Part I - The Big Picture: The Draft Digital Networks Act (DNA), A First Critique.

Executive Summary
The leaked draft of the proposed Digital Networks Act (DNA) marks a significant shift in EU electronic communications policy. While it formally preserves core principles like net neutrality, competition, and consumer protection, it weakens their practical enforceability. By reframing interconnection, traffic management, and ecosystem relations as primarily commercial matters, the draft reduces the role of public law safeguards and regulatory oversight.

The most profound change is on the way the DNA treats interconnection. Technically, the Internet’s scalability, neutrality, and resilience rely on an interconnection model based on settlement-free peering and competitively priced transit, where capacity expansions respond to predictable traffic growth rather than bilateral negotiations. Congestion is treated as a network failure to be remedied through timely upgrades of ports, backhaul, and routing—not as an economic imbalance. This model ensures that quality of service is determined by network design rather than commercial affiliation, preserves the end-to-end principle, and allows new services to reach users without prior negotiation. BEREC has repeatedly found that EU interconnection markets function effectively, with traffic asymmetries reflecting normal demand patterns, and that there is no evidence of systemic congestion or market failure warranting traffic-based contributions or regulatory restructuring.

The draft DNA departs from this evidence-based framework by treating interconnection congestion as a commercial dispute resolved mainly through bilateral negotiation or alternative dispute resolution. This enables operators to delay or condition capacity upgrades to strengthen bargaining positions, effectively monetising quality of service. While nominally maintaining access-level net neutrality, the approach permits de facto discrimination at the interconnection layer—functionally equivalent to paid prioritisation but outside the safeguards of the EU’s Open Internet Regulation.

Politically, the DNA shifts from a rights-based, competition-oriented governance model toward an infrastructure-centric regime that favors incumbent telco operators and codifies their narrative on traffic imbalance and investment incentives. This risks fragmenting the Digital Single Market, raising barriers for smaller and European service providers, weakening regulatory oversight, and contradicting BEREC’s warnings that monetising interconnection undermines openness, competition, and long-term sustainability.

In summary, the draft DNA departs from empirical evidence and regulatory guidance, aligns with incumbent lobbying telco positions, and underestimates the tangible risks to the open Internet, competition, innovation, and consumer welfare. If adopted without substantial revision, it could distort the European Internet ecosystem, accelerate market concentration, weaken practical net neutrality, and threaten the Digital Single Market.
 
 1. Open Internet and Net Neutrality: Formal Continuity, Substantive Regression

1.1 The DNA’s approach
The DNA formally integrates the Open Internet Regulation (EU) 2015/2120 into a broader regulatory framework, explicitly stating that it does not alter the “fundamental principles” of equal and non-discriminatory treatment of traffic. However, the draft simultaneously:

• Expands the regulatory focus on commercial negotiation of interconnection;
• Normalises differentiated network arrangements justified by performance and investment considerations;
• Shifts enforcement emphasis away from ex ante regulatory oversight toward dispute resolution mechanisms.

1.2 Comparison with BEREC conclusions
BEREC has consistently concluded that:

• The Open Internet Regulation is fit for purpose;
• There is no demonstrated market failure justifying structural changes;
• Interconnection disputes have not produced systemic congestion or consumer harm warranting regulatory overhaul;
• Traffic growth is predictable and manageable within existing commercial and technical frameworks.

The DNA diverges sharply from these findings by implicitly treating traffic asymmetry and interconnection disputes as systemic problems requiring regulatory reframing.

1.3 Policy risk
By relocating critical neutrality issues to the interconnection layer and framing them as commercial disputes, the DNA creates a credible pathway for paid prioritisation and de facto discrimination without formally breaching access-level neutrality rules. This undermines the effectiveness of net neutrality while preserving its appearance.

2. “Fair Share” and Network Contributions: De Facto Adoption Without Accountability

2.1 Embedded assumptions
Although the DNA avoids explicit references to “fair share” or mandatory network contributions from content and application providers (CAPs), it embeds the underlying logic by:

• Treating traffic asymmetry as an economic imbalance;
• Framing CAPs as cost drivers rather than demand-side value creators;
• Encouraging commercial settlements linked to traffic volumes and capacity upgrades.

