DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Udvalget for Digitalisering og It 2024-25
DIU Alm.del Bilag 45
Offentligt

THE VALUE & BENEFITS OF

FUTURE-PROOF DIGITAL

INFRASTRUCTURE FOR

DENMARK

Client: DANSK ERHVERV

18 DECEMBER 2024

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

AUTHORS

Tuomas Haanperä

Dr Bruno Basalisco

Neil Gallagher

Dr Gerdis Marquardt

Rodrigo Cipriano

Mads Thorkild Nissen

Jakob Nejsum

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

PREFACE

Telecommunications infrastructure is the backbone of the digital economy, alongside other digital

infrastructure such as data centres, cloud services and software solutions.

In this report, we focus on telecommunications infrastructure as a fundamental enabler of the econ-

omy and society as a whole. Activities facilitated via telecommunications infrastructure are both

business-related

–

e.g., payment, e-commerce, and productivity software

–

and related to wider so-

cietal functions

–

e.g., e-health and e-governmental services, communications, and entertainment

Danish companies are among the best in the EU at integrating digital technology (ranked second in

2022) which allows them to take advantage of digital transformation. Around one quarter of enter-

prises had integrated AI and Big data in 2021

–

technologies which are likely to become even more

important in the future.

The pace of the technological evolution requires constant adaptation and upgrading of the telecom-

munications infrastructure. As reliance on digital systems grows, so does the need for resilient in-

frastructure capable of handling increasing data volumes, ensuring cybersecurity, and facilitating

seamless connectivity.

To ensure that Denmark and Europe remain at the forefront of cutting-edge digital technology, sig-

nificant continued investments in telecommunications infrastructure will be required. However,

there are concerns that the telecommunications sector in Europe and in Denmark may face chal-

lenges in ensuring sufficient financial incentives to support future investments.

In light of this, Dansk Erhverv has commissioned Copenhagen Economics to conduct a research

study to i) investigate the value of the telecommunications sector and its continued infrastructure

investment to the economy and society at as a whole, ii) to examine the potential need for further

investment to ensure futureproof digital infrastructure and the associated socio-economic value and

iii) to discuss the policy framework that can support continued investment.

European Commission (2023), Digital Economy and Society Index (2022)

–

Denmark (link)

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

TABLE OF CONTENTS

Preface

Executive summary

Investment in digital infrastructure has supported

Denmark’s economic performance

The telecommunications sector contributed DKK

45.1 billion to the Danish economy in 2023

The sector invested DKK 85 billion from 2014 to

2023

Denmark is at the forefront of digitisation

compared to other European countries

1.1

1.2

1.3

Advanced digital infrastructure has far-reaching

socio-economic benefits

Digital infrastructure drives economic growth by

boosting productivity across the economy

Infrastructure investments enable the green

transition by reducing CO2 emissions

Investments are required for keeping digital

infrastructure resilient and safe against cyber-

attacks

2.1

2.2

2.3

Continued investments are needed to make

digital infrastructure futureproof and deliver further

benefits

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

3.1

Substantial investments are needed to keep up

with connectivity targets, demand, and

technological developments

Continued investments are required to keep

delivering value and socio-economic benefits

Challenges to continued investment

3.2

4.1

Challenges that may weaken the sector’s ability

and incentive to invest

Policy instruments that affect the sector’s ability

and incentive to invest

References

Appendix

4.2

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

EXECUTIVE SUMMARY

Telecommunications infrastructure is the backbone of the digital economy. Advanced network tech-

nologies that support high capacity, security and resilience have brought and will continue to bring

substantial benefits to Danish consumers and businesses. While Denmark currently fares well in

international comparisons regarding the rollout and take-up of high-speed fixed and mobile con-

nectivity, more remains to be done as the sector undergoes important transformation. The recent

Draghi report on EU competitiveness has singled out the telecommunications sector among key

economic areas worthy of policy attention and consideration, so that Europe can improve its com-

petitiveness. EU-level but also national policymakers need to consider how best to fine-tune policy

conditions to empower further competitiveness in this sector and thus achieve enhanced and fu-

ture-proof digital infrastructure.

Considering this, in this study we assess firstly the economic contribution supported by the opera-

tions and investments of the telecommunications sector to the Danish economy. Secondly, we in-

vestigate how the well-developed digital infrastructure enables wider socio-economic benefits for

the Danish economy and society. Thirdly, we examine why further investments are required and as-

sess how continued development of the digital infrastructure will continue to enable wider benefits

for the economy and society as a whole. Lastly, we discuss how policymakers can support continued

investment while achieving other policy objectives to ensure that future benefits materialise.

At a glance: Key Insights from the study

The telecommunications sector plays a vital role in the functioning of society and its

economic contribution amounts to 1.6 per cent of GDP

In 2023, the telecommunications sector contributed

DKK 45.1 billion

to the Danish economy

through its operations and investments. This corresponds to around 1.6 per cent of Danish GDP,

equivalent to DKK 7,600 per Danish citizen. This contribution includes direct effects, representing

the gross value added generated by the sector's own activities, and additional economic activity

stimulated throughout the supply chain, reflected in a multiplier of 1.6 for every unit of direct con-

tribution. The telecommunications

sector’s supported a total of

41,600 jobs

in Denmark, includ-

ing 13,000 within the sector itself.

In addition, futureproof digital infrastructure has an enabling function and supports economic

growth by boosting productivity. We estimate that digital infrastructure enabled economic gains

a range of 11 to 17 billion in GDP

annually between 2014 and 2023, equivalent to up to DKK

2,800 per citizen, through increased download speeds and broadband adoption.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

The telecommunications sector generates wider socio-economic benefits by enabling the

green transition and mitigating potentially substantial costs related to cyber break-

down

Futureproof digital infrastructure contributes to the green transition by i) lowering CO2 emissions

from the network and ii) enabling the use of advanced, more energy efficient technology across the

economy and society. From 2019 to 2023, CO2 emissions from network electricity consumption de-

creased by 36 per cent. While some part of this is attributable to the decrease in the CO2 intensity of

electricity in Denmark,

31 percentage points of this decrease in CO2 emissions since 2019

are attributable to the increased energy efficiency of the network

compared to a scenario

where the network’s energy efficiency had stopped improving in 2019.

Digital infrastructure in Denmark, similar to the rest of Europe and the world, faces significant

cyber threats. To lower the risk of cyberattacks and network breakdowns, the sector engages and

invests in many activities. This in turn

diminishes the likelihood of disruptions which un-

doubtedly would be associated with substantially large costs to Danish businesses, the

economy and society at large.

Continued investments are needed to make digital infrastructure futureproof

Several developments are underway which impose new and higher requirements for telecommuni-

cations networks in the future. (1) There is a continued

need for the deployment and upgrad-

ing of fibre and mobile networks.

Further upgrading of the networks are required to meet (2)

increasing data needs

and (3) to fulfil high requirements for telecommunications infrastructure

in terms of capacity, latency, resilience and security due to

innovative technologies,

such as AI

and quantum computing. Advanced telecommunications networks also (4) contribute to supporting

the

green transition,

whilst simultaneously (5) ensuring network

resilience

and (6) mitigating

growing

threats to cyber security and digital fraud.

At the same time, we observe that invest-

ment levels have decreased by 11 per cent since 2021 (controlling for inflation) and returns are mod-

est. Furthermore, historic structural challenges continue to affect this sector in Denmark as Danish

mobile operators serve on average fewer customers than the EU average.

Operators in Denmark may face challenges that weaken their ability and incentive to

invest

Administrative barriers, low return on investments in digital infrastructure and lack of scale may

challenge the attraction of sufficient investment. Policymakers and regulators can promote contin-

ued investments by streamlining and speeding up currently burdensome and lengthy

permitting

processes

at the local government level. Different forms of

collaboration and consolidation

can enable operators to pool their resources to invest in upgrading existing and building new net-

works more cost effectively. While authorities will assess each collaborative arrangement on their

merits, competition enforcement recognises that reaping the economies of scale can be critical for

faster and more extensive roll-out of network investments to the benefit of consumers.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

In Detail: Chapter-by-Chapter Insights

Investment in digital infrastructure has

supported Denmark’s economic

performance

As we explain in Chapter 1, we find, based on an input-output model, that the telecommunications

sector contributed DKK 45.1 billion in 2023 to the Danish economy, corresponding to almost 1.6 per

cent of total Danish GDP or DKK 7,600 per Danish citizen, through i) its operations and ii) its in-

vestments. In comparison, we estimate using a similar methodology that the operations of the Dan-

ish agriculture sector contributed DKK 46.6 billion to the Danish economy.

