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.
Focus on Australia
Australia is one of the most developed telecoms landscapes, and leading data centre hubs, in the APAC region. Submarine cables are therefore important to connect Australia to the rest of the world and Google has invested in both the Indigo and JGA-S cables connecting Australia to Southeast Asia and Oceania. Google has also continued to invest in edge infrastructure, with points of presence deployed in five private peering facilities and cross-connected to nine internet exchange points (IXPs) across two cities (Sydney and Melbourne). Google also actively invests in content caches and Google Global Cache (GGC) nodes in eight cities across the country. These investments are expected to contribute an additional cumulative USD64 billion in GDP from 2022 to 2026.
The regulatory environment in Australia continues to be seen as an example of best practice regime in regulating network infrastructure. Its robust regulatory framework was instrumental to the fast restoration of the Australia Singapore Cable in August 2021 after it suffered a cable cut. Finally, two potential areas that could further improve its regulatory approach include the empowerment of a centralised agency to lead the application process for submarine cable deployments to reduce complexities, and also increase the number of cable corridors to prevent potential overcrowding issues and offer more route diversity.
Focus on the Philippines
The Philippines has seen a drastic increase in internet demand due to Covid-19 and Google has supported this growth through its investments. Google has announced a new cable, Apricot, which adds on to two already deployed cables (SJC and PLCN). Google has also established Google Global Caches (GGCs) in 11 cities across the Philippines. These investments will generate an additional cumulative USD31 billion in GDP between 2022 and 2026.
The country is well-positioned geographically to attract more foreign investments in digital infrastructure, potentially enabling it to become a key digital hub in APAC. While the regulatory regime in the Philippines has progressed in recent years, there remain opportunities to further reduce barriers. Introducing open investment policies conducive to foreign investors for the telecom sector, and specifically for submarine cable investments, will be helpful in enabling more foreign investments. Another point of improvement lies in its licensing and permit application processes for network infrastructure which could be further streamlined to help new players enter the market.
Focus on Taiwan
Taiwan is one of the most technologically advanced economies in the world and has a very developed telecoms landscape with expansive fibre coverage. Google has invested in two deployed cable systems (FASTER and PLCN) and has also announced a new cable (Apricot). Google has invested in edge infrastructure with three private peering facilities and cross-connected to two internet exchange points (IXPs) in Taipei. Google Global Caches (GGCs) has also been deployed in six cities across the country. These investments have supported the healthy growth in internet traffic in Taiwan and are expected to contribute an additional cumulative USD37 billion in GDP from 2022 to 2026.
The regulatory regime in Taiwan is well established and effective when it comes to submarine cable applications, deployment and maintenance. The government of Taiwan has also been proactive and strategic in promoting investments in submarine cables, with the recent streamlining of procedures into a single application window for future submarine cable applications. One aspect Taiwan could improve on is to explore an open cable landing station regime and also facilitate the resolution of conflicts between the fishery industry and submarine cable owners – an area which has been historically difficult.
Focus on Singapore
Singapore is one of the most successful and attractive digital and economic hubs in the world. It has the highest number of submarine cable and data centre investments in South East Asia. In Singapore, Google has investments in SJC and Indigo cables, and has announced further investments in four upcoming cable systems (MIST, IAX, Echo and Apricot). Google has also deployed eight peering locations in Singapore, and invested in cache nodes all across the city. These investments will generate an additional cumulative USD16 billion in GDP between 2022 and 2026.
Singapore also leads by example in terms of its telecoms regulatory environment, especially in relation to submarine cables and foreign investments. It welcomes foreign investments and also streamlines submarine cable application processes with the IMDA leading the way as the coordinating agency. One recent notable development was the introduction of digital trade agreements with various countries that included provisions on submarine cables, showing the importance of ensuring efficient deployment and operations of submarine cables to the country. The government could further improve the regulatory regime by looking at cable protection zones to combat risk against submarine cable damage from high levels of nearby maritime activity and also consider speeding up permitting time for vessels conducting repair work through an 'approval in principle' approach.
Focus on Malaysia
In this 2022 update, Malaysia has also 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 Malaysia by 2023. Google has deployed points of presence (PoPs) in four peering locations in Kuala Lumpur and Cyberjaya. Google also invests in content caches with Google Global Cache (GGC) nodes deployed in 20 cities across Malaysia. These investments are expected to contribute an additional cumulative USD8.9 billion in GDP from 2022 to 2026.
Malaysia is one of the fastest-growing economies in South-East Asia and is well positioned to attract new investments for submarine cables given its strategic geographical location in the region. It could grow into an alternative regional hub for digital infrastructure given potential supply constraints (e.g. land, power) faced by Singapore. However, Malaysia’s regulatory landscape is volatile which has dampened investor confidence. The government can strengthen cable protection laws and increase flexibility of cabotage provisions for cable repairs and maintenance in Malaysia’s territorial waters. Increasing the clarity of licensing and permitting processes to speed up submarine cable-related activities will also increase investor confidence. Lastly, the government can consider implementing non-discriminatory and cost-oriented access to cable landing stations to promote stronger competition between operators.