2.2 BEREC’s position
BEREC has repeatedly found that:

• There is no evidence of CAP free-riding;
• CAPs already make substantial investments in infrastructure, caching, and content delivery networks;
• Mandatory or induced payment schemes risk distorting competition and harming end-users;
• Such schemes would disproportionately affect smaller players and innovators.

The DNA disregards these conclusions without presenting new empirical evidence.

2.3 Policy risk
The result is a stealth policy shift that enables outcomes previously rejected by EU institutions, without the transparency, safeguards, or democratic scrutiny that an explicit “fair share” proposal would require.

3. Interconnection and Access: From Open Architecture to Negotiated Bottlenecks

3.1 Structural change
The DNA reframes interconnection as:

• A bilateral commercial negotiation by default;
• A subject for alternative dispute resolution (ADR) rather than regulatory enforcement;
• An area where investment incentives outweigh competitive neutrality.

This marks a departure from the long-standing European approach that treated interconnection as a foundational element of end-to-end connectivity and market openness.

3.2 BEREC comparison
BEREC has emphasised that:

• Interconnection markets generally function well;
• Disputes are limited in number and scope;
• Regulatory intervention should remain available where power imbalances exist;
• Fragmentation of interconnection outcomes undermines the Single Market.

3.3. Policy Risk
The draft DNA risks dismantling the invisible regulatory scaffolding that keeps interconnection competitive, replacing it with negotiated bottlenecks that entrench power, fragment the Single Market, and are extremely difficult to unwind.

4. Alternative Dispute Resolution (ADR): Privatising Regulatory Outcomes

4.1 The role of ADR in the DNA
The draft DNA strongly promotes ADR for both consumer disputes and interconnection conflicts between undertakings. While ADR can be useful for individual disputes, its expanded role raises concerns when applied to systemic market issues.
 
4.2 Structural imbalance
ADR mechanisms:

• Are non-precedential and opaque;
• Do not generate binding market-wide rules;
• Favour parties with greater legal, financial, and negotiating power;
• Reduce transparency and public accountability.

4.3 Policy Risk
By substituting regulatory oversight with negotiated outcomes, the DNA weakens the ability of NRAs and BEREC to address structural competition and neutrality issues, effectively privatising regulatory enforcement.

5. Competition and Market Structure: Incumbent Bias and Consolidation

5.1 Implicit policy choices
The DNA repeatedly prioritises:

• Scale;
• Investment certainty;
• Network operator sustainability.

Competition is treated as instrumental rather than as a core policy objective.

5.2 Impact on smaller operators and innovators
Smaller ISPs, alternative networks, and new market entrants:

• Lack leverage in interconnection negotiations;
• Cannot monetise traffic asymmetry;
• Face increased upstream costs;
• Are more likely to exit or consolidate.

This outcome is inconsistent with EU competition policy and digital innovation goals.

5.3 Policy Risk

The policy risk is that the DNA hardcodes an incumbent-centric market structure by subordinating competition to scale and “investment certainty,” accelerating consolidation, weakening smaller operators and innovators, and ultimately undermining the EU’s own competition and digital innovation objectives.

6. Consumer Protection: Indirect Harm, Limited Remedies

6.1 The missing consumer perspective
While the DNA includes extensive transparency obligations, it fails to address:

• Price increases passed on from interconnection costs;
• Degradation of service quality caused upstream;
• Reduced diversity of online services;
• Lack of effective consumer remedies for systemic harms.

6.2 BEREC alignment
BEREC has consistently stressed that consumer harm in connectivity markets is often indirect and systemic, requiring proactive regulatory safeguards rather than reliance on transparency and switching alone.

6.3 Policy Risk
The policy risk is that the DNA normalises a shift from citizen-centred network governance to infrastructure-centred bargaining, redefining connectivity as a private commercial outcome rather than a public interest service—thereby eroding the EU’s ability to detect, attribute, and correct systemic consumer harm before it becomes structurally embedded.

7. Institutional Balance and Regulatory Capture Concerns

7.1 Shift in governance
The DNA:

• Weakens the role of NRAs in favour of coordination and guidance;
• Limits BEREC to advisory functions;
• Elevates commercial negotiation as the default governance mechanism.

