powers in market regulation

Overall, the Commission retains considerable influence over the work of national regulators. On the one hand, it has exclusive competence to adopt the Relevant Market Recommendation which effectively acts as an ‘on/off’ switch for the entire access regime. On the other hand, it maintains, and even proposes to strengthen, its veto powers over national measures, which Brussels would now like to extend even to remedies. This is a far-reaching power, which the Commission justifies as necessary to better harmonise rules and lay the groundwork for the Single Market.

However, case practice paints a less linear picture: the Commission’s intervention in the activities of national regulators appears primarily aimed at frustrating attempts to regulate network access, while the harmonisation and Single Market dimension remains largely formal. This is not surprising because, as will emerge below, the Commission has been pursuing a deregulatory agenda for at least a decade, whose connection with the objective of the internal market is anything but obvious, given the profound inconsistency between access deregulation and the Single Market objective.

The Commission itself has repeatedly acknowledged that the Single Market has not been achieved. This failure is not the consequence of flawed regulation or insufficient powers, but rather the outcome of an incoherent use of its powers in light of the objectives to be pursued. Any request by the Commission to further expand its prerogatives in this field should therefore be approached with caution and will undoubtedly be one of the key issues in the forthcoming debate between the co-legislators.

Consolidation

Despite the relentless narrative, consolidation remains largely disconnected from network regulation and thus from the DNA: operators remain free to consolidate, subject to competition law, but the creation of ‘European champions’ is a matter of industrial policy choices rather than a political or regulatory diktat. The Virkkunen Commission appears to have duly taken on board the guidance from Member States in this respect, as reflected in the Council Conclusions of 6 December 2024 and in several multi-governmental non‑papers circulated in the run‑up to the DNA.^[6]

This is the lens through which one should read President von der Leyen’s recent remarks on a possible ‘loosening’ of EU antitrust rules, which must be understood in the context of markets that are genuinely integrated at EU level. The underlying idea is that in sectors where a true single market already exists or is emerging – such as cloud, semiconductors, defence or certain digital segments – a higher level of concentration might be needed to foster ‘European champions’ capable of competing globally with large US or Chinese players. In these contexts, European companies face rivals that operate on a continental scale and benefit from economies of scale and scope that fragmented European structures struggle to match.

Relaxing the application of competition rules is therefore presented as a tool to bridge this ‘scale gap’, not as a blanket green light to concentrations. This logic, however, fits poorly with the reality of European telecommunications, which remain predominantly organised on a national basis. EU operators do not compete with US or Chinese players on EU retail markets, but almost exclusively with each other within individual Member States, in a mixed regulatory landscape combining EU and national rules. The main competitive issue is not the absence of ‘European champions’ but the regulatory and market fragmentation that constrains achievable economies of scale.

It is therefore misleading to invoke the ‘too many operators’ narrative and blame it on alleged antitrust over-enforcement. There is no single pan‑European telecoms market, but rather 27 separate markets, each with the typical structure of advanced economies: three or four mobile network operators and a number of virtual operators that do not change the actual number of physical networks. The oft‑quoted figure of ‘almost one hundred operators’ in Europe arises from a purely aggregate calculation (three to four operators in 27 Member States) rather than from an integrated reality comparable to the US or China, where the market is truly unitary and each operator serves a much larger customer base – and where, in any case, there are still hundreds of operators. In practice, EU competition rules intervene in a limited number of transactions, in particular four‑to‑three mobile mergers or large‑scale fixed‑mobile network agreements.

Single Market and competitiveness

Among its main objectives, the DNA includes the achievement of a genuine Single Market for electronic communications,^[7] introducing for the first time a more technical formulation of the idea of pan‑European services. The provision refers to network management and the provision of cross‑border services within the EU, the development of trans‑European digital networks and the supply of innovative networks and services, marking a conceptual evolution compared with the 2018 Code.

However, the tools envisaged to implement this vision remain limited. Roaming reform, a key element for full competition in mobile services, has been left outside the scope of the DNA. At the same time, the provisions on functional separation^[8] are expressly repealed, reducing the regulatory levers available to foster pan‑European, service‑integrated operators. The text does, however, retain some potentially interesting elements, such as the introduction of a European numbering scheme^[9] and the possibility of harmonised wholesale broadband access at EU level,^[10] which nevertheless appear partial and not sufficiently far‑reaching in light of the Single Market objective.

This approach ultimately reflects the underlying inconsistency of the European Commission, which has been proclaiming the goal of a digital single market for more than a decade while at the same time upholding an industrial policy based on the ladder of investment, encouraging operators to invest in their own national access infrastructures. While coherent with infrastructure‑based competition, this approach is structurally incompatible with the creation of a genuine single market: no operator finds it economically rational to replicate its access network in all Member States, while the alternative – regulated access to existing networks – is systematically discouraged.

An effective strategy would rather require replicating in fixed networks the mobile model, that is, providing for a regulated ‘fixed roaming’ access regime that would allow operators to offer pan‑European services without inefficient duplication of infrastructure.

Conclusions

Overall, the DNA looks more like an exercise in critical continuity than a radical overhaul: it consolidates the structure of the 2018 Code in line with the current level of network development, but it stops short of tackling the structural bottlenecks that hinder genuine integration of the sector. The choice of a regulation as the legal instrument and the strengthening of the Commission’s role heighten the tension between centralisation and the local characteristics of networks, once again raising questions about the right balance between EU‑level market governance and national specificities, especially with regard to access and remedies.

The preservation of the wholesale‑only regime and the caution on consolidation confirm that the agenda is not a political ‘green light’ to concentration, but rather a marginal adjustment of a model still based on infrastructure‑based competition in a context where regulatory and market fragmentation continues to stand in the way of truly pan‑European operators. In this way, the DNA seeks to re‑energise the Single Market objective and to promote more modern and resilient networks, without, however, resolving the fundamental ambiguity between Single Market rhetoric and the persistence of 27 national markets, nor putting forward a clear regulatory alternative – such as a genuine ‘fixed roaming’ model – capable of making the European level effectively contestable rather than merely proclaimed.