The GSMA 2022 Internet Value Chain Report found that factors such as asymmetric regulation and restrictions, sector-specific taxes and spectrum costs could compress the business models of infrastructure providers.
Internet value chain revenues have nearly doubled in five years, from US$3.3 trillion in 2015 to US$6.7 trillion in 2020.
Much of this growth comes from online services which saw their revenue increase by 19% per year in 2020.
GSMA Chairman José María Álvarez-Pallete said, “The Internet connects 4.6 billion people and is the engine of the global economy.
“It transforms business models, unlocks new opportunities and uplifts communities around the world.
“But as certain sectors of the Internet value chain thrive, the demands for investment in the infrastructure that these sectors depend on for their growth weigh on network operators.
“We welcome the growing recognition of this problem by policy makers and the expansion of the Internet-based economy across all sectors over the next decade.”
The study also revealed that paid online services will soon surpass $1 trillion in revenue, driving huge demand for capacity on global networks.
And with an annual growth rate of 7.5%, the number of users connected to the Internet continues to increase.
Traffic per user has increased by 27% per year, with almost 80% coming from video traffic.
However, the return on investment in infrastructure for network operators has been between 6% and 11%.
The report highlighted the average return on capital below 10% as a concern due to pressure on telecom operators to continue to invest CAPEX at rates of up to 20% of revenue.
He adds that counterproductive taxation on infrastructure, regulatory requirements and other “value eroding” factors can reduce incentives to invest in infrastructure.
It says policymakers should consider the whole tax and regulatory landscape, ensuring that companies investing in infrastructure have an incentive to build and upgrade the networks that underpin online services.