7.2 Alignment with incumbent lobbying
The narrative structure and policy assumptions of the DNA closely mirror positions advanced by large telecom operators and industry associations, particularly regarding traffic imbalance, investment incentives, and ecosystem “fairness.”
This raises legitimate concerns about regulatory capture and the marginalisation of evidence-based regulatory conclusions.

7.3 Policy Risk
The policy risk is that the DNA recalibrates EU digital governance away from independent, evidence-based regulation toward a negotiation-driven regime shaped by incumbent preferences, creating a perception—and eventual reality—of regulatory capture that weakens institutional credibility, exposes the EU to legal challenge, and undermines trust in the Union’s capacity to govern critical digital infrastructure in the public interest.
 
8. Conclusions and Policy Imperatives

8.1 Strategic assessment
The draft Digital Networks Act cannot credibly be framed as a technical simplification or neutral regulatory adjustment. It constitutes a strategic redirection of EU digital policy, moving away from a rights-based, competition-driven model and towards an infrastructure-centric regime in which access, interconnection, and market outcomes are increasingly shaped by private negotiation rather than public rule-setting.
This shift has implications that extend well beyond the telecommunications sector. By prioritising scale, bargaining power, and incumbent sustainability over contestability and openness, the DNA risks weakening the structural conditions that have historically enabled European digital innovation, cross-border growth, and service diversity. In effect, it trades a dynamic, entry-friendly ecosystem for a more static model optimised around large, vertically integrated actors.

8.2 Competitiveness, growth, and the open Internet
Europe’s digital competitiveness has never depended on global platform dominance or network scale alone, but on open connectivity, low barriers to entry, and predictable regulatory safeguards that allow new services, applications, and business models to emerge. The DNA’s reorientation threatens these foundations in three ways:

• Competitiveness and growth: By increasing upstream costs and uncertainty for smaller operators, content providers, and new entrants, the DNA risks suppressing innovation-led growth and reinforcing Europe’s structural disadvantage in scaling digital services globally.
• The open Internet: Normalising negotiated interconnection and traffic-based payments risks transforming the open Internet from a neutral innovation substrate into a tiered access environment, where reach, quality, and viability depend increasingly on financial leverage rather than merit or user demand.
• Ecosystem health: Over time, reduced entry, higher consolidation, and diminished service diversity would weaken the resilience of the EU’s digital ecosystem, making it less adaptive, less competitive, and more dependent on a small number of dominant infrastructure and service providers.

Rather than strengthening Europe’s digital position, the DNA risks locking in low-growth equilibrium dynamics, where rents are redistributed within the connectivity layer while innovation and value creation migrate elsewhere.

8.3 Policy imperatives
To safeguard long-term competitiveness, growth, and the integrity of the open Internet, the following corrections are essential:

1. Reaffirm net neutrality as an end-to-end principle extending to interconnection, supported by enforceable obligations rather than discretionary oversight.
2. Reject traffic- or volume-based contribution mechanisms in the absence of clear, evidence-based findings of systemic market failure, with the burden of proof resting on proponents.
3. Preserve strong ex ante regulatory powers for NRAs in interconnection and access markets, ensuring timely and harmonised intervention across the Single Market.
4. Limit ADR strictly to non-systemic, bilateral disputes, and prevent its use as a substitute for regulatory enforcement in structurally imbalanced markets.
5. Re-anchor competition, consumer welfare, market entry, and innovation capacity as primary policy objectives, not secondary considerations subordinated to incumbent investment narratives.
6. Align the DNA with BEREC’s empirical findings and regulatory experience, restoring coherence between evidence, institutional roles, and legislative design.

​8.4 Closing warning
Absent these corrections, the DNA risks reshaping Europe’s Internet from an open, innovation-enabling infrastructure into a managed network of negotiated access, with adverse consequences for competition, growth, and digital sovereignty. Once embedded, such a shift would be structurally difficult to reverse, diminishing the EU’s capacity to sustain a healthy digital ecosystem and weakening its ability to compete in an increasingly innovation-driven global economy.

Disclaimer: This post is part of an ongoing series analysing the draft Digital Networks Act (DNA). Given the size and complexity of the proposal, each instalment focuses on a specific set of issues that deserve closer scrutiny as the legislative process unfolds.