Magda Cocco
Vieira de Almeida, Lisbon
mpc@vda.pt

Rui Gordete Almeida
Vieira de Almeida, Lisbon
ral@vda.pt

Introduction

A cutting-edge digital network infrastructure is the foundation for a flourishing digital economy and society. Secure and sustainable digital infrastructures are one of the four cardinal points of the EU’s Digital Decade Policy Programme 2030, one of the main priorities of the current European Commission. However, the EU faces significant challenges in meeting its connectivity targets and keeping pace with technological transformation and global competition in the digital infrastructure sector.

These challenges and their potential policy solutions are identified in the White Paper ‘How to master Europe’s digital infrastructure needs?’, published by the European Commission (the ‘Commission’) on 21 February.

Main trends and challenges in the digital infrastructure sector

The White Paper analyses the main trends and challenges in the digital infrastructure sector and provides an overview of the current situation and future needs of the EU in terms of high-performance, secure and sustainable digital networks and services, as well as the obstacles and risks that may hamper the achievement of the EU’s digital objectives.

The main challenges are categorised as follows:

Connectivity infrastructure challenges:

The White Paper highlights the gaps and delays in the deployment and take-up of very high-capacity networks, such as fibre and 5G, and the investment needed to meet the 2030 Digital Decade targets. It also compares the EU’s performance and coverage with other leading regions and discusses the demand-side factors affecting the profitability and attractiveness of connectivity markets. 

Technological challenges:

These challenges are related to the convergence of connectivity and cloud infrastructures, which enable new applications and services based on data processing, artificial intelligence (AI) and the Internet of Things. The White Paper describes the emerging business models and opportunities for the electronic communications sector, as well as the risks of dependencies and bottlenecks in the supply and value chain. The White Paper also emphasises the need for innovation and orchestration across the computing continuum, from chips and devices to edge and cloud services, and for fostering a collaborative computing ecosystem in the EU.   

Challenges of achieving scale in EU connectivity services:

These services are essential for enhancing the competitiveness and economic security of the EU. The challenges in question are related to the financial situation of the EU electronic communications sector, the barriers to cross-border provision and consolidation, level playing field and convergence issues, and the sustainability challenges related to the energy consumption and environmental impact of digital networks. 

Security and resilience challenges:

Notably in the supply and operation of networks, especially in the context of increasing geopolitical tensions and cyber threats. The White Paper discusses the challenge of ensuring trusted and diversified suppliers of network equipment and services, the security standards for end-to-end connectivity and the security and resilience of submarine cable infrastructures, which are critical for the EU’s global connectivity and economic security.

The White Paper addresses the challenges presented above and proposes a vision and roadmap for mastering the transition to future digital networks.

How to address the challenges 

Overview of the pillars:

The White Paper suggests three main pillars of action, each with several potential scenarios for policy measures, such as a possible future Digital Networks Act.

Pillar I of the White Paper aims to create the 3C Network (‘Connected Collaborative Computing Network’), an ecosystem that spans semiconductors, computational capacity in all kinds of edge and cloud environments, radio technologies, connectivity infrastructure, data management and applications. It is based on the premise that connectivity and computing are converging and, therefore, that the EU needs to leverage its current strength in the network equipment and service industry to embrace this paradigm shift and ensure its economic security and competitiveness.

The White Paper discusses three possible scenarios for public policy actions to foster the 3C Network:

• Scenario one: The Commission may consider proposing large-scale pilots that set up end-to-end integrated infrastructures and platforms for telco cloud and edge. In the second step, these pilot infrastructures will be used to orchestrate the development of innovative technologies and AI applications for various use cases. 
• Scenario two: The possibility of extending €1.2 billion of state aid for an Important Project of Common European Interest in Next Generation Cloud Infrastructure and Services (IPCEI-CIS) or adding it to a new state aid package to be discussed by the Commission’s Joint European Forum for Important Projects of Common European Interest (JEF-IPCEI).
• Scenario three: Massive investments in connectivity capacity are required to support the creation of a collaborative connectivity and computing ecosystem. The Commission may consider different options to frame these investments into a simplified and coordinated support framework for a truly digital single market, drawing on European, national, public and private investments.

Pillar II of the White Paper aims to complete the Digital Single Market by addressing the challenges and opportunities for the convergence of electronic communications networks and services, cloud infrastructures and services, and other digital services. It also seeks to promote investment, competition, sustainability and end-user benefits in the digital infrastructure sector.

