Network Regulation: EU Commission presents draft for Digital Networks Act

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The EU Commission presented its draft of the Digital Networks Act (DNA) in Strasbourg on Wednesday. The draft law is intended to consolidate four existing regulatory frameworks and set the course for the European telecommunications market. It concerns central issues such as the migration from copper networks to fiber optics, mobile networks, and network neutrality.

The DNA consolidates over 260 pages the European Electronic Communications Code (EECC), the Regulation on the Body of European Regulators for Electronic Communications (BEREC), regulations on cross-border radio frequencies, and "Open Internet". Many things are to become simpler, faster, and more European – and in some areas, the DNA has teeth.

Commission wants to phase out copper by 2035

The DNA brings a major task for German politics: by 2035, virtually all connections should be converted to fiber optics, reiterated Commission Vice-President for Digital, Henna Virkkunen, at the presentation of the DNA in the European Parliament in Strasbourg. By 2029, all member states are to have a concrete plan for how the farewell to copper should take place. Virkkunen did not mention exceptions for television cables – and the draft also does not distinguish between old subscriber networks and more modern HFC networks when it comes to copper.

For Valentina Daiber, President of the Association of Providers in the Digital and Telecommunications Market (VATM), the approach is the right signal; ten years offer "sufficient planning perspective." For this, Daiber also wants to see the regulation set up accordingly: "Provider and service diversity make fiber optic networks attractive to people in the first place. The choice that is common on copper networks must also be preserved on the new network infrastructure."

Because so far, the rule is: whoever builds decides whether others are allowed to offer something on this infrastructure. Unlike the old, state-owned copper monopolies, there is currently no clear legal obligation to grant competitors network access. In the worst case, consumers therefore have fiber optics – but no alternative provider with whom they could conclude a contract.

How the future regulatory regime will be precisely designed will depend, among other things, on the outcome of a complicated mechanism: if there is relevant market power, supervisory authorities will be able to intervene in advance and set rules for how competitors can co-use infrastructures. The fact that market position should determine regulation is also welcomed by the broadband association ANGA. The association, on the other hand, is critical of an extension of regulation to all market participants.

Licenses without time limits

A central change in the allocation of radio frequencies is likely to cause many heated discussions: if the EU Commission has its way, licenses for frequency use will be awarded without time limits in the future. Mobile operators are expected to benefit most from this. The usage rights would then no longer be re-awarded after several years as before – in Germany, auctions had become customary for this. Instead, providers would de facto acquire the licenses permanently. This is intended to provide companies with more planning certainty, explained Virkkunen.

And beyond that, the EU Commission wants to make changes to radio frequencies: after each World Radiocommunication Conference (every two to four years), a common EU frequency strategy is to be adopted. This is intended to create uniformity – a sensible Europeanization through the back door. Originally, the Commission would have liked to fully centralize frequency policy but could not find a majority among the member states for this.

Peering: Regulators as arbitrators?

One of the questions that was repeatedly asked in the run-up: Will the EU revisit its own rules on network neutrality and introduce a so-called "Fair Share" regime that obliges large US platforms to pay for the transmission of their data? This has been a geopolitical political issue for years – and is currently not up for debate, at least with the Commission's proposal.

In the dispute over whether politics must establish concrete rules for peering and transit, the Commission has now initially proposed a voluntary dispute resolution procedure. For Virkkunen, this is preferable to concrete regulation, as it is generally a well-functioning market.

Nevertheless, the Computer and Communications Industry Association (CCIA) Europe, in which the major US content providers and platforms have a significant voice, fears that the DNA draft leaves a loophole for such fees: "This is not a procedure for 'voluntary arbitration' but one that will create new disputes," says Maria Teresa Stecher from CCIA Europe. The association fears that Article 192 of the proposal would de facto lead to an obligation to agree.

Long deliberations expected

The Parliament and the Council will intensively deliberate on the EU Commission's proposal in the coming months. In the European Parliament, the Committee on Industry, Research and Energy (ITRE) will take the lead. The specialist politicians will have to agree on a regulation with the Council and the member states' ministers. Whether and when this will happen is currently completely open. For particularly controversial projects – and at least parts of the DNA undoubtedly belong here – the deliberations of the bodies can drag on for many years.

(mki)