•

The telecommunications sector's operations contributed DKK 38.6 billion to the Danish

economy in 2023 and supported 32,300 jobs. This captures the immediate impact of the

industry’s operations, such as the value

added from its activities and the jobs it directly

creates (direct effect) as well as additional value added and employment generated

through its supply chain via the sector’s demand for goods and services from other sectors

(indirect effect).

The telecommunications sector’s investments

(i.e. which amounted to DKK 10.5 billion in

2023) contributed an additional DKK 6.5 billion to the Danish economy and supported

9,300 jobs (direct and indirect effect).

•

Over the last 10 years, the telecommunications sector has invested DKK 85 billion to improve Den-

mark’s digital infrastructure

and investments as a share of revenue have grown 7.5 percentage

points from 15.6 per cent in 2014 to 23.1 per cent in 2023.

These efforts by the sector have put Denmark at the forefront of digitisation compared to other Eu-

ropean countries. Denmark is leading in 5G coverage with 100 per cent 5G coverage in 2023 relative

to the EU average of 79 per cent

–

although further investments

will be required to deliver ‘full’ /

‘stand-alone’ 5G across Denmark. Denmark is also among the top three European countries regard-

ing Fixed Very High Capacity Network (i.e. optical-fibre network or equivalent in terms of perfor-

mance) with 97 per cent total coverage and 91 per cent in rural areas. This is to the benefit of Danish

citizens and businesses.

Advanced digital infrastructure has far-reaching socio-economic bene-

fits

As we demonstrate in Chapter 2, beyond its technological importance, future-proof digital infra-

structure delivers significant socio-economic benefits and is critical to achieving key policy objec-

tives in three areas: 1) supporting GDP growth by boosting productivity, 2) promoting the green

transition, and 3) enhancing IT security as well as ensuring resilience and security of supply.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Advancements in digital infrastructure support

GDP growth.

High-quality digital infrastructure is

essential for businesses, research facilities, public authorities etc. to adopt digital technologies that

contribute to more efficient business processes, technological progress and innovation and thereby

to boost productivity across the economy. Based on estimates from existing studies scaled to the

Danish context, we estimate that digital infrastructure enabled economic gains of between DKK

10.8 and 16.8 billion in GDP each year between 2014 and 2023, equivalent to DKK 1,800 to 2,800

per Danish citizen each year. We estimate this GDP contribution by considering the impact of two

cumulative measures of advancement in digital infrastructure discussed in the academic literature,

i.e. the impact of fixed broadband download speed and the impact of broadband adoption.

Infrastructure investments also advance the

green transition

and thereby

EU’s environmental tar-

gets. First, we find that continued investments in digital infrastructure led to improved energy effi-

ciency of the mobile and fixed broadband network in Denmark. Since 2019, the energy intensity of

the mobile and fixed broadband network has declined by 33 per cent, from 12 to 8.1 MWh of elec-

tricity per PB of data in 2023. We estimate, based on the network’s electricity consumption, that

CO2 emissions from network electricity consumption decreased by 36 per cent, of which 31 percent-

age points are attributable to increased energy efficiency compared to a scenario where the net-

work’s energy efficiency had stopped improving in 2019. Second, we describe how advancements in

digital infrastructure could enable up to 15 per cent emission reductions in other sectors, for in-

stance through the development of smart grids in the energy and utility sector, or data sharing and

route optimisation in transports.

According to the Centre for Cybersecurity, Denmark faces a high to very high threat regarding cyber

espionage, cyber activism and cyber-crime. How well the telecommunications sector can mitigate

cyber threats

and

ensure network resilience

has far reaching consequences across all sectors and

for all citizens and businesses using digital infrastructure. As the reliance on digital infrastructure

grows, the costs associated with a potential network break-down for whole regions or a cyber-attack

can be large and are likely to be even larger in the future. Some studies attempt to provide an indi-

cation of the magnitude of the potential costs associated with a breakdown in digital infrastructure.

A widely referenced report from the analysis company Gartner in 2014, for example, reports that

large companies face costs of USD 5,600 per minute of unplanned downtimes and small companies

between USD 137

–

427 per minute.

This corresponds to DKK 2.3 million per hour for large compa-

nies and DKK 57,000

–

177,000 per hour for smaller companies (not adjusted for inflation). As an

illustrative example, this per minute cost range for small and large companies suggests that it could

cost Danish companies as much as DKK 3.5 to 6.5 billion per hour

if digital infrastructure breaks

down and companies experience downtime - these are high-level, exploratory estimates that come

with a margin of uncertainty and do not constitute a full-fledged model of the economy. To mitigate

cyber threats, the sector invests in making networks safe and comply with national security regula-

tions, e.g., by upgrading designated infrastructure assets to vendors compatible with Danish regula-

tions, which involves significant additional costs. The sector also invests in network resilience to

minimise downtime and to reduce cyber-crime at user level.

Forbes (2022), How to Guard Against The Cost Of Unplanned Downtime And Network Outages (link) and Pingdom (2023),

Average Cost of Downtime per Industry (link).

We extrapolate the per minute cost linearly to estimate the cost per hour. However, the true cost might be decreasing with

time as companies adjust operations.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Continued investments are needed to make digital infrastructure future-

proof and deliver further benefits

As we examine in Chapter 3, despite high 5G coverage and Fixed Very High Capacity Network pene-

tration in Denmark, continued investments are needed to improve capacity and handle increasing

demand for digital services, keep up with technological developments, and meet increasing security

requirements and legislation.

If market and policy conditions are such that future investments would stay at similar levels as real-

ised in 2019-2023, we estimate that investment will support DKK 5.6 billion to GDP and 8,000 jobs

annually in direct and indirect effects until 2030. In addition, as an example of how investments

lead to better infrastructure which ultimately supports GDP, we estimate the effect of further in-

creases in download speeds on GDP. We find that further increases

in Denmark’s already high

download speeds could contribute 0.10 to 0.18 per cent to GDP annually until 2030, equivalent to

between DKK 2.9 and 5.0 billion in GDP contribution. Finally, we estimate that from 2023 to 2030,

CO2 emissions from

the network’s

electricity consumption could decrease by a further 83 to 89 per

cent. Of this total potential reduction, 17 to 24 percentage points could be attributable to further im-

provements in the network’s

energy efficiency.

These benefits will only materialise when the sector has the ability and incentives for further sub-

stantial investments, which necessitates a policy and regulatory framework that ensures incentives

to invest by allowing sufficient returns that are commensurate with the risks involved. However, in

Denmark, similarly to the rest of Europe, there may be potential barriers to sustained levels of in-

vestment.

There may be challenges to continued investment

As we discuss in Chapter 4, the policy debate and current market conditions suggest two main chal-

lenges potentially hindering future investments.

•

Long, complex and burdensome administrative procedures

may weaken operators’ ability

and incentive to invest in digital infrastructure. Operators face two significant issues in de-

ploying network infrastructure such as masts, towers or ducts.

First,

there are significant

restrictions associated with municipal plans and rules to deploy infrastructure, and rules

can vary significantly between municipalities, making compliance burdensome.

Second,

municipalities often lack the resources to expedite permitting and the approval processes

are lengthy, taking up to 11 months.

Recent financial performance of operators in the EU and Denmark is indicative of con-

cerns over insufficient returns to support future investments.

There is a concern that the

recent and expected low returns on investments stem from a lack of sufficient scale. While

case-specific considerations are required, there are sound economic reasons to enable

forms of collaboration that have limited impact on competition while allowing operators to

spread fixed costs over a sufficient number of users to leverage economies of scale.

•

Policymakers and regulators can make use of various tools to support

operators’ ability and incen-

tive to invest in digital infrastructure. In doing so, they seek to strike the right balance between sup-

porting investments while achieving other policy objectives and protecting competition:

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

•

Policymakers should consider how administrative and financial constraints are day-in and

day-out

impacting operators’ ability to

make timely investments in digital infrastructure.

Streamlining lengthy and cumbersome permitting processes at the local government level

is very impactful for the telecoms sector and should deserve special attention. The entry

into force of the Gigabit Infrastructure Act (GIA) is an opportunity to review the Danish

legislation and improve conditions for investment.

There are sound economic reasons to enable forms of collaboration that have limited im-

pact on competition while allowing operators to spread fixed costs over a sufficient num-

ber of users to leverage economies of scale. Operators can benefit from improved econo-

mies of scale through co-investments, network-sharing agreements and mergers. Competi-

tion authorities have a central role in determining boundaries to forms of collaboration

that are conducive to network investments while preserving competition. While competi-

tion authorities will continue to scrutinise proposed consolidations and collaborative

agreements on their merits, there is a growing policy impetus in Europe towards a more

thorough consideration of investment-related benefits:

First,

competition authorities can consider whether and how the full suite of po-

tential efficiencies manifested through enhanced network investments and higher

quality are balanced against any competitive effects of collaborative agreements

or consolidation. The authorities face a balancing act whereby, for example, an

assessment of investment (and hence quality) related benefits may warrant con-

sidering a longer time horizon than short-term competitive effects.

