EU threads needle on telecom, cybersecurity overhaul

BRUSSELS (CN) — The European Union proposed a sweeping digital package Wednesday to give telecom operators permanent control over airwave licenses while forcing member states to rip out Chinese equipment from mobile networks.

The package — a Digital Networks Act overhauling telecom rules and a revised Cybersecurity Act targeting supply chain risks — tries to navigate an impossible spot: pumping up telecom investment while clamping down on security risks, keeping Washington happy while pushing Beijing out of critical infrastructure.

Executive Vice President Henna Virkkunen rolled out both measures in Strasbourg, France, ditching a controversial plan to force Big Tech companies to pay for network infrastructure. European telecom operators have complained for years that a handful of companies — mostly American firms like Netflix, Google and Meta, plus China’s ByteDance — generate the majority of internet traffic but pay nothing toward maintaining the pipes.

Instead, Brussels offers telecom operators what they’ve long wanted: spectrum licenses that last indefinitely rather than expiring every 15 or 20 years. That’s a fundamental shift meant to convince investors that building out 5G and fiber networks is worth the money.

“It’s a clear signal for the market that it’s worth investing in this sector because there is a predictability of what you get,” a senior commission official said Tuesday.

But the permanent licenses come with strings attached. Operators would face “use-or-share-it, or lose-it” rules and coverage requirements, and regulators could still revoke licenses if companies park on spectrum without actually deploying it.

Telecom operators tore into the package. The proposal is “a continuation of the status quo, lacking transformative proposals to foster much-needed investment,” Connect Europe said in a statement. “Voluntary measures will do little to reach negotiations at eye-level with Big Tech giants.”

The GSMA, the global mobile operators association, was equally critical. “Europe’s ability to compete in the digital age will unfortunately not be turbocharged by the proposed version of the DNA,” said Laszlo Toth, the group’s head of Europe, in statements shared with Courthouse News. The voluntary cooperation mechanism “falls far short of addressing significant and persistent bargaining power asymmetries” between telecom operators and tech platforms.

Digital rights groups also attacked the proposal, warning it undermines consumer protections. The voluntary cooperation mechanism “will likely pave the way for the establishment of network fees,” despite the commission dropping mandatory payments, Thomas Lohninger, executive director of Austrian group epicenter.works, told Courthouse News. “It is a direct attack on net neutrality protections for consumers."

Europe also gets more time to rip out its old copper phone lines. The original plan called for replacing copper with fiber by 2030, but the new proposal pushes that to 2035 and only in areas where at least 95% of people already have fiber available and prices stay affordable.

Officials say legacy networks are strangling fiber deployment in countries that have been slow to force incumbents to open their underground conduits to competitors, like Greece, Austria, Belgium and the Czech Republic.

The telecom package combines four separate rule sets into one law and adds security requirements. Brussels also grabs control over satellite internet licensing from national governments. France and Germany are already pushing back on that along with four other countries.

Derisking from Chinese suppliers

The cybersecurity proposal takes a harder line on foreign suppliers. The revised Cybersecurity Act would let the European Commission and member states force the removal of “high-risk third-country suppliers” from mobile networks and other critical sectors.

EU countries get three years to strip high-risk vendors out of critical 5G infrastructure once the law takes effect. European regulators will publish a catalog of banned suppliers for 5G, then work through other sectors — energy, water, transport, health care. Virkkunen said Wednesday the removal would cost between 3 billion and 4 billion euros ($3.1 billion to $4.2 billion), or about 25 cents per mobile user.

The measure stops short of naming China explicitly, but officials have for years expressed concern about suppliers like Huawei and ZTE, whose equipment powers significant portions of Europe’s mobile networks.

“In today’s geopolitical landscape, supply chain security is no longer just about technical product or service security, but also about risks related to a supplier, particularly dependencies and foreign interference,” the commission said in a statement Tuesday.

The package cuts red tape on Europe’s certification system for digital products — down to 12 months from what’s been taking years — and eases compliance for nearly 29,000 companies through changes to NIS2, the EU’s main cybersecurity law. ENISA, the EU’s cybersecurity agency, gets more power to coordinate ransomware responses and run a single entry point for incident reporting.

Both proposals head to the European Parliament and the 27 member states now. Negotiations will take months. The cybersecurity rules kick in immediately once approved. Member states get a year to write the NIS2 changes into national law.

Tech industry groups are already bracing for fights over the cybersecurity rules. The Computer & Communications Industry Association, representing U.S. tech companies, praised the commission for sticking to technical security criteria rather than blanket bans on non-European providers.

But the group warned that member states and lawmakers will likely try adding pro-Europe measures during negotiations. “We call on EU institutions to resist the protectionist urge,” said Mitchell Rutledge, the group’s technology and security policy manager.

The dual package reflects Brussels’ attempt to balance competing pressures: spurring telecom investment while tightening security controls, and maintaining trade relations with Washington while reducing strategic dependencies on Beijing.

The approach satisfies no one completely. Telecom operators say permanent spectrum licenses won’t close the hundreds-of-billions funding gap they face. Tech groups worry negotiations will produce the protectionism Brussels tried to avoid. And some lawmakers already want tougher China restrictions, setting up fights over how far to go.

Courthouse News correspondent Yuval Molina is based in Brussels, Belgium.