Europe’s ambitions for digital infrastructure are encountering regulatory headwinds, with industry groups warning that recent proposals could widen the global investment gap rather than close it.
For business leaders planning long-term European operations, the current regulatory trajectory suggests potential delays to network modernisation and higher compliance costs that could affect service rollout and competitiveness.
The GSMA, which represents mobile network operators, has issued a critical appraisal of the European Commission’s latest initiatives—specifically the proposed Digital Networks Act (DNA) and revisions to the Cybersecurity Act. While the GSMA supports stronger security objectives, it argues that the current draft measures risk discouraging the capital expenditure required for next-generation connectivity.
Europe’s digital infrastructure deficit
High-performance connectivity such as 5G Standalone (5G SA) is essential for advanced enterprise applications—from industrial IoT to real-time logistics. Yet the pace of deployment in Europe is lagging. The GSMA points out that nearly seven years into the 5G era, Europe still trails other major regions in making full use of standalone 5G technologies.
By contrast, more than three-quarters of people in China already have access to 5G SA, a technology that fuels innovation and creates new monetisable services. The United States is also advancing practical connectivity use cases more quickly than Europe.
This connectivity gap harms economic performance. As prior analyses such as the Draghi and Letta reports have emphasised, digital connectivity is a key driver of Europe’s economy. Without comparable infrastructure, European companies may struggle to achieve the same productivity gains and operational efficiencies as their international competitors.
Laszlo Toth, Head of Europe at the GSMA, summed up the concern: “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 versus revolution
The Digital Networks Act was intended to address Europe’s investment shortfall in connectivity. However, industry stakeholders say the draft represents regulatory evolution where more radical change is needed to accelerate infrastructure rollout.
A central worry for operators is the sector’s financial sustainability. Operators continue to invest in networks despite declining returns and reduced market valuations over the past decade. The GSMA contends that the DNA in its current form does little to reverse that trend.
Although the Commission has emphasised “simplification,” industry feedback describes the effect as “complexification”: the draft adds sector-specific rules, new administrative bodies and expanded reporting requirements. Those changes risk creating duplicated compliance layers and procedural burdens that constrain operators’ agility.
For enterprise leaders, these developments imply higher downstream costs and less flexibility in supply chains as operators allocate more resources to regulatory compliance alongside legacy obligations such as the ePrivacy Directive.
One positive element in the DNA proposal is a move toward a single-market approach to spectrum licensing. The GSMA describes spectrum as the “lifeblood of the connectivity industry,” and a more harmonised, predictable spectrum framework could improve investment certainty—important for large-scale enterprise deployments that depend on wide-area coverage.
The cybersecurity trade-off
At the same time, proposed changes to the Cybersecurity Act introduce further operational complexity. Mobile networks serve both as a frontline defence and a potential target, so stronger cybersecurity rules are understandable. But increased security standards can also increase costs and divert funds away from network upgrades.
The GSMA supports the objective of stronger cybersecurity, but stresses that measures must be strictly risk-based and operationally feasible. Industry voices caution that the current proposals take a blanket approach—treating all equipment elements as equally sensitive—which they view as unnecessary and disproportionate.
For security leaders within enterprises, this raises a practical concern: if operators must direct capital toward broad, non-risk-based compliance, progress on secure network features and new services could slow. The GSMA warns that unrealistic timelines and heavy compliance loads could cause service disruptions and significant additional costs.
Another gap in the DNA is the absence of a binding mechanism to manage relations between network operators and large traffic generators. The proposal currently contains a voluntary conciliation mechanism, which the GSMA says is insufficient to address “significant and persistent bargaining power asymmetries.”
Without a binding conflict-resolution framework, commercial negotiations may remain unbalanced. That dynamic can undermine the investment capacity of telecom operators and restrict resources available for research and development.
The industry’s message is clear: the current legislative proposals need refinement to avoid consigning Europe to a deeper connectivity shortfall. Laszlo Toth warns that without adjustments, the sector will struggle to attract the investment necessary to support the continent’s digital growth.
The GSMA is urging EU member states and the European Parliament to improve the DNA so it achieves a workable balance between security imperatives and financial realities. The objective should be a regulatory framework that secures networks without undermining the revenue and investment conditions that enable enterprise innovation.
Until such balance is reached, enterprises operating in Europe should expect uneven 5G deployment, regulatory friction and potential increases in operational costs tied to compliance burdens.
See also: Why bridging Private 5G security gaps protects enterprise networks
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