Studying the consolidation of the Internet economy is key to the future of the network

Sebastián Bellagamba *


The greatest consolidation trends are seen in the area of Internet applications, which are focused on a handful of stakeholders who, in addition, are investing in new markets and generating developments to promote new service schemes.

Internet is a technology that has expanded at an astonishing rate. Figures from the International Telecommunication Union suggest that more than half of the world’s population is connected to the Internet. While this is very good news, it also represents the opportunity to think about innovative strategies for reaching those who still don’t enjoy the benefits offered by the Internet. Because what it’s all about is linking people up: we hope that people can connect in order to improve their quality of life, thanks to the advantages offered by the Internet through its applications and services.

Community networks are a good example of the options available to take the Internet to hard-to-access locations, as these are networks deployed by residents for their own use. This model of collaboration is similar to the Internet itself, which is basically a set of independent networks that connect to each other to exchange information. Such connections occur voluntarily and due to the architecture of the Internet. And this is not only a philosophical choice, but rather because of the technical foundations that gave rise to the Internet. In short, no one person or group has built the Internet; all stakeholders make a daily contribution to make the Internet the great global network we know today.

At the Internet Society, we defend the vision of an open, globally connected, reliable and safe Internet for all people. From this perspective, we recognize that the Internet has evolved over time and continues to do so in various aspects, including those that are intimately related to the Internet economy. Therefore, the 2019 edition of our Global Internet Report (GIR) focuses on the effects of consolidation in this area and its potential impact on the technical evolution of the Internet.

The document refers to the Internet economy as «the economic activities that either support the Internet or are fundamentally dependent on the Internet’s existence». In this context, referring to consolidation involves taking into account forces of concentration, vertical and horizontal integrations, as well as entry barriers to markets and the influence of these factors on a set of properties referred to as the Internet invariants. Such properties make the Internet unique and, because they are inherent in the original design of the Internet, their weakening can undermine the open-access nature of the Internet.

To better assess the impact of consolidation, the report offers an analysis focused on three economic domains:

  • Access provision to the Internet;

  • Service infrastructure; and

  • Internet applications.

In terms of access provision to the Internet, the complexity of the international scenario makes it difficult to find a consolidation trend. Each nation offers different approaches to the management and use of the spectrum, and operators find different solutions to provide access. Furthermore, some of the offers promoted by platforms generate new incentives that could reconfigure the markets. It is thus pertinent to continue to pose questions that help to understand and in greater depth the effects that consolidation can cause in this economic domain.

Moreover, changes in the habits of Internet users have led to a reconfiguration of the behavior patterns of Internet traffic. Contents are being stored increasingly closer to users and this has led to large stakeholders that are traditionally located at the application level investing in solutions related to the service infrastructure. Both the size of these stakeholders and the pressures related to the prices of international traffic have led to a growing concentration among such stakeholders, which in turn represents a change in the decentralized nature of the Internet.

Finally, the greatest consolidation trends are in the area of Internet applications. Although the number of Internet users has increased, their interaction tends to occur ever more among a smaller number of stakeholders. Consolidation in this layer is usually focused on a handful of stakeholders who, in addition, are making investments in new markets and generating developments to promote new service schemes.

To sum up, the Global Internet Report 2019 represents a fundamental input to reflect on the evolution of the architecture of the Internet. During the preparation of the Report, we discovered that it is necessary to study in depth the impact that consolidation may have on the Internet in the economic domains that were explored. And this is not only about defending Internet invariants; it also includes promoting the skills that such properties enable in people through the Internet: the ability to connect, speak, innovate, share, choose and trust.

This is why we are inviting the Internet community as a whole to answer a set of questions over the course of 2019 that will deepen our knowledge about the consolidation of the Internet economy. These questions cover the trends explored in the three economic domains of the Report and their responses will help generate inputs to inform decision makers and public policy makers.

Here it is important to emphasize that it is not just about looking for the negative impacts of consolidation and a way to reduce them. We know that there are also positive effects of some forms of consolidation. Thus, this information will be essential to generating balanced information for the future. We trust in the power of collaboration, which is basically what makes the Internet work on a daily basis.

* Sebastián Bellagamba is the Regional Director for Latin America and the Caribbean of the Internet Society.

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