Page 76 - SAMENA Trends - January 2020

ARTICLE SAMENA TRENDS

ARTICLE

Connectivity for Everyone: New Funding and Financing

Approaches

Governments in Middle East have demonstrated
a strong interest in development of telecom/
ICT infrastructure, considering that the sector

shall be a key pillar in achievement of their
ambitious national strategies.

Ubiquitous gigabit connectivity will be the backbone of our future
economies and societies. The generation and consumption of data is
increasing exponentially and will continue to do so, driven by consumer
trends such as increased usage of mobile devices, rising video/
streaming demand, and advent of new data-intensive applications
enabled by Virtual Reality/ Augmented Reality etc. as well as industrial/
governmental applications such as Industry 4.0, smart communities/
cities etc. enabled by technologies such as Internet of Things (IoT),
Artificial Intelligence and Edge computing. These technologies will
form basis for new/ innovative services and applications that require
networks with enough capacity, quality and reliability to eventually
support throughput requirements as high as potentially 1Gbps.

For realization of these Gigabit societies/ economies, both fixed
and mobile networks will need to be upgraded. 5G will be a crucial
connectivity enabler to facilitate transportation of such large volumes
of data and reduce response time/ latency. According to Ericsson, 5G
is expected to carry 35% of global mobile data traffic by 2024. The GSM
Rohit Sethi Association (GSMA) forecasts that meeting such rapidly increasing
Principal mobile traffic demand in the world’s main cities by 2025 will require
Arthur D. Little network operators to at least double, and in some cases triple, their
capital and operating expenditures. At a cumulative level, estimates
suggest 5G to require an investment to the tune of USD 1 trillion by
2025.

Historically, financing for information and communications technology
(ICT) infrastructure has primarily come from private sector industry
players such as telecom operators, Internet Service Providers (ISPs)
and tower companies. However, under the current situation of
declining telecom ARPUs and reducing margins given increased direct
competition from internet players, telecom operators are becoming
increasingly disincentivized to invest in new ICT infrastructure
deployment. Public entities and other private players have also

76 JANUARY 2020