01 November, 2016

Building the Gigabit Society: An Inclusive Path Toward Its Realization

This Report by BCG identifies an inclusive path towards "Building a Gigabit Society".

Although Europe has come a long way in developing its digital economy, there are substantial benefits to gain from further transition toward a true digital society. Forty percent of the economic growth between 2015 and 2020 is expected to be due to a digital society driving job creation and prosperity.

The European Commission has crafted a vision of a Gigabit Society in which all Europeans reap the benefits. This vision is accompanied by an ambitious target to improve Europe's broadband infrastructure.

BCG estimates that this infrastructure upgrade, if delivered exclusively via fiber-to-the-premises (FTTP) approach, will cost €660 billion, which represents about 25 years of investing at the current pace. Clearly these investments will have to be funded in large part by the private sector. A time frame of 25 years is not in line with the Gigabit Society objectives set by the European Commission. Accelerating the investment pace will be a significant challenge because willingness to pay substantially more for higher broadband speeds is limited and the returns on investments in the telecom industry have been historically low over the past years.

Although the telecom industry has embraced the Gigabit Society, it will need to navigate multiple tradeoffs when charting a practical, inclussive path toward its realisation.