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How to connect the next 4 billion

Global communicationThose who are not connected today are lagging behind the velocity of our time. It is true that by the end 2015 we will get 3, 2 billion people, however we face the big challenge of connecting the rest 4 billion people, most of them, living in developing countries.

 

Being part of the digital revolution implies higher GDP growth, greater employment, and higher productivity or improved public services. It is a given. That is why the global community, companies and civil societies are asked to get the right answers to succeed connecting the unconnected.

 

Telcos are in the forefront of these efforts. The equation is simple. Because they provide the infrastructure, the people and the things can be connected. It is true that the today situation is much more complex than this for an array of different reasons. Firstly, the telecommunication sector has become part of the whole digital ecosystem and the proliferation of OTT services (IPTV, VoIP, messaging) has reshaped the way we communicate. Secondly, the Internet has also evolved, it is even completely different from the one we know at its birth. And also, the OTTs providers burst into the marketplace offering services clearly differentiated from the ones given in the past by telcos, and at the same time the devices rapidly evolve. As a result, the Internet value change to a new market reality and we cannot asses it in a separate way anymore because the market does not follow this pattern. In any case, infrastructure and consequently investments are basci pre-requisites to make technology available to everyone.

 

Connect the unconnected is a hot issue at the global public agenda. United Nations has even include it at The 2030 Agenda for a Sustainable Development (see post). Many other institutions are addressing this debate. Precisely this week, Carlos Lopez Blanco, Global Head of Public and Regulatory Affairs of Telefónica participated in the 20015 Annual Conference of the International Institute of Communications in Washington. Here we would like to share the ideas he expressed during the debate regarding investments.

 

Investment is, as mentione above, the cornerstone of being successful to connect the next 4 billon people. In fact, the investments have made possible that in this century we have gone from 400 million internet users, to 3.2 bn, eight times more in the last 15 years. The years to get 1 billion users of some communications technologies are impressive. This can only be explained considering that Telecom sector have undertaken a huge investment effort since 1990. $ 536 bn is the estimated amount that has been invested between 1990 and 2006 by the Telecom industry. In developing countries, the connections has been multiplied by 21!

 

The effort of telco operators to expand the number of connections, the coverage and the affordability has been huge. Regarding the last, telcos have done a strong effort lowering and improving their offers, while other agents of the ecosystem, as devices manufacturers or digital contents industry, have not reacted in the same way, and even worse, have not been asked for doing the same. In many cases, broadband price offers is not the most important concept, if comparing, for instance, with mobile phone terminal (lifetime: 2-3 years).

 

Having said that, the role of governments and the right regulatory framework that allowed the expansion of the market in most of the countries have been crucial. However, the fast path of the innovation oblige us to a new wave of investments. In fact, new private infrastructure investments need to be encouraged by public policies, providing confidence and security to investors. Essential to this it is a predictable and stable regulatory environment for broadband investments and a level playing field for all companies in the Digital Ecosystem.

 

A last remark on investments has to do with spectrum which is a major challenge. The importance of spectrum availability for society and communications in the future is key, and also it is key for our industry since it defines the strategies and investment plans for the future. It is important that when national authorities assign spectrum should focus on investment, not on tax, and we encourage authorities to consider alternative methods of spreading the cost of spectrum rights over time.

 

In coming posts we will continue talking about the vision to get everyone connected, addressing other relevant factors to complete this goal. To finish with this idea, it is to highlight that Telefónica has invested around 114 billion Euro in the America, becoming the biggest private investor regardless of any industry sector. 7,5 billion of investment (66% CapEx+Spectrum) in 2014, shows the commitment of Telefónica for expanding the connections in the Americas and connect everyone.

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Lourdes Tejedor / @madrid2day

Telefónica Public Policy & Telefónica España Regulatory teams