The White Paper discusses several possible scenarios for public policy actions that could be part of a future Digital Networks Act, such as:

• Scenario four: Broadening the scope and objectives of the current regulatory framework to ensure a regulatory level playing field and equivalent rights and obligations for all actors and end-users of digital networks, where appropriate to meet the corresponding regulatory objectives.
• Scenario five: Accelerating copper switch-off and changing access policy in view of the full fibre environment (fixed deadline of 2030 and support for switch-off to commence from 2028), proposing a European wholesale access product and recommending no markets for presumptive ex ante regulation, while maintaining a safety net for national regulatory authorities (NRAs) to keep regulation if the ‘3 Criteria Test’ is met. 
• Scenario six: Facilitating the single market and building scale for the activities of all players, by considering a more integrated governance at EU level for spectrum that would allow, where necessary, for greater harmonisation of spectrum authorisation processes, thereby creating the conditions for market scale necessary for pan-EU operators to attain larger investment capacity, and by considering a more harmonised approach to authorisation (through the possible establishment of the ‘country of origin’ principle for certain activities less connected to consumer retail markets and local access networks). 
• Scenario seven: Facilitating the greening of digital networks, by promoting the timely switch-off of copper networks and the move to a full fibre environment and a more efficient use of networks (codecs) throughout EU territory. 

Pilar III of the White Paper aims to ensure secure and resilient digital infrastructures for Europe in light of the growing threats and challenges posed by the broader geopolitical context, the advancement of quantum computing and the dependence on critical submarine cable infrastructures. The White Paper discusses the following possible scenarios for public policy actions to address these issues:

• Scenario eight: The Commission will promote the reinforcement of advanced research and innovation activities across the EU in support of new fibre and cable technologies.
• Scenario nine: The Commission may consider establishing a Cable Projects of European Interest (CPEI) list and related labelling system by a delegated act under the Connecting Europe Facility. 
• Scenario ten: The Commission may conduct a review of available instruments, in particular grants, procurement, blending operations under InvestEU and grant blending facilities, with a focus on leveraging private investment to support CPEIs, including the possibility of an equity fund. 
• Scenario 11: The Commission may consider proposing a joint EU governance system on submarine cable infrastructures.
• Scenario 12: The Commission may consider harmonising security requirements in international fora, which may be recognised through a dedicated EU certification scheme.

Stakeholders’ positions regarding the White Paper

Thierry Breton initially hinted at the suggestion of expanding the Electronic Communication Code to include cloud and digital platform operators last year. The telecommunications industry had proposed that large digital platforms relying on traditional communications infrastructure and generating data traffic should contribute to the costs of network expansion, while digital platforms argued that additional fees would be passed on to consumers (fair share). This new White Paper proposes expanding the code to cover all types of cloud infrastructure and services.

Computer & Communications Industry Association Europe (CCIA), which represents the interests of digital platforms, argues that this idea should be based on evidence. In essence, the proposal aims to extend regulation for the digital platform sector to ensure fair competition, much like in the telco industry, and promote a single market.

European Telecommunications Network Operators’ Association (ETNO), the group representing major European telecom companies, expressed support for the Commission’s plans to create a more innovation-focused and investment-friendly telecom policy. They praised the ‘clear recognition of scale’ as an essential element for success in a software and cloud-defined world. ETNO stated that Europe’s strategic interest lies in avoiding market fragmentation.

The GSMA, which represents mobile network interests worldwide, welcomed the Commission’s white paper addressing Europe’s digital infrastructure needs, seeing it as a blueprint for spurring investment in Europe’s networks, which are a high priority for the European economy.

However, many alternative network representatives criticised the proposal for its top-down approach towards industrial policy and expressed concerns that it prioritises forced consolidation over fair competition, innovation and service quality in the long term.

Conclusions and next steps: call to action by the entire digital ecosystem

The White Paper sets out a vision and a roadmap for mastering the transition to the digital networks of the future in view of the technological, economic and geopolitical challenges facing the EU in the digital decade. To this end, the White Paper launches a broad consultation of stakeholders and invites comments until 30 June 2024. The Commission will analyse the feedback received and consider the appropriate follow-up actions, such as a possible future Digital Networks Act, in line with its priorities and work programme.

In light of the upcoming European Parliament elections in June and the appointment of a new European Commission, we anticipate seeing whether the newly appointed commissioners will take measures to execute the proposals put forward in the White Paper.

In any case, the results of this public consultation will significantly impact how Europe’s future digital infrastructure will be shaped. It is therefore vital to engage in this conversation to ensure that the telecommunications industry and the broader digital economy are well positioned for continued growth and success.