Second,

where relevant, the commitments required to approve mergers, or other

agreements should be those required to mitigate potential harm to consumers.

Depending on case-specific circumstances, authorities can consider whether

structural remedies reduce the benefits of consolidation and whether behavioural

remedies

–

e.g. investment commitments or pricing remedies - may be appropri-

ate and sufficient to safeguard competition whilst supporting investment incen-

tives.

•

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

CHAPTER 1

INVESTMENT IN DIGITAL INFRASTRUCTURE

HAS SUPPORTED DENMARK’S

ECONOMIC

PERFORMANCE

Digital infrastructure supports an increasing part of the functions and activity in society, thus ena-

bling digital communication, payment, streaming, and other digital services.

High investments by

the telecommunications sector have ensured that Denmark is one of the leaders in terms of digita-

tion.

In this chapter, we analyse firstly the economic contribution of the telecommunication sector in

terms of GDP and employment supported via its operations and investments throughout the econ-

omy. We find that the sector supported DKK 45.1 billion to the Danish economy in 2023 and 41,600

jobs in Denmark (Section 1.1). Secondly, we show that the sector invested DKK 10.5 billion in 2023

and DKK 85 billion in total from 2014 to 2023. These investments stay primarily in Denmark and

support blue collar jobs in the construction sector (Section 1.2). Thirdly, we discuss how the efforts

made by the sector have put Denmark at the forefront of digitation compared to other European

countries to the benefit of Danish citizens and businesses (Section 1.3).

1.1

The telecommunications sector contributed DKK 45.1

billion to the Danish economy in 2023

In this section, we examine the economic contribution of the telecommunication sector in 2023

based on input-output modelling and publicly available data. We find based on input-output model-

ling that the sector contributed DKK 45.1 billion to the Danish economy in 2023, which corresponds

to around 1.6 per cent of Danish GDP, DKK 7,600 per citizen in Denmark in 2023, and is more than

the cost of the Great Belt Bridge (DKK 43.7 billion in 2023 prices).

Of this total, DKK 38.6 billion in GDP contribution (accounting for direct and indirect effects) is

supported through

the telecommunication sector’s

operations (see Section 1.1.1). In comparison, we

estimate, using a similar methodology, that the operations of the Danish agriculture sector (ac-

counting for direct and indirect effects) contributed DKK 46.6 billion to the Danish economy. In ad-

dition, the telecommunication sector’s investment

(accounting for direct and indirect effects) con-

tributed another DKK 6.5 billion (see Section 1.1.2), see Figure

See e.g. Tænketanken for Digital Infrastruktur (link).

We adjust the cost of DKK 21.4 billion in 1988 prices (see Storebælt, Om Storebælt (link)) to 2023 prices using Danish CPI

(see Statistics Denmark, Pris112 (link)).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Figure 1

National economic contribution supported by the telecommunications sector

through operations and investments in 2023

Billion DKK, 2023

45.1

6.5

38.6

Operations

Investments

Total

Note:

Source:

The figure includes the direct and indirect effects we estimate in Sections 1.1 and 1.2. See Appendix A for

an overview of the methodology behind the two elements.

Copenhagen Economics based on Statistics Denmark, Input-output (link) and Klimadatastyrelsen,

Økonomiske Nøgletal for Telebranchen 2023 (link).

1.1.1 The operations of the telecommunications sector contributed

DKK 38.6 billion to the Danish Economy in 2023

In this section, we estimate the economic contribution of the telecommunications sector’s

opera-

tions and find that in 2023 the sector contributed DKK 38.6 billion to the Danish economy.

To estimate the economic contribution, we employ an input-output model based on the latest avail-

able input-output tables from Statistics Denmark.

These tables provide insights into how each sec-

tor of the economy procures goods and services from the rest of the economy and demonstrate how

the output of one industry impacts other industries and the overall economy. Using this model, we

estimate the telecommunications

sector’s impact on GDP and employment.

The sector contributes

to the economy through profits, product taxes, salaries, and purchases of intermediary goods and

services from other domestic companies. Thus, this captures the economic contribution through the

entire value chain of the sector

–

except for the effect of investments, which we cover separately in

Section 1.2.

When estimating the economic contribution, we distinguish between the direct, indirect, and in-

duced effects:

•

Direct effects

refer to the immediate impact of the telecommunications sector, such as

value added through its activities and the jobs it directly creates.

•

Indirect effects

capture the ripple effects of the sector’s demand for goods and services

from other sectors. This includes the additional value added and employment generated

through its supply chain.

•

Induced effects

measure the additional economic activity generated by employees in the

telecommunications sector and its supply chain, spending their wages on goods and

Statistics Denmark, Input-output (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

services. This consumption drives further demand and supports additional jobs in the

broader economy.

We find that in 2023 the telecommunications sector’s

operations

contributed DKK 38.6 billion to

the Danish economy. This corresponds to almost 1.4 per cent of total Danish GDP in 2023 or

around DKK 6,500 per Danish citizen.

The sector contributed DKK 24.8 billion directly and DKK

13.8 billion indirectly, see Figure

which implies a multiplier of 1.6 for every unit of direct eco-

nomic contribution in the broader economy. In addition, the sector supported a further DKK 12.3

billion in induced effect in 2023.

Figure 2

National economic contribution supported by the telecommunications sector

through its operations in 2023

Billion DKK, 2023 prices

38.6

13.8

12.3

24.8

Direct

Indirect

Total

Induced

Note:

Source:

We have adjusted results by inflation to get results in 2023 prices instead of 2022 prices. Find a complete

description of the methodology in Appendix A.

Copenhagen Economics based on Statistics Denmark, Input-output (link).

Similarly, we find that the telecommunications sector supported Danish employment with 32,200

jobs in 2023, see Figure

This corresponds to 1 per cent of total Danish employment in 2023.

the 32,300 jobs, 13,000 were supported directly by the telecommunications sector (direct effect),

while 19,200 jobs were supported through purchases from other Danish companies (indirect effect).

Furthermore, we estimate that the telecommunications sector supported an additional 14,200 jobs

through induced effects.

We assess the induced effects separately and do not include them in the total economic contribution since these effects are

generated through the consumption of wages. Employees in the telecommunications sector and its supply chain would

eventually find other jobs if the sector where to vanish because individual companies or even industries do not affect the

‘structural employment’ level. Thus,

while these effects are important, they

cannot be attributed to the sector’s presence in

the same way as the direct and indirect effects.

Based on a GDP of DKK 2,805 billion, see Statistics Denmark (link), and on a population of 5,961,249 in ultimo 2023, see

January 2024 in Statistics Denmark, Befolkningstal (link).

Based on employment of 3,000,600 persons in August 2023, see Beskæftigelsesministeriet (2023), Aldrig set før

–

millioner i beskæftigelse (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Figure 3

Danish employment supported by the telecommunications sector through its opera-

tions in 2023

Thousand FTEs

14.2

32.3

19.2

13.0

Direct

Indirect

Total

Induced

Note:

Source:

The sum of the direct (13,000) and the indirect (19,200) does not add up to the total (32,300) in the figure

due to rounding of the two. Find a description of the methodology in Appendix A.

Copenhagen Economics based on Statistics Denmark, Input-output (link).

The indirect value supported by the telecommunications sector’s

operations

is centred around a few

specific industries that provide most of the goods and services the telecommunications sector relies

on. We find that the impact was largest in the information and communications sector, which ac-

counts for 22 per cent of the indirect GDP contribution, see Figure

This was followed by profes-

sional service activities (15 per cent), wholesale and retail (12 per cent), construction (10 per cent),

and real estate activities (7 per cent).

The picture is fairly similar for employment except that the effect is largest in the wholesale and re-

tail sector with 19 per cent, see Figure

These differences can be explained by the different labour

intensity across these sectors such that a million DKK in revenue does not support an equal number

of jobs in each sector.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Figure 4

GDP and employment supported by the telecommunications sector through its opera-

tions across key sectors

Per cent of indirect GDP contribution and employment supported

GDP

Employment

Information and

communication

Professional,

scientific, and

technical

service activities

Wholesale and

retail trade

Construction

Real estate

activities

Other

Note:

Source:

We are using OECD’s sector classifications.

Information and communication include the following sectors:

Publishing; IT and other information services (sector codes 58-60 and 62-63). Professional service activities

include the following sectors: Legal, accounting, management, architecture, engineering, technical test-

ing and analysis activities; Scientific research and development; Other professional, scientific and tech-

nical activities (sector codes 69-75). Wholesale and retail include: wholesale; retail (sector codes 45-47).

