Arthur D. Little has today released its first study on the Telecom sector in Belgium, commissioned by the five major operators of the Belgian Telecom market (Base Company, Mobistar, Proximus, Telenet and VOO), entitled ‘A New Deal for the Telecom Sector in Belgium’ at a seminar in Brussels, Belgium.
With this first edition we want to make a first step in shedding some light on the role and contribution of the telecom sector to the Belgian economy and society, and unravelling some of the complexity related to the major disruptions ongoing in the digital ecosystem.
This fact-based study on the Belgian telecom sector shows the critical role played by the telecom operators in the digital value chain, as well as the leverage effect of investments in telecom networks on the overall Belgian economy. This study calls for a "Digital New Deal" on both a European and national level, based on a strategic long-term vision and the recovery of the European leadership in the digital economy. We outline hereafter the key messages of this first study:

The telecom sector is at the core of the Belgian society and economy

80% of Belgian households have a broadband internet connection, 61,5% have interactive digital TV, 54% of Belgians have a mobile internet connection; illustrating how telecom services are nowadays part of our daily life. Still while telecom services usage has been growing strongly over the last years, the price index of telecom services has dropped by 7% since 2006 (vs an inflation at +17%). Nonetheless, compared to 2009, operators provide a substantially better offering that generates 4 to 7 times more value for money to the consumers.

Telecom is the main engine for the digital eco-system

Telecom Operators have rolled out high-performance networks and are investing in the networks of tomorrow. Belgium is leading in fixed Next-Generation Access broadband coverage and catching-up on 4G. Telecom operators’ investment level in Belgium has reached a new record in 2013 (1,8 Bln €), exceeding that of other network infrastructures. Over the 2007-2013 period, the telecom sector injected more than 45 Bln€ value in the economy.
Investment and innovation in the telecom sector has not only a leverage effect on the Belgian economy (1 euro invested in new high-speed broadband (fixed and mobile) networks creates 3 euros of GDP which represents 1,5 euros of revenue for the State), it also accelerates the development of the whole digital ecosystem.

Despite a difficult environment, telecom operators are sustaining their level of investment

Europe is the only region not benefiting from the strong growth of the digital economy. While the revenues of the global digital ecosystem have grown by 39% since 2007, they decreased by 16% in Europe. Furthermore, telecom operators are generating the vast majority of investments, thought they benefit only from a (decreasing) third of the added value. In the Belgian digital ecosystem, telecom operators generated 59% of the revenues, while accounting for 87% of investments, 75% direct jobs and 90% of taxes in 2013.
Telecom operators have so far continuously increased the level of investment reaching a new record in 2013, accounting for 23% of their revenues; thereby raising the question of medium-term sustainability.
Furthermore, with the current legal and regulatory cycles not in line with the long cycles of telecom investment, the telecom sector lacks the visibility to further justify continued investments in our digital infrastructures.

For a digital New Deal fostering Telecom investments

Given the strong growth in telecom services usage and the economic context, it is critical to support the investment effort of the telecommunication operators. Telecom operators call for a digital New Deal that will foster telecommunication investment:

1. Guarantee regulatory predictability to ensure necessary visibility for the telecom investments
2. Set-up fiscal and financial incentives (reduction of over-taxation) to stimulate private investment in high-speed networks
3. Set-up regulatory and fiscal level-playing field for all actors in the digital ecosystem
4. Build trust in the networks in this digital age
5. Public Authorities to stimulate the development of the digital economy

The full report can be downloaded at
www.adl.com/NewDealforBelgianTelecom/ or on the websites of the Base Company, Mobistar, Proximus, Telenet and VOO.