KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

Further investments in digital infrastructures, especially high-speed broadband networks, is essential to
supporting vibrant, innovative and inclusive digital G20 economies. Financing hurdles related to digital
infrastructure investment include high capital costs, susceptibility to changes in market conditions, low
rates of return in rural and remote areas, and a lack of accurate data for making informed investment
decisions.
Encouraging investments in and sharing of data – itself an important 21st-century infrastructure – is also
needed. Challenges to doing so include issues related to data curation and investment incentives, trust
(privacy and digital security risk management), data evaluation, pricing, data ownership and intellectual
property rights (IPRs).
Access to finance is also a key challenge for innovative enterprises that are seeking to implement new
business models based on digital technologies. There are a number of areas in which the G20 could play a
role to help address some of these concerns, including by strengthening infrastructure deployment through
public and private financing and improving framework policies to foster financing of digital infrastructures
and new business models.
Digital technologies, and the infrastructures that supports them, are essential for success in today’s global
economy. Despite the critical importance of digital infrastructures, there are a number of challenges facing
governments and companies with respect to how to finance them, in part because they are relatively
expensive and have a longer-term time horizon. While financing digital infrastructures is attractive to some
investors who have a preference for predictable returns in the long-term – similar to those found in utility
industries (e.g. energy, water) – it shares some of the challenges associated with any infrastructure
investment, especially those characterised by dynamic technological change.
At the same time, the current environment of slow global growth and low interest rates for cash deposits, gilts,
and bonds may well continue for some time. This, coupled with market volatility, has made investing in
infrastructure relatively attractive as a way to reap higher returns. Nonetheless, infrastructure investment can
also be risky. It can be a challenge, for example, to attract the large capital outlays required for expanding or
upgrading communication networks or to meet the substantial ongoing capital expenditure requirements of
such networks. In addition, returns are often influenced by changes in government policy, and the long-term
nature of infrastructure investments therefore becomes more uncertain since they are subject to changes in
the regulatory environment.
Digital infrastructures encompass a range of elements. At its core, digital infrastructure includes
telecommunications infrastructure, both fixed and mobile. Another important digital infrastructure is data,
which is increasingly a foundational element in data-driven economies and societies.