Construction include: Construction (sector codes 41-43). Real estate activities include: Real estate activi-

ties (sector code 68). The remaining sectors are included in Other.

Copenhagen Economics based on Statistics Denmark, Input-output (link).

1.1.2 The investments made by the telecommunications sector

supported an additional DKK 6.5 billion to the Danish economy in

2023

Employing the input-output model we can also estimate the economic contribution of investments

made by the telecommunications sector in addition to the footprint of the sector’s operations, cov-

ered in Section 1.1.1. Investments contribute to the Danish economy as they constitute purchases of

goods and services from the sectors that receive the investments

–

here that is mainly construction

companies, see Figure

Concretely, we estimate that the investments of DKK 10.5 billion made by the telecommunications

sector in 2023 contributed to the Danish economy with DKK 6.5 billion, see Figure

This is equiv-

alent to 0.2 per cent of GDP or DKK 1,100 per citizen in Denmark.

Of this total contribution, DKK

3.1 billion comes from indirect effects, nearly matching the direct contribution of DKK 3.4 billion,

resulting in a multiplier of 1.9. This means that for every unit of direct contribution, a similar addi-

tional amount is generated in the broader economy. Additionally, we estimate that the investments

contributed to the Danish economy with DKK 3.4 billion in induced effects

–

this is the economic

activity supported by the consumer expenditure linked to workers’ earnings across the telecommu-

nications value chain.

Based on a GDP of DKK 2,805 billion, see Statistics Denmark (link), and on a population of 5,961,249 in ultimo 2023, see

January 2024 in Danmarks Statistik, Befolkningstal (link).

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Figure 5

Contribution to the Danish economy via investments made by the telecommunica-

tions sector in 2023

Billion DKK, 2023 prices

3.4

6.5

3.1

3.4

Direct

Indirect

Total

Induced

Note:

Source:

We have used data from Klimadatastyrelsen on the total investments in 2023 by the telecommunications

sector and data from IO-tables in the period 2015-2019 from Statistics Denmark to calculate a split be-

tween sectors receiving these investments and splitting them into foreign and domestic investments. We

used the calculated domestic investments per sector to estimate impact using multipliers calculated using

the newest IO table from 2023, find a description of the methodology in Appendix A.

Copenhagen Economics based on Statistics Denmark, Input-output (link) and Klimadatastyrelsen,

Økonomiske Nøgletal for Telebranchen 2023 (link).

We estimate the impact of investments by calculating ‘revenue-multipliers’

for all sectors that re-

ceive investments from the telecommunications sector. These multipliers express the effects on di-

rect, indirect, and induced GDP contribution and employment per DKK in revenue. For example,

we find that the direct and indirect revenue multipliers of the construction sector are 0.32 and 0.31,

respectively. Based on this, we estimate that a DKK 1 billion investment from the telecommunica-

tions sector in construction yields DKK 0.32 billion and DKK 0.31 billion in direct and indirect GDP

contribution, respectively. Direct multipliers capture profits, product taxes, and salaries in the rele-

vant sector. Indirect multipliers capture purchases of intermediary goods and services from

domes-

tic

companies. Imports of goods and services are not included, since they do not add to

Danish

GDP.

In terms of employment, we find that the investments made by the telecommunications sector in

2023 supported Danish employment with 9,300 jobs (direct and indirect effect), see Figure

Addi-

tionally, we find that a further 3,600 jobs were supported by the investment accounting for induced

effects.

See Appendix A for a complete description of the methodology.

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Figure 6

Danish employment supported by investments made by the telecommunications sec-

tor in 2023

Thousand FTEs

3.6

9.3

4.0

5.3

Direct

Indirect

Total

Induced

Note:

Source:

We have used data from Klimadatastyrelsen on the total investments in 2023 by the telecommunications

sector and data from IO-tables in the period 2015-2019 from Statistics Denmark to calculate a split be-

tween sectors receiving these investments and splitting them into foreign and domestic investments. We

used the calculated domestic investments per sector to estimate impact using multipliers calculated using

the newest IO table from 2023, find a description of the methodology in Appendix A.

Copenhagen Economics based on Statistics Denmark, Input-output (link) and Klimadatastyrelsen,

Økonomiske Nøgletal for Telebranchen 2023 (link).

1.2

The sector invested DKK 85 billion from 2014 to 2023

We find that the telecommunications sector has invested DKK 85 billion from 2014 to 2023 in nom-

inal terms.

Annual investments have grown 44 per cent from 2013 to 2023 when controlling for

inflation, see the left panel of Figure

In the same period, investment as a share of revenue has

grown from 16 per cent in 2014 to 23 per cent in 2023, which illustrates that the sector has in-

creased the focus on investments, see the right panel of Figure

However, we also note that invest-

ment levels peaked in 2021 at DKK 10.1 billion and have decreased by 11 per cent since then to DKK

9 billion in 2023. Similarly, investments as share of revenue have decreased from 25 per cent in

2021 and 2022 to 23 per cent in 2023.

Klimadatastyrelsen, Økonomiske Nøgletal for Telebranchen 2023 (link). Note this is in nominal terms and thus does not

match the sum of investments in real terms in Figure

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Figure 7

Investments by the telecommunications

sector

Billion DKK, real prices

-11%

+44%

7.2

8.3

9.9 10.1

9.7

Investments by the telecommunications

sector as a share of sector revenues

Per cent of revenue

9.0

6.3

6.7

6.6

6.9

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Note:

Source:

Since we consider real prices in the left panel, investments sum to less than DKK 85 billion which is in nomi-

nal terms.

Klimadatastyrelsen, Økonomiske Nøgletal for Telebranchen 2023 (link).

The investments made by the telecommunications sector particularly support blue collar jobs in

Denmark. We find that 89 per cent of the investments flow into the construction sector,

see the

first panel of Figure

and stay with 93 per cent within Denmark, see the second panel of Figure

Figure 8

Average share of investment by the tele-

communications sector going to con-

struction vs. other industries

Per cent, 2015-2019

Average share of investments made by

the telecommunications sector going to

domestic companies vs. import

Per cent, 2015-2019

11%

Construction

Other

Domestic companies

Imports

89%

93%

Note:

Source:

The numbers are based on first-order purchases only. We have calculated the shares using Input-output

investment tables from 2015 to 2019. We have calculated the total investments into each sector in the

period and calculated the shares using the total investments.

Copenhagen Economics based on Statistics Denmark, Input-output (link).

Construction includes general and specialised construction activities for buildings and civil engineering works. It includes

new work, repair, additions and alterations, the erection of prefabricated structures and constructions of a temporary na-

ture, see Eurostat (2008), NACE Rev.2 - Statistical classification of economic activities in the European Community (link).

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1.3

Denmark is at the forefront of digitisation compared to

other European countries

In this section, we discuss how advanced Denmark is in terms of 5G and Very High Capacity Net-

works (VHCN). VHCN refers to an optical-fibre network connection, or a connection that is equiva-

lent in terms of performance.

We find that high levels of investment by the telecommunications

sector have positioned Denmark as one of the most digitalised countries in Europe.

In Denmark, both urban and rural populations benefit from advanced digital infrastructure. This is

reflected in Denmark’s coverage of VHCN, which stands at 97 per cent —

the third highest in Eu-

rope

—

and is well above the EU average of 79 per cent, see Figure

Also in rural areas, Denmark

ranks third with 91 per cent coverage, exceeding the EU average 56 per cent in rural regions.

Figure 9

Very High Capacity Network coverage

Per cent of households, 2023

100

Note:

Source:

Very High Capacity Network refers to an optical-fibre network connection or a connection that is equiva-

lent in terms of performance to what is achievable by an optical fibre installation.

Copenhagen Economics based on Eurostat, Broadband internet coverage by technology (link).

Denmark also ranks top in Europe regarding 5G coverage, sharing the highest position with three

other countries at 100 per cent, while the EU average is at 89 per cent, see Figure

10.

However, we

note this

is not yet ‘Full’ or ‘Stand-alone’ 5G

in all networks across the country since most 5G net-

works rely on 4G core, which does not fully support

‘next-generation’ capabilities.

Also the fibre

network is not yet at full coverage and further upgrades are needed e.g. to ensure sufficient capacity

and security of the network, see further discussion in Section 3.1.

See e.g. Thomson Reuters, Practical Law

–

Glossary (link).

Eurostat, Broadband internet coverage by technology (link).

Thomson Reuters, Practical Law

–

Glossary (link).

See e.g. p. 98 in ETNO (2024), State of Digital Communications 2024 (link).

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Figure 10

5G coverage

Per cent of households, 2023

100

Note:

Source:

The Netherlands, Malta, and Cyprus also has a coverage of 100 per cent.

Copenhagen Economics based on Eurostat, Broadband internet coverage by technology (link).

