The European Commission's draft Digital Networks Act (DNA), now moving toward formal legislative debate under Executive Vice-President Henna Virkkunen, has reopened one of Brussels' most contested digital policy fights: should large content and application providers be forced to subsidise the networks of European telecom operators?
The proposal — flagged in the Commission's February 2024 white paper How to master Europe's digital infrastructure needs? — would consolidate fragmented telecom rules across the 27 Member States. Among its most controversial elements is a renewed push for a 'fair share' mechanism that would require hyperscalers such as Netflix, Meta, Alphabet and Amazon to contribute to the cost of building and maintaining European broadband and 5G infrastructure.
The argument from incumbent telecoms — channelled through the European Telecommunications Network Operators' Association (ETNO) — is familiar: a handful of platforms drive the majority of traffic on European networks, and operators say substantial additional investment is needed to meet the EU's Gigabit and 5G targets. Their pitch is that a direct transfer from content providers should help close that gap.
The economics don't add up
The problem is that the case for 'fair share' has been repeatedly examined — and repeatedly found wanting — by the EU's own technical regulator. The Body of European Regulators for Electronic Communications (BEREC) published a preliminary assessment in October 2022 concluding that there is no evidence the current internet ecosystem is unsustainable, and that introducing mandatory payments from content providers to telcos would risk distorting competition, undermining net neutrality, and harming end users.
That conclusion mirrors decades of internet economics. Large content providers already invest heavily in submarine cables, content delivery networks (CDNs), peering arrangements and edge caches that reduce — not increase — the load on operator networks. Netflix's Open Connect, Meta's network appliances and Google's Edge Network deliver content closer to users, often hosted free of charge inside the telco's own facilities.
In effect, a 'fair share' levy would charge content providers for traffic that telcos' own subscribers requested, over infrastructure that the content providers themselves help build. As BEREC has noted, operators are already remunerated twice: by retail subscribers for connectivity, and by content providers through existing interconnection and transit markets when extra capacity is required.
South Korea offers a cautionary tale
The clearest warning sign comes from the only major democracy that has experimented with a sending-party-network-pays (SPNP) model. South Korea's framework triggered prolonged legal disputes — most prominently the SK Broadband v. Netflix litigation — and has been linked to slower international content investment and a decline in some of Korea's network performance rankings. Several major content providers reportedly throttled or downgraded streaming quality in response.
European policymakers should study that experience carefully before institutionalising a similar mechanism across a single market of roughly 449 million people. The political fight in Korea has been bruising; the consumer outcome, underwhelming.
A net neutrality problem
There is also a legal question. The EU's Open Internet Regulation (2015/2120) enshrines net neutrality and prohibits operators from discriminating among traffic flows. A mandatory payment regime that gives telcos commercial leverage over which content providers reach users — and on what terms — sits uneasily with that framework.
Charging the platforms users want to reach is not 'fair share' — it is a tax on the open internet, ultimately paid by European consumers.
Civil society groups including European Digital Rights (EDRi) and the European consumer organisation BEUC, along with industry bodies such as the Computer & Communications Industry Association (CCIA), have warned that the proposal would erode net neutrality in substance even if it preserves the letter of the law. End users would likely face higher streaming subscription prices, reduced service quality, or both — while operators would gain a regulator-blessed bargaining chip against the very services driving demand for fibre and 5G upgrades.
A better path forward
The DNA's broader goals — single-market consolidation, faster spectrum harmonisation, easier cross-border investment among operators, and lighter authorisation regimes for new entrants — are sound. European telecoms genuinely operate in a more fragmented competitive landscape than their US or Chinese counterparts, and the EU's strategic autonomy agenda will benefit from stronger, better-capitalised domestic networks.
But the answer to under-investment is not to tax the most successful firms on the internet. It is to fix the underlying market structure:
- Streamline merger review where consolidation is genuinely welfare-enhancing.
- Accelerate the auction, re-farming and harmonisation of spectrum across Member States.
- Simplify rights-of-way, permitting and civil-works rules that delay rollout.
- Direct targeted public co-investment — including through the Connecting Europe Facility and structural funds — to rural areas that the commercial market will not serve.
Innovation in Europe's digital economy depends on permissionless interconnection. Stripping that away to subsidise incumbents would slow, not accelerate, the continent's digital build-out. The Digital Networks Act can still deliver real gains for European competitiveness — but only if Brussels resists the temptation to relitigate a fair-share fight that its own regulators, and the underlying economics, have already settled.