Economic impact of Google's APAC network infrastructure – 2022 update
This report is an update of the Economic impact of Google’s APAC network infrastructure report, released in 2020. The original report described how network infrastructure is the critical link between content and services in content, application and service provider (CASP) data centres, and customers and end users on internet service provider (ISP) networks. The original report and this updated version examine how Google’s investments in network infrastructure have had, and continue to have, a positive impact on the connectivity ecosystem across Asia–Pacific (APAC).
The econometric models we updated for this report estimate that these network infrastructure investments by Google led to 1.3 million additional jobs as of 2021 and USD 640 billion in aggregate GDP for the region (real 2020 USD) from 2010 to 2021. Continued network investments from Google are expected to support 3.5 million additional jobs by 2026 and drive additional economic benefits of approximately USD627 billion in GDP (real 2020 USD) over the next five years (2022–2026).
Focus on Japan
Digital connectivity and the economic landscape of Japan have developed significantly since 2020, largely due to the impact of the COVID-19 pandemic, and Google has continued to invest in network infrastructure. Google has invested in three deployed cables (FASTER, SJC and Unity) and has announced that it will invest in two more (Apricot and Topaz).
Google has also continued to invest in edge infrastructure. It has deployed points of presence (PoPs) in nine private peering facilities and cross-connected to internet exchange points (IXPs) at 11 locations. Google also invests in content caches, and Google Global Cache (GGC) nodes have been deployed in 31 cities across Japan. These investments generate social benefits by supporting new use cases and economic benefits in the form of GDP growth and jobs.
The regulatory environment surrounding Japan’s submarine cable infrastructure is strong and conducive to foreign investment. This regulatory environment, coupled with Japan’s location on the eastern edge of Asia, has made the country one of the main submarine cable hubs in the region. However, Japan could do more to support the submarine cable industry. The government could facilitate discussions between the fishery industry and submarine cable owners – an area that has been historically difficult and introduces substantial uncertainty into cable landings in Japan. Japan could also enable submarine cable owners to deploy spare shore-end cables terminating at the beach manhole without having to go through new applications each time as this would speed up deployment processes for subsequent cables that need to connect to the same cable landing station. Finally, new regulations such as those in the new National Economic Security bill should continue to enable future network infrastructure investments.
Focus on Indonesia
Indonesia has one of the fastest-growing economies of the countries that are members of the ASEAN, with the internet economy driving the most growth. The volume of fixed and mobile network internet traffic has increased and Google’s investments have continued beyond the current Indigo-West cable with the announcement of investments in two new submarine cables (Apricot and Echo).
Google has also deployed seven peering locations in 3 cities and deployed GGC nodes in 39 cities across Indonesia. These investments generated an additional cumulative USD29 billion in GDP (in real terms) in Indonesia from 2010 to 2021, and supported up to 299 000 jobs in 2021. We forecast that Google’s investments will generate an additional cumulative USD94 billion in GDP between 2022 and 2026, supporting up to 1.6 million jobs by 2026.
Indonesia is well-positioned geographically to attract more foreign investments in digital infrastructure, which will support its ambitions to become a key digital hub in APAC. However, the country has various opportunities to improve its regulatory regimes; new regulations that were introduced through the Kepmen KP 14/2021 decree and the MR5/2021 regulation are not aligned with best practices and create uncertainty for investors. The government could consider closer alignment with guidelines on cable deployment and protection published by institutions such as the Asia–Pacific Economic Cooperation and the ICPC. Ownership restrictions should also be re-considered to promote participation beyond a small number of local players. Finally, disruptions caused by submarine cable damages can be reduced by improving the supply of ships available to conduct cable repairs and removing preferential treatment towards Indonesian vessels.
Focus on Thailand
In this 2022 update, Thailand has been added as an economy of focus. This follows Google’s announced investments in two submarine cables, the MIST and IAX, which are scheduled to land in Thailand by 2023 respectively. Google has deployed points of presence (PoPs) in two private peering facilities. Google also invests in content caches, and Google Global Cache (GGC) nodes are already deployed in 26 cities across Thailand. These investments are expected to contribute an additional cumulative USD17 billion in GDP from 2022 to 2026.
Thailand has a notable strategic position in APAC as it faces both the Pacific and Indian Oceans. This gives it the potentially significant role of a digital connectivity hub that links Africa, the Middle East, Asia and the Americas. The government could consider allowing partial or full foreign ownership of assets in public–private partnership investment projects such as for submarine cables. Thailand could also streamline processes and requirements from various government departments in relation to cable deployment and maintenance. Existing cabotage policy can also be relaxed to speed up the application process for foreign-registered vessels to perform submarine cable maintenance in Thailand’s territorial waters.