Liberty Global’s Superfast Broadband Investment Generates Economic Boost for European Consumers and Businesses
May 30 2017 - 8:00AM
Business Wire
- Total social benefits estimated at €7
billion due to the impact of higher internet speeds, improved
productivity and price competition
Independent research has outlined how investment in digital
infrastructure by the world’s largest international TV and
broadband company is delivering transformative benefits to European
consumers and businesses.
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The analysis by economists Oxera Consulting studied the economic
impact of Liberty Global’s investment in broadband infrastructure
between the start of 2013 and the end of the first quarter of 2017
and concluded that the higher broadband speed, improved
productivity and price competition generated social benefits worth
€7 billion in Europe. This impressive impact has been enabled by
Liberty Global’s investment of €14.5 billion(1) in total capital
expenditures across all of its European operations in new and
existing infrastructure, customer premises equipment, business
support and other key services, including a significant investment
to bring high-speed internet to four million more European
households through new build and upgrades.
The report estimates that the economic benefits to society total
more than €7 billion since the start of 2013, including €5 billion
in speed benefits to customers through access to a greater range
and quality of internet services. There is an additional €1.5
billion in productivity benefits through increased output of small
businesses and home workers due to better connectivity, and €536
million(2) in price benefits, as Liberty Global’s investments often
introduce network competition to an area for the first time.
Oxera Consulting estimates that the €14.5 billion investment by
Liberty Global between the beginning of 2013 and March 2017 has
generated a total of €23.7 billion of economic transactions through
the supply chain.
The report follows the November 2016 launch of Liberty Global’s
GIGAWorld initiative, which outlines Liberty Global’s plans to
bring gigabit internet speeds to the European countries in which it
operates. Around 50 million homes in Europe have access to Liberty
Global’s fibre-based “GIGAReady” networks, and the company expects
millions more to be connected over the coming years through its
previously announced network extension programs in Europe.
CEO Mike Fries said: “GIGAWorld is our mission to build robust,
reliable, superfast networks that can not only meet the
connectivity and speed demands of consumers today, but also support
the next-generation devices and applications of tomorrow that will
fuel even greater demand. Our significant investment clearly has a
positive impact for consumers and businesses across Europe, and we
are proud that it simultaneously generates billions for the
economy, while creating clear social benefits through improved
speed, productivity and competition.”
Enno Eilts, Partner at Oxera, said: “Liberty Global’s
significant investment in the reach and capability of its broadband
cable network is creating considerable benefits for companies and
households across Europe. With the digital economy expanding seven
times faster than the rest of the economy(3), high-quality
broadband networks are critical. As well as providing consumers
with communication and entertainment services, fast and reliable
broadband increases the productivity of businesses and provides
individuals with access to substantial information and learning
resources.”
Notes to editors
Measure of economic footprint
In simple monetary terms, Liberty Global has invested €14.5
billion in capital expenditure across its European operations
between the start of 2013 and the end of Q1 2017.
This investment in Europe’s communications infrastructure
requires supply chains that have a multiplier effect through the
wider economy. The total economic footprint of Liberty Global’s
investment includes the activity of Liberty Global’s suppliers, and
of the suppliers to those suppliers, and so on up the value chain.
The total economic value of this activity is estimated to be €23.7
billion.
Measure of net benefits to consumers and businesses
Separate from the economic footprint of Liberty Global’s
investment, the report also estimates the resulting net benefits
for its customers (domestic and commercial)—i.e. the incremental
benefits that they derive from accessing Liberty Global’s new
and/or enhanced infrastructure over and above the benefits they
would have received without the investment.
Consumers and businesses benefit from the following
- Speed benefits: High quality
broadband networks can benefit consumers in terms of internet
connection speed and reliability. Where customers can enjoy greater
speeds as a result of switching to a Liberty Global service, this
allows them to access a broader range and quality of internet
services. For example a new interactive or high-quality service,
such as virtual reality using binaural sound, 360° live streaming
of events, or multiple members of a household being able to stream
HD content simultaneously. The estimated speed benefit from Liberty
Global’s investment to its European consumers and businesses is
around €5.0 billion since the start of 2013 up to the end of the
first quarter of 2017
- Productivity benefits:
Businesses and home workers benefit from Liberty Global’s
investment in faster speeds through better productivity. Taking
advantage of Liberty Global’s investment in enhanced business
broadband services, small businesses can communicate through video
conferencing and collaborate in real time on projects using
cloud-based services. They could save costs through better
multi-tasking and having smaller premises. It is estimated that
these benefits are worth €1.5 billion across Europe since the start
of 2013 up to the end of the first quarter of 2017
- Price benefits: When Liberty
Global introduces cable broadband to a new area, this increases
competition in the market for high-speed broadband services.
Importantly, such a change often introduces network competition to
an area for the first time, where consumers previously had access
only to services provided over the incumbent’s network. Academic
evidence shows this competition puts downward pressure on prices
for a given level of service, resulting in cost savings, and thus a
monetary benefit, to consumers. The estimated benefits to customers
are €0.5 billion(2) across Europe since the start of 2013 up to the
end of the first quarter of 2017
In total, Oxera’s report estimates the benefits of Liberty
Global’s investment in its cable broadband network since 2013 to be
worth €7 billion to customers and businesses in Europe.
Footnotes: (1) The €14.5 billion investment
amount includes total capital expenditures, which includes customer
premises equipment, new build and upgrades, capacity, capitalizable
costs associated with maintaining and supporting the business, and
products and enablers, of Liberty Global’s consolidated European
operations from the beginning of 2013 through March 31, 2017,
adjusted for inflation. (2) Estimated price benefit of €536 million
is calculated over a period of 15 years, in line with European
Commission impact assessment guidelines. (3) As estimated by the
European Commission.
About Liberty Global
Liberty Global is the world’s largest international TV and
broadband company, with operations in more than 30 countries across
Europe, Latin America and the Caribbean. We invest in the
infrastructure that empowers our customers to make the most of the
digital revolution. Our scale and commitment to innovation enable
us to develop market-leading products delivered through
next-generation networks that connect our 25 million customers who
subscribe to over 50 million television, broadband internet and
telephony services. We also serve over 10 million mobile
subscribers and offer WiFi service across 6 million access
points.
Liberty Global’s businesses are comprised of two stocks: the
Liberty Global Group (NASDAQ: LBTYA, LBTYB and LBTYK) for our
European operations, and the LiLAC Group (NASDAQ: LILA and LILAK,
OTC Link: LILAB), which consists of our operations in Latin America
and the Caribbean. The Liberty Global Group operates in 11 European
countries under the consumer brands Virgin Media, Unitymedia,
Telenet and UPC. The Liberty Global Group also owns 50% of
VodafoneZiggo, a Dutch joint venture, which has 4 million
customers, 10 million fixed-line subscribers and 5 million mobile
subscribers. The LiLAC Group operates in over 20 countries in Latin
America and the Caribbean under the consumer brands VTR, Flow,
Liberty, Más Móvil and BTC. In addition, the LiLAC Group operates a
sub-sea fiber network throughout the region in over 30 markets.
For more information, please visit www.libertyglobal.com.
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Liberty GlobalCorporate
Communications:Andrew Mitchell, tpf, +44 20 7291
1523Matt Beake, +44 20 8483 6428Rebecca Pike, +44 20 8483 6216
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