New Study Highlights US$ 5.6 Trillion Global Benefit of Online Applications

BY Heather Greenfield
May 18, 2017

Brussels, BELGIUM — A German research institute, WIK, (Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste) has released a new study on the economic and social contribution of online applications consumers use to do everything from sharing videos, paying for groceries, communicating through voice, video and messaging, and engaging in rich interaction with friends and colleagues. WIK reviewed 139 of the most commonly used apps across 164 countries from 2000 to 2015.

WIK found that for every 10 percent increase in worldwide usage of these Rich Interaction Applications (RIAs) — applications that facilitate rich interaction such as, photo/video sharing, location sharing, payment and chat among individuals, groups and enterprises — global GDP increased by an average of US$ 5.6 trillion. This activity exceeded the economic benefits of telecommunications services in these same countries. WIK further predicts that the innovation around new and existing RIAs will continue at breakneck pace, leading to uses we can’t yet imagine, as mobile broadband connections spread worldwide, combined with the decreasing cost of devices.

The following can be attributed to Dr. René Arnold, Head of Department “Markets & Perspectives” at WIK and project manager for the study:

“RIAs are the modern campfire. They make social and economic exchange happen online. In the 16 years analyzed, the average impact of a 10% increase in RIAs usage leads to roughly an additional US$ 1 billion daily. Today, we expect that RIAs’ impact is significantly larger as they have added innovative functions and gained in popularity. Notably, GDP captures only a fraction of RIAs’ economic impact.”

“We have also gathered evidence that the rise in RIAs’ popularity is not to the detriment of telecommunications providers. Quite the opposite is true. Consumers who use RIAs intensively have likely purchased a more expensive mobile plan recently.”

“In terms of the positive socioeconomic impact of RIAs, we are optimistic about further innovation in functions like speech interfaces. But the economic and social impact of RIAs can only grow if policies evolve in ways that don’t stifle that innovation.”

CCIA Europe Vice President James Waterworth on why CCIA commissioned the study:

“Consumers love their interaction applications (RIAs) and their use is growing rapidly, boosting economic growth worldwide. Yet, until now, there had not been adequate academic literature analyzing this phenomenon. Moreover, some have spun a narrative that these sorts of applications, which they often derogatorily call OTT, do not add value to the overall digital economy. We appreciate WIK bringing a better understanding of the economic value of interaction applications, and how they differ from telecommunications services, so countries and policymakers can use it as they determine how to support this dynamic growth without imposing stifling and potentially outdated regulations.”

“Particularly interesting is that, on average, RIAs provide nine different functions, from real-time translation to gaming, money transfer, video sharing and chat. Their use creates economic value locally for merchants, for families receiving remittances and for broadband providers, who get new customers who want to use these apps. They create social value by bringing families together or spreading information to combat disease.”

“Benefitting from this value requires policy makers to recognise these apps for what they are: interaction apps with the capacity to fulfill many 1:1 and group functions.  Policy makers will inevitably limit the potential benefits generated by these services if they attempt to impose sectoral regulation designed for a different set of services and competitive conditions will inevitably misunderstand what they are and limit their positive impact.”

Related Articles

CCIA Offers Trade Officials Examples Of Scope of Digital Trade Barriers

Oct 25, 2017

Washington — As the US takes more steps to monitor the fastest growing export, trade in services, the Computer & Communications Industry Association offered USTR examples of digital trade barriers faced by tech companies in comments filed Wednesday evening. CCIA also provided recommendations for upcoming NAFTA negotiations. “Six key barriers to digital trade include data…

Simons Nominated To Lead FTC

Oct 19, 2017

Washington — The administration has announced two nominees to fill out the Federal Trade Commission — DC antitrust attorney Joe Simons to lead the FTC and Rohit Chopra to fill the Democratic slot. President Trump’s spokeswoman confirmed that Senator Cornyn’s chief counsel Noah Phillips is expected to be the third nominee. The FTC has been…

CCIA Tech Industry Delegation Meets Incoming Bulgarian EU Presidency

Oct 19, 2017

Sofia, Bulgaria — The Computer & Communications Industry Association is leading a delegation of tech companies to meet with Bulgarian Ministers, regulators, and startups this week ahead of the upcoming Bulgarian Presidency of the Council of the EU. CCIA Europe will also present tech industry’s recommendations to the Bulgarian EU Presidency while in Sofia. Bulgaria…