The GSMA warned 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”.
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 (pictured) stated 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 incentivized to build and upgrade the networks which underpin online services.
Lower returns
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 annum 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.
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