Europe’s telecoms giants received a clear, albeit bittersweet, signal from the European Commission on Wednesday regarding the future of their business models. As part of the long-awaited Digital Networks Act, Brussels has proposed a revolutionary change in the management of radio resources: granting operators the right to use spectrum for an indefinite period. This is a fundamental change from the current standard, where licences are typically issued for a minimum of 20 years, forcing companies into cyclical uncertainty and the need to build reserves for costly auctions.
For telecoms CFOs, this proposal is key. The default renewal of licences and harmonisation of spectrum valuation rules is intended to increase investment predictability. A senior Commission official explicitly acknowledged that unlimited licensing is intended to send a signal to capital markets that the telecoms sector is a safe haven for long-term capital. This is essential to meet Brussels’ ambitious target: full fibre coverage of the European Union between 2030 and 2035. Henna Virkkunen, the EU’s chief technology officer, stressed in a statement that resilient infrastructure is a prerequisite for Europe’s digital sovereignty.
However, operators’ enthusiasm is dampened by the fact that their key financial demand has been ignored by the Commission. The lobbying offensive to force so-called Big Tech (Google, Netflix, Meta) to directly subsidise infrastructure costs – argued on the grounds that these operators generate the lion’s share of network traffic – has failed. Instead of a mandatory ‘traffic tax’, the bill merely proposes a voluntary cooperation mechanism between service providers and tech giants. In practice, this means maintaining the status quo, in which the burden of CAPEX is on the operators and Silicon Valley avoids new regulatory burdens in Europe.
An additional element of the package, designed to make the technological transition more flexible, is the possibility for national governments to extend the deadline for copper networks to be phased out until 2030. The draft will now go before the European Parliament and member states, where there are sure to be further clashes between lobbyists from both sectors.
