(Adnkronos) - Double-Digit Internet Value Chain Growth at Risk if Infrastructure Investors Cannot Realise Meaningful Returns
LONDON, May 15, 2022 /PRNewswire/ -- 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
The GSMA 2022 Internet Value Chain Report 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.
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.
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 José María Álvarez-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 the 2022 Internet Value Chain report.
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