Telecoms body tasks politicians on Internet market as value chain hits $6.7tr

Telecoms body tasks politicians on Internet market as value chain hits $6.7tr. The Global System for Mobile telecommunications Association (GSMA) has warned that market imbalances between network operators and online services providers could stall growth in several sectors of the internet-based economy, and called on politicians to urgently address the issue.

In the GSMA 2022 Internet Value Chain report, the trade association noted 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 body noted that those in charge of setting laws and regulations must consider the interdependence of online services and other growth sectors on the underlying infrastructure investment.

GSMA chairman, Jose Maria Alvarez-Pallete, said the association welcomes the “growing recognition of this issue by policymakers, and as the Internet-based economy expands across all sectors over the next decade.”

The report encourages decision-makers to consider the “full landscape of taxation and regulation”, ensuring companies investing in infrastructure are incentivised to build and upgrade the networks, which underpin online services.

The study found revenue across the Internet value chain doubled in five years, from $3.3 trillion in 2015 to $6.7 trillion in 2020. The GSMA noted much of this growth comes from online services, revenue from which increased 19 per cent per year in 2020.

However, the return on investment in infrastructure for network operators was far lower, at between 6 per cent and 11 per cent.

The GSMA noted operators are receiving less than 10 per cent returns on capital because of pressure to invest up to 20 per cent of revenue in capex.

The body noted that the Internet continues to grow at a pace in terms of users, services and, most of all, traffic. It stressed that the growth is relentless, and there is much more to go.

“The number of people with access to the Internet has reached 4.6 billion in 2020 (via either fixed or mobile networks), an increase of 44 per cent since 2015 and a yearly growth rate of 7.5 per cent. While this rate of growth shows no sign of slowing, 41 per cent of the world’s population still does not have regular access to the Internet.”

GSMA observed that the growth of digital services, whether streaming content, e-commerce or enterprise digitalisation, is powering the continued growth of the online services segment most strongly.

It stressed that a lot of innovation and investment is making this possible, particularly the increased functionality of end-user devices and sensors, advances in connectivity, growth of hyper-scale technologies and cloud infrastructure through to application interfaces that connect these to the central systems of the service providers.

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