Both individuals and companies in Denmark gain from the high degree of digitalisation. For

indi-

viduals,

Denmark’s high level of digitalisation brings convenience and efficiency. Citizens benefit

from innovative digital solutions like NemID/MitID, which allow secure access to public services,

banking, and private platforms online. Additionally, Digital Post ensures all communications from

public authorities are received digitally, reducing paperwork and streamlining processes. Nearly 99

per cent of Danes use e-Government services, making Denmark a leader in the EU.

For

companies,

digitalisation enhances business efficiency and competitiveness. Denmark ranks

sixth globally in the Cisco Digital Readiness Index, excelling in areas like digital infrastructure

(number one globally) and ease of doing business (number one globally). These strengths and a

high level of technology adoption (number 15 globally) enable businesses to thrive in a highly digi-

talised economy.

In this chapter, we have demonstrated that the telecommunications sector contributes significantly

to GDP and supports jobs through its operations as well as investments, which put Denmark at the

forefront of digitalisation. In the next chapter, we will examine how a well-developed digital infra-

structure contributes even further to the Danish economy by enabling productivity growth for those

using the infrastructure and by creating wider socio-economic benefits such as reducing emissions

and increasing cybersecurity and resilience.

European Commission, DESI indicators

–

e-Government users (link).

Cisco, Digital Readiness Index (link).

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CHAPTER 2

ADVANCED DIGITAL INFRASTRUCTURE HAS

FAR-REACHING SOCIO-ECONOMIC BENEFITS

In today’s fast-evolving

digital landscape, futureproof digital infrastructure

–

designed to be adapta-

ble, scalable, and resilient

–

is essential for addressing both current and emerging challenges and

needs. Beyond its technological importance, it delivers significant socio-economic benefits, as we

discuss in this section. Specifically, we explore how resilient digital infrastructure is critical to

achieving key policy objectives in three areas: fostering productivity growth, promoting the green

transition, enhancing IT security and resilience as well as ensuring the security of supply.

Firstly, we find that improvements to digital infrastructure contributed to economic growth. Based

on estimates from existing studies scaled to the Danish context, we find that the average annual

contribution to GDP from increases in download speeds and broadband adoption was between 0.38

and 0.60 per cent annually, equivalent to DKK 10.8 to 16.8 billion (DKK 1,800 to 2,800 per citizen)

in GDP, over the last ten years (see Section 2.1).

Secondly, we discuss how futureproof digital infrastructure contributes to the green transition by i)

lowering CO2 emissions from the network and ii) enabling the use of advanced technology down-

stream. We estimate that from 2019 to 2023, the network’s improved energy efficiency reduced the

networks emissions by 31 per cent. Substantial further reductions are enabled for those using ad-

vanced digital infrastructure by supporting the use of new, more energy efficient technology across

the economy and society (see Section 2.2).

Thirdly, we discuss that according to the Centre for Cybersecurity, Denmark faces a high to very

high threat regarding cyber espionage, cyber activism and cyber-crime. Efforts made by the tele-

communications sector to mitigate those cyber threats provide far reaching benefits across all sec-

tors and for all citizens and businesses using of the digital infrastructure (see Section 2.3).

2.1

Digital infrastructure drives economic growth by

boosting productivity across the economy

In this section, we discuss how digital infrastructure supports economic growth by improving the

productivity across the economy. Studies show that adoption and improvements in digital infra-

structure is associated with achieving more efficient business processes, technological progress and

supporting innovation,

which are key ingredients for economic growth.

To estimate the GDP contribution of improved digital infrastructure in Denmark specifically, we

rely on results from existing studies scaled to the Danish economy. Overall, we estimate that ad-

vancements in digital infrastructure enabled economic gains of between DKK 10.8 and 16.8 billion

in GDP annually between 2014 and 2023, equivalent to DKK 1,800 to 2,800 per Danish citizen an-

nually.

Telecom Advisory Services (2020), Assessing the Economic Potential of 10G Networks (link). Briglauer, Krämer, and Palan

(2023), Socioeconomic benefits of high-speed broadband availability and service adoption: A survey (link).

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We estimate this GDP contribution by looking at the impact of two cumulative measures of ad-

vancement in digital infrastructure, which have been discussed in the academic literature: 1) the im-

pact of fixed broadband download speed and 2) the impact of broadband adoption.

According to

existing studies, improvements in broadband speed drive the adoption of more efficient business

processes and accelerate the introduction of new products, services, and innovative business mod-

els.

Further, increased broadband adoption leads to positive effects in product innovation, techno-

logical progress, and efficiency gains.

According to Briglauer, Krämer, and Palan (2023), all these

positive effects ultimately lead to an impact on GDP.

Digital infrastructure is likely to have an im-

pact on productivity and economic growth also via other channels, however, those are less widely

studied.

GDP impact of fixed broadband download speed

Historically, fixed broadband download speeds have increased rapidly. In Denmark, fixed broad-

band download speeds have increased 14-fold in the last ten years, from a median speed of 22.5

Mbps in 2014 to 321.9 Mbps in 2023.

This corresponds to a compound annual growth rate

(CAGR)

of 34 per cent over the last ten years, see Figure

11.

This substantial14-fold increase is at-

tributable both to an increase in the availability of high-speed internet, and to an increase in high-

speed internet adoption.

Figure 11

Median fixed broadband download speed in Denmark

Mbps

CAGR 34%

2018

2019

209

134

266

322

2014

2015

2016

2017

2020

2021

2022

2023

Note:

Source:

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a specified pe-

riod, assuming consistent growth each year.

Klimadatastyrelsen, Internet dataark, 2. halvår 2023 (link).

In total, these two effects give an annual GDP contribution of 0.38 per cent to 0.60 per cent, as we derive below, equivalent

to DKK 10.8 to 16.8 billion in GDP annually.

Telecom Advisory Services (2020), Assessing the Economic Potential of 10G Networks (link).

Briglauer, Krämer, and Palan (2023), Socioeconomic benefits of high-speed broadband availability and service adoption: A

survey (link).

Briglauer, Krämer, and Palan (2023), Socioeconomic benefits of high-speed broadband availability and service adoption: A

survey (link), p. 9.

Klimadatastyrelsen, Internet dataark, 2. halvår 2023 (link).

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a specified period, assuming con-

sistent growth each year.

According to European Commission, DESI indicators

–

Fixed Very High Capacity Network (VHCN) coverage (link), cover-

age grew from 63 per cent in 2017 to 97 per cent in 2023. Further, according to Klimadatastyrelsen, Internet dataark, 2.

halvår 2023 (link), the number of fibre subscribers (fibre to private) in Denmark grew from 331,246 in the first half of 2014

to 1,167,052 in the second half of 2024.

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A study by Telecoms Advisory Services

finds that a 100 per cent increase in fixed broadband

download speed results in a GDP increase of 0.26 per cent for download speeds below 40 Mbps,

and a 0.73 per cent increase for download speeds above 40 Mbps. Their estimates are based on

panel data for 159 countries, between 2008 and 2019. In their econometric model, they include the

broadband adoption rate to be able to separate the speed effect from the broadband adoption effect.

The estimates by Telecom Advisory Services (2020) are comparatively more conservative compared

to other studies, such as Carew et al. (2018)

who find that a 100 per cent increase in internet speed

results in a GDP increase of 1.97 per cent, and Kongaut et al. (2017)

who find that a 100 per cent

increase in broadband speed leads to a 1.47 per cent increase in GDP.

Scaling the results of Telecom Advisory Services (2020) to Denmark, we estimate that increased

download speeds resulted in an average annual GDP contribution of 0.08 per cent for the period

2014-2017 (where the median download speed was below 40 Mbps

), and an average annual contri-

bution of 0.25 per cent for the period 2018-2023 (where the median download speed was above 40

Mbps).

GDP impact of broadband adoption

Apart from the increase in download speeds, the adoption of mobile and fixed broadband has also

increased substantially over the last ten years. From 2014 to 2023, the number of mobile broadband

subscriptions per capita in Denmark increased from 1.10 to 1.46, and the number of fixed mobile

broadband subscriptions increased from 0.42 to 0.44, see Figure

12.

Telecom Advisory Services (2020), Assessing the Economic Potential of 10G Networks (link).

Carew, Martin, Blumenthal, Armour, and Lastunen (2018), The Potential Economic Value of Unlicensed Spectrum in the

5.9 GHz Frequency Band (link).

Kongaut and Bohlin (2017), Impact of broadband speed on economic outputs: An empirical study of OECD countries (link).

Even though the median download speed in 2017 was above 40 Mbps, our estimate for the contribution to GDP in 2017 is

included in the <40 Mbps period. This is because the median download speed in 2016, which we use in calculating the an-

nual growth in 2017, was below 40 Mbps.

