Weekly Wrap Special: Experts question Digital Networks Act’s perpetual license proposal 

The webinar brought together Gerard Pogorel, professor emeritus of economics at Telecom Paris; Philippe Lefebvre, a former senior policy officer at the European Commission; and Tony Shortall, director of economic consultancy Telage. You can watch it below.

The DNA proposes an unlimited radio spectrum licence duration by default, subject to periodic reviews, and this drew the most criticism from the panel. As the proposal text puts it, the preferred option “entails mainly unlimited licence duration by default, with possibility for review clauses and revocation of rights of use, quasi-automatic renewals, and the application of pro-investment auction designs.”

Pogorel understands why the Commission had proposed it. “This was introduced because the mobile telephony operators have rightly complained that over the past 20 years, they have spent billions of euros and whatever currency on spectrum licenses, and those billions were not available for investment. This was the somewhat lopsided result of a very good, necessary idea, the opening of competition in telecommunications in mobile telephony.” He says the Commission is seeking to mitigate the burden imposed by these spectrum fees.

However, he says that perpetual licences are nevertheless a “terrible idea”. “BERECBEREC stands for the Body of European Regu… often says it, that telecommunications is a strong oligopoly, and now we would have an oligopoly with the license duration of one, two generations, indefinite licenses. Frankly, it doesn’t make sense,” says Pogorel.

“I understand the rationale, […] the commission has said to the operators, okay, you have spent hundreds of billions of euros on spectrum licenses, there should be some counterpart, but this is not the right one,” says Pogorel. 

His alternative was to tie duration to investment and argues that the Commission should “get back to the economic rationale.” He says that the spectrum licenses should be adjusted to the duration of the investment. For many companies, the current investment cycle is eight years, ten years, or even 15 years. “Let the license duration be adjusted to the investment cycle, and let the operators, the incumbents, get the return of investment they absolutely deserve, adjusted to the duration,” says Pogorel.

He believes that there will be “hot discussions” on the topic, with member states having “already taken very strong positions on this issue”.

Shortall explains that cheap spectrum plus indefinite rights “has a kind of a twin effect,” he said. “The money they’re not spending on the licences can be used for investment,” and while “they have less uncertainty, they can engage in longer planning cycles.”

But he found the proposal hard to square with economics: “If you’re the holder of a relatively scarce resource, you want to allocate it to that party that derives the greatest value from it, and the easiest way to identify that party, is who’s willing to pay the most for it,” says Shorthall, explaining that this can be also measured in terms of investment commitments. 

Shorthall argues that there is a “very strong rationale to using competition periodically to allocate spectrum”. Instead, unlimited licence duration could present challenges to entry and exit from markets. 

“My principal regret is more a European collective one. We have once again deprived ourselves of the possibility to perform a truly decisive reform of the telecom internal market,” comments Lefebvre on the proposal as a whole.  According to Lefebvre, the DNA ” has had to stay below or avoid the threshold of political irritation of the capitals and the National Regulators, which reduces the ambitions from the start.”

Where the experts see promise

Lefebvre reserved his warmest words for the spectrum chapter. “If you look at the part of the DNA where there are real treasures, it’s the spectrum part,” he said, pointing to “quite a few groundbreaking proposals, like having a true EU-level strategy for spectrum with EU-level spectrum roadmaps that have to be translated to national roadmaps.”

Lefebvre was particularly in agreement with some of the procedural changes. On the idea that any party can petition the Commission to harmonise an allocation, he said: “You and I can start asking for allocations. That’s great.” On assignments, he described EU-level scrutiny of member states’ proposals “with the possibility of even blocking it or amending it” as “even more ambitious,” adding: “I would be surprised, but delighted, if this would survive in the negotiations.” He also welcomed the geolocation database and new sharing obligations, calling them “really innovative.”

However, he admits that some of these proposals will be taken out in the negotiations. “It’s like a missile with several warheads, and it depends on how many warheads will hit the target to provoke or to really achieve a paradigm shift, so we’ll see how many of these very good innovations will survive the negotiations.”

Shortall framed the proposal as a response to investment anxiety. “This was first and foremost a concern about whether Europe was doing enough to ensure sufficient investment in telecom networks and services,” he said, a concern he called “derived,” because “there’s actually no demand for connectivity itself. It’s only a demand for the things that connectivity enables.”

Pogorel’s standout positive element was passporting. “The passport is very positive. It should be enhanced, it should be protected. It’s very important,” he said. “I’m sure the next generation will be extremely happy that we have introduced this possibility of providing services at the EU level.”

In terms of the timeline, there is still some uncertainty. Shorthall expects that the adoption of the DNA will take place by the end of the first quarter of 2027, although the panelists accept it could take longer.

Here’s what else PolicyTracker covered this week:

• Indonesia plans its first mobile spectrum auction in over five years, which will see the release of 260 MHz in the 700 MHz and 2.6 GHz bands
• Head of Ukraine’s new Electromagnetic Warfare Research Centre maps out, band by band, what spectrum congestion looks like during war
• The European Commission wants to assign 2 GHz MSS spectrum via a beauty contest rather than an auction, with rules designed to benefit EU operators
• The National Physical Laboratory (NPL) is working with UK companies to understand how atomic clocks and terrestrial timing can complement and strengthen GNSS services.