A core focus is telecommunications, where Europe’s large number of operators with small customer bases leads to underinvestment and slower network progress compared with the U.S. and China, due to regulation that prioritizes market entry and price competition over scalable investment.

The Letta Report describes the EU single market as foundational but lagging in a digital era, with finance, energy, and telecommunications as particularly fragmented sectors hindering growth and innovation.

Since April 2024, EU policy has begun to respond, with Draghi’s 2024 report backing Letta’s view; the Commission rolled out initiatives including the Competitiveness Compass (2025), the May 2025 Single Market Strategy, and a February 2026 Cable Security Toolbox addressing critical infrastructure and resilience.

There is an ongoing debate over the DNA’s effectiveness: consumer groups warn of backdoors and net neutrality risks, while industry groups seek stronger investment incentives and market-oriented reforms, and telecom operators call for investment-focused regulatory simplification and fairer digital value-creation frameworks.

The Digital Networks Act (DNA), unveiled in January 2026, aims to harmonize EU rules, create a Single Passport for operators, and standardize frequencies and satellite services, turning Letta’s telecom diagnosis into binding law while drawing critique over net neutrality, consumer protections, and investment incentives.

Policy choices on digital infrastructure touch wide swaths of competitiveness, digital sovereignty, and resilience, shaping Europe’s ability to compete with the United States and China and influencing its defense capabilities.

Letta argues fragmentation causes capital flight and pushes a new “fifth freedom” to move research, innovation, knowledge, and education more freely, to boost competitiveness and reduce fragmentation, while stressing that scale matters for European firms.