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LONDON, May 16, 2022 /PRNewswire=KYODO JBN/--

Double-Digit Internet Value Chain Growth at Risk if Infrastructure Investors

Cannot Realise Meaningful Returns

A new GSMA report warns market imbalances between network operators and online

services providers may put global growth prospects at risk across multiple

sectors of the internet-based economy. Policymakers, the report urges, must

consider the interdependence of online services and other growth sectors on the

underlying infrastructure investment.

The GSMA 2022 Internet Value Chain Report [

https://www.gsma.com/publicpolicy/wp-content/uploads/2022/05/Internet-Value-Chain-2022.pdf

] reveals factors including asymmetric regulation and restrictions,

sector-specific taxes, and spectrum costs are squeezing the business models of

infrastructure providers whilst allowing Big Tech to thrive.

Telco squeeze

The study finds that revenues across the internet value chain nearly doubled in

five years, from $3.3 trillion in 2015 to $6.7 trillion in 2020. Much of this

growth comes from online services; they saw a 19% increase in revenue per annum

in 2020.

- Paid-for online services will soon exceed $1trillion in revenues, driving huge

  capacity demand on global networks.

- With an annual growth rate of 7.5%, the number of users being connected to the

  internet globally shows no sign of slowing.

- Traffic per user grew at 27% per year, with almost 80% of that being driven by

  video traffic.

Yet the return on investment in infrastructure for network operators was far

lower, between 6% and 11%. The report highlighted average sub-10% returns on

capital as a concern due to pressure on telecom operators to keep investing

CAPEX at rates of up to 20% of revenue.

The GSMA's Chairman Jose Maria Alvarez-Pallete said, "The internet connects 4.6

billion people and drives the global economy. It is transforming business

models, unlocking new opportunities, and uplifting communities across the

world. But as some sectors in the internet value chain thrive, the demands of

investing in the infrastructure those sectors rely on for growth are squeezing

network operators. We welcome the growing recognition of this issue by

policymakers, and as the internet-based economy expands across all sectors over

the next decade."

The report notes that counterproductive taxation on infrastructure, cumbersome

regulatory requirements, and other value-eroding factors can reduce incentives

for infrastructure investment. It encourages policymakers to consider the full

landscape of taxation and regulation, ensuring that companies investing in

infrastructure are incentivised to build and upgrade the networks that underpin

online services.

Download [

https://www.gsma.com/publicpolicy/wp-content/uploads/2022/05/Internet-Value-Chain-2022.pdf

] the 2022 Internet Value Chain report.

About GSMA

The GSMA is a global organisation unifying the mobile ecosystem to discover,

develop and deliver innovation foundational to positive business environments

and societal change. Our vision is to unlock the full power of connectivity so

that people, industry, and society thrive. Representing mobile operators and

organisations across the mobile ecosystem and adjacent industries, the GSMA

delivers for its members across three broad pillars: Connectivity for Good,

Industry Services and Solutions, and Outreach. This activity includes advancing

policy, tackling today's biggest societal challenges, underpinning the

technology and interoperability that make mobile work, and providing the

world's largest platform to convene the mobile ecosystem at the MWC and M360

series of events.

We invite you to find out more at gsma.com

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GSMA Press Office pressoffice@gsma.com

Source: GSMA