Double-digit growth in the Internet value chain is at risk if infrastructure investors fail to make significant returns
LONDON, May 15, 2022 / PRNewswire / – A new GSMA report warns that market imbalances between network operators and online service providers could jeopardize global growth prospects in various sectors of the Internet-based economy. Policy makers, the report insists, must take into account the interdependence of online services and other growing sectors with underlying infrastructure investments.
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the GSMA 2022 Internet Value Chain Report reveals factors such as asymmetric regulation and restrictions, industry-specific taxes, and spectrum costs that compress the business models of infrastructure providers while allowing Big Tech to thrive.
The study reveals that Internet value chain revenue has almost doubled in five years, from € 3.17 trillion ($ 3.3 trillion) in 2015 to € 6.435 trillion ( $ 6.7 trillion) by 2020. Much of this growth comes from online services; they saw their revenue increase by 19% annually in 2020.
- Online payment services will soon surpass € 960 billion ($ 1 trillion) in revenue, generating high demand for capacity on global networks.
- With an annual growth rate of 7.5%, the number of users connected to the Internet worldwide shows no signs of slowing down.
- Traffic per user has increased by 27% annually, almost 80% of which is generated by video traffic.
However, the return on investment in infrastructure for network operators was much lower, between 6% and 11%. The report highlighted average returns on capital below 10% as a concern due to pressure on telecom operators to continue investing in capital spending at rates of up to 20% of revenue.
GSMA President José María Álvarez-Pallete said: “The Internet connects 4.6 billion people and is the engine of the global economy. It is transforming business models, opening up new opportunities and improving communities around the world. But While certain sectors of the Internet value chain are thriving, the demand for investment in the infrastructure on which these sectors depend for their growth weighs heavily on network operators. political leaders and the expansion of the Internet-based economy in all sectors over the next decade. ”
The report notes that counterproductive taxation on infrastructure, onerous regulatory requirements and other factors that erode value can reduce incentives to invest in infrastructure. It encourages policymakers to consider the entire tax and regulatory landscape, ensuring that companies investing in infrastructure have an incentive to build and upgrade networks that support online services.
download the 2022 Internet Value Chain Report.
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