Our estimate is based on median download speeds in Denmark, while Telecom Advisory Services (2020) (link) use average

download speeds to estimate the GDP impact. Consequently, our median-based estimate may differ compared to what

would be obtained using average download speeds.

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Figure 12

Mobile broadband adoption

Subscriptions per capita

Fixed broadband adoption

Subscriptions per capita

CAGR 1%

1.5

1.2

0.9

0.6

0.3

0.0

CAGR 3%

0.5

0.4

0.3

0.2

0.1

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

0.0

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Note:

Source:

Mobile broadband subscriptions include all subscriptions, both data-only and combined data and voice

subscriptions, that give access to mobile-broadband networks that provide a minimum download speed

of 256 Kbps. CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a

specified period, assuming consistent growth each year.

OECD, Going Digital Data Kitchen - Mobile Broadband (link) and OECD, Going Digital Data Kitchen -

Fixed Broadband (link).

To estimate the historical effect of increased broadband adoption on GDP, we use an estimate from

Briglauer, Cambini, and Gugler (2023)

who study the effect of an increase in fixed and mobile

broadband adoption on GDP. Briglauer, Cambini, and Gugler (2023) show that a 1 per cent increase

in fixed broadband adoption raises GDP by 0.026-0.034 per cent, and that a 1 per cent increase mo-

bile broadband adoption raises GDP by 0.079-0.088 per cent. Their estimates rely on comprehen-

sive panel data for 32 OECD countries for the years 2002 to 2020.

Combining the results from Briglauer, Cambini, and Gugler (2023) with data on per capita broad-

band subscriptions in Denmark, we find that from 2014 to 2023, the rise in fixed and mobile broad-

band adoption contributed an average of 0.018-0.024 per cent per year to GDP for fixed broadband

and 0.29-0.32 per cent per year for mobile broadband.

Briglauer, Cambini, and Gugler (2023), Economic benefits of high-speed broadband network coverage and service adop-

tion: Evidence from OECD member states (link).

If we instead use the results of Czernich, Falck, Kretschmer, and Woessmann (2011), Broadband infrastructure and eco-

nomic growth (2011) (link), who find that a 10 percentage point increase in fixed broadband penetration (defined as the

number of fixed broadband subscriptions per 100 inhabitants) leads to a 0.9-1.5 per cent increase in GDP, we find a larger

annual GDP contribution, on average 0.03-0.04 per cent for the 2014-2023 period.

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2.2

Infrastructure investments enable the green transition

by reducing CO2 emissions

In the following, we discuss how digital infrastructure investments advance the green transition and

thereby the emission targets of the Danish Climate Act

. Firstly, we investigate how investments in

digital infrastructure enable more energy-efficient technologies related to data use in the network

directly. Secondly, we discuss how advanced digital infrastructure enables new solutions down-

stream, for instance smart grids in the energy sector and route optimisation through data sharing in

the transport industry.

We find that compared to a scenario where energy efficiency had not improved since 2019, im-

proved energy efficiency contributed 31 percentage points to the total reduction in

the network’s

CO2 emissions from its electricity consumption between 2019 and 2023. We estimate this following

two steps.

Firstly, we estimate that the CO2 emissions from network electricity consumption have decreased

by 36 per cent (from 43,137 to 27,542 tons) between 2019 and 2023.

This is driven by two factors:

1) decrease in the CO2 intensity of electricity in Denmark and 2) increased energy efficiency of the

network implying lower CO2 emissions per unit of data consumed.

Secondly, we estimate the CO2 emission in a counter factual scenario where energy efficiency levels

had stayed at 2019 levels and find that CO2 emission would have only decreased by 5 per cent in the

same period. In absolute numbers, this means that, in total, 42,292 metric tonnes of CO2 emissions

have been avoided between 2019 and 2023 due to the increased energy efficiency of the mobile and

fixed broadband network in Denmark compared to 2019 levels.

This is equivalent to the emissions

of 3,250 Danes.

While data needs have been steadily increasing

, continued investments in digital infrastructure

have led to improved energy efficiency of the network. At 12 MWh of electricity per PB of data still

in 2019, by 2023 the energy intensity of mobile and fixed broadband had dropped to 8.1 MWh of

Danish Ministry of Climate, Energy and Utilities, Climate Act (english translation) (link)

We estimate the CO2 emissions from the network electricity consumption by firstly estimating the total amount of traffic

(units in data) in the Danish mobile and fixed broadband network. To calculate this, we use information on the total data

traffic in TDC Net’s entire network between 2019 and 2023

(Annual Report 2023 (link)), split between fixed and mobile via

the total up and download traffic at the consumer level in the fixed and mobile broadband network (Klimadatastyrelsen,

Internet dataark, 2. halvår 2023 (link); Klimadatastyrelsen, Hovedtal dataark, 2. halvår 2023 (link)) and scaled to all of

Denmark based on TDC market shares (TDC (2016), Svar på Erhvervsstyrelsens høring om bredbåndsmarkeder (link); TDC

Net (2023), Annual Report 2023 (link)). Secondly, we use information on the energy intensity, i.e. the amount of electricity

(MWh) consumed per unit of data (PB), in TDC Net’s network between 2019 and 2023

(TDC Net (2023), Annual Report

2023 (link)), assuming this is the same across the Danish network. Thirdly, we use information on the average amount of

CO2 used to produce and deliver one unit of electricity, i.e. the annual average CO2 intensity of electricity from Energinet

(Energinet (2023), Baggrundsdata for Miljøberetningen 2023 (link)). See Appendix A for more details.

To calculate avoided emissions, we use the average annual historical and future emission intensity of electricity (CO2 per

unit of electricity) from Energinet (2023), Baggrundsdata for Miljøberetningen 2023 (link).

If the network’s electricity con-

sumption is in reality uneven throughout the year, using the average annual emission intensity means that we either over or

underestimate the avoided emissions due to network energy efficiency improvements.

According to CONCITO (2023), Danmarks globale forbrugsudledninger, the average

Dane’s global emissions is 13 tons an-

nually.

See for instance Klimadatastyrelsen, Internet dataark, 2. halvår 2023 (link), Klimadatastyrelsen, Hovedtal dataark, 2.

halvår 2023 (link), which shows that total consumer traffic in the mobile network grew from 449,151 TB in 2019, to

1,207,361 TB in 2023, and from 3,579,408 TB to 6,677,543 TB in the fixed network.

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electricity per PB of data. This corresponds to a compound annual decline of 9.5 per cent over five

years, see Figure

13.

Figure 13

Development in the mobile and fixed broadband network’s energy intensity

MWh of electricity/PB of data

12.1

CAGR -9.5%

11.0

9.8

9.2

8.1

2019

2020

2021

2022

2023

Note:

Source:

We assume that the development in the rest of the Danish network is the same as the development in TDC

NET’s network.

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over

a specified period, assuming consistent growth each year.

TDC Net (2023), Annual Report 2023 (link).

The increase in energy efficiency has been made possible by employing more energy-efficient tech-

nologies, such as fibre instead of copper and 5G instead of 4G.

According to Telefónica, FTTH

broadband (fibre to the home) is 85 per cent more energy efficient than the copper network.

Ac-

cording to Ericsson

and Nokia

, 5G is between 70 per cent and 90 per cent more energy efficient

than 4G. In rural areas, sleep mode solutions mean that 5G could consume as little as one tenth the

amount of electricity that 4G does to deliver one unit of data through the network. In urban areas,

an energy reduction of up to 70 per cent is achievable if the entire network is upgraded to 5G.

note however that while 5G is more efficient than 4G per unit of data, 5G users tend to consume

more data.

In addition to reduced emissions due to the increased energy efficiency of the network, future ad-

vancements in ICT technology can enable other industries to reduce emissions, which is crucial for

reaching climate goals and Net Zero targets. Estimates from The World Economic Forum suggest

that ICT solutions, and in particular 5G, could

“help

reduce global carbon emissions by up to 15%

–

or one-third of the 50% reduction required by 2030

–

through solutions in energy, manufacturing,

agriculture and land use, buildings, services, transportation and traffic management.”

Teleindustrien, Dansk Erhverv, and DI (2024), Aftale om Digital Infrastruktur 2025

–

2030, p. 16 (link); TDC Net (2023)

Annual Report 2023, p. 31 (link).

Telefónica (2019), Telefónica issues the first green bond of the telco sector, amounting to 1 billion euros (link).

Ericsson (2023), ICT energy - The energy use and enablement effect of the Information and Communication Technology

industry (link).

Nokia (2020), Nokia confirms 5G as 90 percent more energy efficient (link).

Ericsson (2023), ICT energy - The energy use and enablement effect of the Information and Communication Technology

industry (link).

