GSMA Seeks Balanced Approach to Internet Market

GSMA Seeks Balanced Approach to Internet Market

Foto: GSMA

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 study found 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. Among other findings, the study shows that 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 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,” said José María Álvarez-Pallete, the Chairman of the GSMA.

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 incentivized to build and upgrade the networks that underpin online services.

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