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The GSMA warns of Internet value chain growth slowdown

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The GSMA, a worldwide organization dedicated to uniting the mobile ecosystem, has cautioned that market imbalances between network operators and online service providers might impede growth in a number of areas of the Internet-based economy, and has urged policymakers to solve the problem immediately.

 

 According to the GSMA’s 2022 Internet Value Chain analysis, asymmetric regulation and limits, sector-specific taxes and spectrum charges are straining infrastructure providers’ business models while allowing big tech to prosper.

 

The reliance of Internet services and other growing sectors that are dependent on underlying infrastructure investment must be considered by those in charge of enacting rules and regulations. Infrastructure investment incentives may be restrained by unfavorable taxes, costly regulatory requirements, and other cost-degrading factors, according to the paper. The document urges politicians to analyze the entire tax and regulatory environment, ensuring that enterprises investing in infrastructure are rewarded for building and upgrading the networks that support online services.

 

Revenue throughout the Internet value chain has quadrupled in five years, from $3.3 trillion in 2015 to $6.7 trillion in 2020, according to the report. The GSMA said that Internet services account for a large portion of this development, with revenue increasing 19% each year up till 2020. The return on infrastructure investment for network operators, on the other hand, was much lower, ranging between 6% and 11%. Because of the expectation of investing up to 20% of sales in capex, the GSMA reported that operators are achieving less than 10% return on capital.

 

José María Álvarez-Pallete,the GSMA’s Chairman, commented: “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.”