See for instance Nokia (2024), Nokia report reveals 5G data consumption four times faster than 4G in India (link), which

reports that “5G users on average consume up to 3.6x more data compared to 4G users.”

World Economic Forum (2019), Digital technology can cut global emissions by 15%. Here’s how

(link).

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Smart grids in the energy sector and route optimisation through data sharing in the transport in-

dustry are examples for how developments in digital infrastructure could enable the green transi-

tion, see Box 1. In addition to these two examples, there are many other ways in which digital infra-

structure enables substantial emission reductions. Other examples are digital services replacing

CO2-intensitve physical products, or better digital access enabling online meetings which reduced

travel-related emissions.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Box 1 Examples for how developments in digital infrastructure could enable new

solutions downstream supporting the green transition

Electricity generation and utilities

Electricity demand is expected to increase over the coming two decades. At the same time,

renewables such as solar and wind will generate a substantially larger share of electricity. Ac-

cording to Ericsson, when the utility sector relies more on renewable energy, electricity produc-

ers will face management and operational challenges. Energy production will be more vola-

tile, with many small, scattered power sources and grid capacity limits, putting strain on load

balancing and energy planning. In addition, these challenges will be complicated further by

more households installing solar panels, leading them to become both producers and consum-

ers

–

known as

prosumers

–

of electricity.

According to a MIT Technology Review Insights report

, connected and automated smart

grids, supported by 5G, will play a crucial role in tackling these management and operational

challenges. Through real-time data from smart meters and sensors, smart grids will bring im-

proved automation and control, enabling power companies and utility operators to manage

the two-way energy flows from prosumers and balancing renewable energy fluctuations.

Transports

Integrating transportation and communication networks—such as telematics, smart city analyt-

ics, and traffic management—can lead to efficiencies that reduce emissions. However, ac-

cording to MIT and Ericsson, a key challenge in speeding up decarbonisation of the transport

sector through connectivity is that most transport systems remain siloed. “Fleets

of trucks oper-

ated by logistics firms, public subway operators, or individual drivers of vehicles largely exist in

separate parallel data universes“

One example of how the transportation sector can reduce emissions through data sharing is

route optimisation for electric vehicles, which requires data on road conditions, traffic patterns,

congestion, charging infrastructure, grid use, and vehicle location. This enormous flow of this

data relies on cellular communications, with 5G being essential for a fossil-free transportation

sector.

Other examples of how digital infrastructure could enable the green transition include optimi-

sation of port processes, automated building management systems, automated field robots in

agriculture, smart city solutions, and many more.

Ericsson (2023), ICT energy - The energy use and enablement effect of the Information and Communication Technology

Industry (link).

MIT Technology Review (2021), Decarbonizing industries with connectivity & 5G (link).

See also European Commission, Flexibility markets (link).

Ericsson (2023), ICT energy, The energy use and enablement effect of the Information and Communication Technology

Industry (link).

Ericsson (2023), ICT energy, The energy use and enablement effect of the Information and Communication Technology

Industry (link).

European Green Digital Coalition, Case study calculators (link).

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2.3

Investments are required for keeping digital

infrastructure resilient and safe against cyber-attacks

As societies and economies become more reliant on digitalisation, digital infrastructure is likely to

become even more central for generating economic growth and benefits. However, the increased

digitalisation will not only create more benefits but also more risks in terms of cyber threats.

As we discuss in this section, digital infrastructure in Denmark, similar to the rest of Europe and the

world, faces significant cyber threats. To lower the risk of attacks and network breakdowns, the sec-

tor engages and invests in many activities. As the reliance on digital infrastructure grows, the costs

associated with a potential network break-down or a cyber-attack on an individual or company

level, or for whole regions can be large and are likely to be even larger in the future. Strengthening

network resilience and cybersecurity safeguards the Danish economy and society as a whole, with

the true cost of failure only revealed when the systems break down.

The Centre for Cybersecurity states that “Denmark

is still [2024] a prime target for malicious ac-

tors”.

We can distinguish threats, as identified by the Danish Centre of Cybersecurity, by the agent

and the purpose as well as whether they occur at the user level or the structural level:

•

Threats at structural level:

Cyber espionage, destructive cyber-attacks and cyber activism

are the most common tactics in state-on-state cyber operations and are mainly done by

state-sponsored hackers to steal information or disrupt activities. The purpose of cyber ter-

rorism is to conduct terrorism via the cyber domain.

Threats at user level:

The actors conducting cyber-crime are typically non-political and

opportunistic in pursuit of financial gain. Consequently, cyber-crime can affect everyone.

•

According to the Centre for Cybersecurity, Denmark as a whole faces a high or very high threat re-

garding two out of four structural threats (i.e. cyber espionage and cyber activism) and a very high

threat on user level (i.e. cyber-crime) across all industries, see Figure

14.

On sector level, the risk of

cyber espionage and cyber activism are especially high for Energy and Transport.

European Commission (2020), The EU toolbox for 5G security (link).

Centre for Cybersecurity (2024), The cyber threat against Denmark (link), p. 6.

Based on Centre for Cybersecurity (2024), The cyber threat against Denmark (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Figure 14

The cyber threat against Denmark and key sectors

Centre for Cybersecurity threat assessments across sectors (year of assessment)

Structural level

Cyber

espionage

Cyber

activism

Destructive

cyber attacks

Cyber

terrorism

User level

Cyber crime

Denmark

(2024)

Telecommunications

(2022)

Financial

(2022)

Energy

(2023)

Transport

(2022)

None

Low

Medium

High

Very high

Note:

Source:

The threat assessments are not all from the same year and older assessments might be lower than what is

the case.

Denmark: Centre for Cybersecurity (2024), The cyber threat against Denmark (link); Telecommunication:

Centre for Cybersecurity (2022), The cyber threat against the telecom sector (link); Financial: Centre for

Cybersecurity (2022), The cyber threat against the Danish financial sector (link); Energy: Centre for Cyber-

security (2023), The cyber threat against the Danish energy sector (link); Transport: Centre for Cybersecu-

rity (2022), The cyber threat against the Danish land and air transport (link).

While the specific threat to the telecommunications sector is not higher than for other key sectors,

efforts to mitigate the threats by the telecommunications sector will likely affect the ability to resist

cyber threats across all sectors. The Centre for Cybersecurity has highlighted that more complex

technologies will create increasing demands on the sector to keep digital infrastructure updated and

adequately protected to resist cyber threats.

The telecommunications sector exerts continued efforts to make networks safe (i.e. improve cyber-

security and minimise cyber-threats) and resilient (i.e. minimise downtime) with far reaching bene-

fits across all sectors and for all citizens and businesses using the digital infrastructure. The efforts

include for example increasing cyber security (e.g. updating systems and educating personnel), risk

management (e.g. updating risk management system), business continuity management (e.g. disas-

ter recovery and crisis management), physical safety (e.g. data centre and site safety), and following

Centre for Cybersecurity (2022), The cyber threat against the telecom sector (link).

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current legislation (e.g. NIS2 activities).

While in the following we will focus mainly on cybersecu-

rity, we note that efforts to improve cybersecurity often also support network resilience if for exam-

ple cyber-attacks that threaten the security of supply can be mitigated.

To mitigate

structural level threats,

the sector’s efforts are twofold:

•

The sector invests to ensure safe networks, avoid espionage, support anti-terror activities,

and similar. Besides working closely together with governmental bodies,

operators com-

ply with legal guidelines when selecting equipment suppliers

–

even when this limits the

number of available vendors and/or could lead to higher costs for operators.

•

The sector exerts efforts to build resilient networks with no downtime. This is done by an

ongoing focus on resilience against and fast response to potential incidents.

Structural failures leading to wider breakdowns of telecommunications services can have considera-

ble consequences for all users of the infrastructure and the entire economy. For example, businesses

may face loss of revenue (for businesses that rely on online sales or provide online services) or face

operational disruptions and productivity losses (as e.g. communication channels, cloud-based data

and computing systems, supply chains and logistics break down). Critical services like healthcare,

emergency response, and energy supply may also be affected with far reaching consequences not

just for the economy but society at large. The total costs associated with an internet breakdown is

likely to depend on the exact scale, duration and sectors affected.

We have investigated publicly availably sources to find estimates on the potential costs associated

with a breakdown in digital infrastructure. There are some studies that attempt to provide an indi-

cation of the magnitude of such costs:

•

A widely referenced report from the analysis company Gartner in 2014 reports that large

companies face costs of USD 5,600 per minute of unplanned downtimes and small compa-

nies between USD 137

–

427 per minute.

This corresponds to DKK 2.3 million per hour

for large companies and DKK 57,000

–

177,000 per hour for smaller companies.

•

A more recent study conducted by the Ponemon Institute from 2016 finds that the average

cost of an unplanned outage was USD 9,000 per minute per incident for data centres.

