Digital 9 Infrastructure plc is delighted to announce the positive results of the Placing and Retail Offer raising an additional £175 million
1 February 21
1 February 21
Access to the internet has become a fundamental human right in the twenty-first century. The internet enables business, entertainment and social interaction - and increasingly education. But Covid-19 tested the resilience of our digital infrastructure and revealed that it needs significant investment to meet the rising demand for the internet connectivity that drives modern economies and societies.
Arguably the most crucial infrastructure today is digital infrastructure. That is everything from the undersea and underground fibreoptic cables that connect businesses and homes to the internet, to the data centres where the internet ‘lives’, to the towers and small cells that carry data wirelessly to the end user. This infrastructure has enabled the expansion of the internet from a niche curiosity in the early 1990s into a key pillar of our lives today.
Throughout the world, internet connectivity is mixed: billions of people expect (and usually get) fast and reliable internet connection, while almost 4 billion people - overwhelmingly in developing countries - lack access altogether. But this is changing. Last year the number of internet users around the world grew by 321 million – more than 875,000 per day!
The fact that almost 60% of the global population is now online marks progress for the implementation of the 2030 Agenda for Sustainable Development. But it also highlights the need to further modernise our digital infrastructure to expand accessibility for all and reverse the impact of the digital divide.
The UN Sustainable Development Goals (SDGs) identifies investments in resilient infrastructure as critical to achieving a “better and more sustainable future for all”. As part of SDG 9, the UN has declared universal access to the Internet to be a “priority for all states” because the consensus is that those who lack internet access will be left behind economically and academically. Although specifically wrapped under Goal 9 of the SDGs, digital infrastructure will play a fundamental role in all three dimensions of sustainable development: the economy, the environment and society.
According to the UN, four in five people in the world’s most vulnerable countries now have access to wireless networks. This has had a transformative impact in areas including financial inclusion, poverty reduction and improved access to healthcare. Raising internet penetration to 75 percent of the population in all developing countries would add as much as US$2 trillion to their collective gross domestic product (GDP) and create more than 140 million jobs.
But while connecting people to the internet is key, improving internet speed and reliability throughout the world is also a priority. The Covid-19 pandemic has tested the resilience of our digital infrastructure.
Following the rollout of homeworking policies in March 2020, global internet disruptions increased by 63% as businesses relied on their staff working from home. One study of UK SMEs found that more than eight in ten companies said their productivity was impacted by an unreliable internet connection. Parents are also acutely aware that juggling a job and a child’s education is unthinkable – even impossible – without a stable connection.
Almost all internet service providers saw double-digit increases in broadband usage, as ‘the busy period’ for streaming in households typically rose from four hours on weekday evenings to ten hours a day. The surge in broadband traffic even led to the video streaming giants slowing download speeds and reducing quality to save on network bandwidth.
Yes, we made do and got by with slow or unreliable internet connections – in a very stressful situation. But life during the pandemic revealed that the digital infrastructure we rely on is not as resilient as it could or should be.
Even before the impact of a global pandemic, the growth rate of Internet traffic was predicted to increase on average by 30% every year. Over the next three years, more than two-thirds of the global population will have internet access and over 70% of the population will have mobile connectivity.
Evolving patterns of internet usage and the ever-changing and ever-growing mix of wireless devices will have tremendous impacts on internet traffic in the 2020s. For example, watching two to three hours a day of HD television over the internet will generate as much traffic as an entire household does today.
We will also see increased demand to scale new technologies. Fifth generation (5G) cellular technology, for example, has the potential to accelerate mobile download speeds by 100x compared to fourth generation (4G) technology. Many of the emerging technologies unleashed by the fourth industrial revolution will require exponential amounts of data to work. By 2023, there will be almost 30 billion networked devices globally. Nearly half of them - 14.7 billion or 2 per person - will be machine-to-machine (M2M) connections. These connections run applications such as telemedicine and healthcare monitoring, smart car navigation systems, and asset tracking – and many others yet to be conceived. All of these billions of connections and their growing list of applications require greater bandwidth, lower latency and investment in digital infrastructure to run.
These themes highlight that there is an ever-growing need for resilient and sustainable digital infrastructure. Subsea fibreoptic cables are the backbone of the internet, carrying 98% of international internet traffic. There are over 400 submarine cable systems currently active around the world, stretching for 1.2 million kilometres. A further 50 are under construction. Because they are at the heart of digital infrastructure, they enable data centres, terrestrial fibre and wireless networks to function reliably.
But this is an industry that faces significant demands moving forward. With a 25-year lifespan and a 3-year development lead time, 11 of the 14 existing transatlantic cables are expected to retire in the next 5 years. This means that by 2026, there will be a 40% shortfall in transatlantic capacity. Elsewhere, the world’s tech giants are scrambling to lay new subsea cables to meet the exploding demands for accessibility, affordability, speed and reliability of internet connectivity across the African continent.
In 2020 alone, almost $400 billion was spent on new digital infrastructure – across fibre, data centres and wireless networks. We will need to spend that amount – and more – every year to prepare our digital infrastructure for the future.
A fast and reliable internet connection is increasingly seen as a twenty first century human right and a necessity for economic growth and development as underpinned by SDG 9. It has become an essential way of communicating with colleagues and customers, socialising with families and friends, and educating ourselves and our children. But Covid-19 served as a test of the resilience of our digital infrastructure – and revealed that we need to invest a huge amount to prepare it for the future.
Investing in resilient digital infrastructure is crucial to driving our interconnected world, underpinning economic growth and sustainable development.
The global demand for improved speed, reliability and accessibility of data is driving exponential growth in the vast digital infrastructure market.
By investing in a diversified portfolio of critical Digital Infrastructure assets, Digital 9 Infrastructure plc. will contribute to improving global digital communications whilst targeting sustainable income and capital growth for investors.
Find out more by visiting the website - https://www.d9infrastructure.com
This article was written by Andre Karihaloo, Investment Manager for Digital 9 Infrastructure plc.