This corresponds to DKK 3.7 million per hour.

•

A study by Deloitte in 2016 of the economic impact of disruption to internet connectivity

finds that temporary internet shutdowns in

‘high connectivity’

countries (corresponding to

a 35 per cent broadband penetration which is very low today) could lead to an economic

loss of around 1.9 per cent of daily GDP.

Based on information from telecommunications operators.

Center for Cybersikkerhed (2022), En sikrere teleinfrastruktur i Danmark (link).

See e.g. Berlingske (2024), TDC Net bekræfter: Alt Huawei-udstyr er væk til tiden (link).

See e.g. TDC Net (2023), Annual report 2023 (link), p. 47.

Forbes (2022), How to Guard Against The Cost Of Unplanned Downtime And Network Outages (link) and Pingdom (2023),

Average Cost of Downtime per Industry (link).

We do not adjust prices by inflation. We have converted to an hourly DKK cost by multiplying with 60 (number of minutes)

and using the average 2023 USD/DKK exchange rate of 6.8895.

Ponemon Institute (2016), Cost of Data Center Outages

We do not adjust prices by inflation. We have converted to an hourly DKK cost by multiplying with 60 (number of minutes)

and using the average 2023 USD/DKK exchange rate of 6.8895.

Deloitte (2016), The economic impact of disruptions to internet connectivity

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As an illustrative example, we use the per minute cost range for small and large companies, from

Gartner 2014 mentioned above, to calculate a high-level, exploratory estimate of the cost associated

with a one-hour breakdown of telecommunications services. This illustration suggests that in aggre-

gate it could cost Danish companies as much as DKK 3.5 to 6.5 billion per hour

if digital infra-

structure breaks down and companies experience downtime. The effect will be larger with longer

periods of downtime. These sources are high-level estimates with a margin of uncertainty and do

not constitute a full-fledged model of the economy, thus also the numbers which, on this basis, we

have calculated for Denmark should be interpreted as high-level, exploratory estimates.

Regarding

user level threats,

the telecommunications sector exerts efforts to reduce cyber-crime

by providing spoofing protection, blocking links and websites, and providing SMS and mobile iden-

tity protection.

Such efforts generate benefits to citizens and businesses lowering the societal cost

related to cyber-crime, see Box 2.

We estimate this using an estimate of the average cost of downtime of USD 5,600 per minute for large enterprises and be-

tween USD 137-427 for smaller companies. We extrapolate this per minute cost linearly to estimate the cost per hour and

for longer time intervals. However, the true cost might be decreasing with time as companies adjust operations. We use the

number of large companies in Denmark (927) and the number of companies with between 10-249 employees (24,456) in

2022, see Statistics Denmark. FGF3: Preliminary general enterprise statistics by industry (link). We exclude the companies

with less than 10 employees to reduce the risk of overestimating the effect. See Appendix A for a detailed description of the

methodology.

See e.g. Teleindustrien, Dansk Erhverv, and DI (2024), Aftale om Digital Infrastruktur 2025

–

2030 (link).

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Box 2 The cost of cyber-crime

Cyber-crime affects both individuals and businesses and can in some cases have wide societal

impacts.

Cyber-crime targeting individuals can lead to considerable costs for those affected:

A German study from 2015 estimated that cyber-crime against individuals

–

phishing,

identity theft, consumer fraud, and malware

–

leads to societal costs of 0.1 per cent of

GDP every year.

Translating this finding to a Danish context, we estimate that the yearly societal cost of

cybercrime could be up to DKK 2.8 billion.

Cyber-crime targeting companies can lead to considerable costs for the company and within

certain sectors cyber-attacks lead to even larger societal impacts.

One example of cyber-crime targeting a key societal sector, is the digital ransomware

attack on the Colonial Pipe

–

a pipeline from Texas to New Jersey in the US

–

in 2021. The

cyber-attack created a widespread disruption of US fuel supply along the East Coast,

such that the president declared a state of emergency.

We do not know the exact

societal cost of such an attack, but they are significant.

An example from Denmark is the cyber-attack on A.P. Møller Mærsk in the summer of

2017, which disrupted shipping and terminal operations for 12 to 24 hours. The attack

resulted in a direct loss for Mærsk of around DKK 1.6 to 1.9 billion

and likely impacted

customers by interrupting their supply chains.

Leading US experts expect the global annual cost of cybercrime to triple from USD 8.4 trillion in

2022 to more than USD 23 trillion in 2027.

Assuming a similar trend in Denmark, the cost of cy-

bercrime could increase rapidly in the coming years.

DIW Berlin (2015), Tatort Internet: Kriminalität verursacht Bürgern Schäden in Milliardenhöhe (link).

Using GDP in 2023 of DKK 2,805 bn. Note this is only an approximation since the results are almost 10 years old and Den-

mark is significantly more digitalised than Germany. This can have conflicting effects since Danes are likely more internet

literate which, we expect, would decrease the cost of cybercrime but on the other hand Denmark is more digitalised and

hence likely more vulnerable to cybercrime.

See e.g. Coverlink (2024), Cyber Case Study: Colonial Pipeline Ransomware Attack (link).

See Finans (2017), Hackerangreb på Mærsk koster mindst 1,6 mia. kr. (link).

U.S. Department of State (2023), Digital Press Briefing with Anne Neuberger, Deputy National Security Advisor for Cyber

and Emerging Technologies (link).

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CHAPTER 3

CONTINUED INVESTMENTS ARE NEEDED TO

MAKE DIGITAL INFRASTRUCTURE

FUTUREPROOF AND DELIVER FURTHER

BENEFITS

In this chapter, we outline the need for continued investment in digital infrastructure to ensure that

it remains future-proof and continues delivering socio-economic benefits. As digital demands grow

and technological developments such as 5G, edge computing, and AI reshape the landscape, sub-

stantial investments are required to keep pace with new advancements, meet connectivity targets

and increasing safety requirements (see Section 3.1).

Furthermore, we explore how ongoing investments can deliver significant benefits to society. First,

we show that continued investments at levels similar to the last five years will support DKK 5.6 bil-

lion in GDP and 8,000 jobs yearly until 2030 (see Section 3.2.1). Secondly, we find that increased

download speeds by further adoption of modern broadband technologies could contribute 0.10 to

0.18 per cent annually to GDP until 2030 (see Section 3.2.2). Finally, we explore how further adop-

tion of modern broadband can reduce CO2 emissions (see Sections 3.2.3).

3.1

Substantial investments are needed to keep up with

connectivity targets, demand, and technological

developments

Historically, the Danish telecommunications sector has been fast at embracing and implementing

new technologies. This has made Denmark one of the most digitalised countries in Europe and the

world and has created economic benefits for society, as discussed in Chapters 1 and 2. However,

past successes do not ensure future ones, and today's telecommunications networks are facing a

major transformation. A future-proof digital infrastructure relies on networks capable of respond-

ing to evolving societal needs alongside significant technological advancements.

As we discuss in this section,

futureproof digital infrastructure needs to i) achieve the EU’s 2030

connectivity targets

, and ii) respond to the increasing demand for bandwidth, speed, low latency,

and ubiquitous access required to iii) support the mass adoption of emerging technologies such as

edge computing, cloud computing, or artificial intelligence, and iv) comply with increasing security

requirements and legislation. This requires large-scale investments, including network equipment,

civil engineering works, and labour.

Firstly, the European Commission has set ambitious

connectivity targets

for the EU and has esti-

mated that the investment needed to reach connectivity goals in Europe alone could be as high as

European Commission (2024), State of the Digital Decade 2024 report (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

EUR 148 to 227 billion.

The digital infrastructure targets include 100 per cent coverage by 2030 of

known technologies such as 5G, Fibre to the Premises, and Fixed Very High-Capacity Networks, see

Figure

15.

Additionally, the European Commission aims to increase the number of edge nodes in

the EU tenfold to 10,000 in 2030 and have targets for both semiconductor production and quantum

computing.

Figure 15

European digital infrastructure targets

Overall 5G coverage

5G coverage in 3.4-3.8 GHz

Fibre to the Premises

Fixed Very High-Capacity Network

Edge Nodes

1,186

8,814

100% coverage

10,000 edge nodes

Now

2030 target

Note:

Source:

We have only included targets directly targeting the telecommunications sector.

European Commission (2024), State of the Digital Decade 2024 report (link).

While the investments needed to reach the connectivity targets are likely lower in Denmark com-

pared to other EU countries, since Denmark is a leader in terms of digital infrastructure (see Sec-

tion 1.3), some additional investments are still required to reach all targets fully. Similar to the rest

of Europe, 5G in Denmark is not yet

‘Full

5G’

or ‘Stand-alone 5G’,

which requires new 5G core to

support the new technologies with

‘next-generation capabilities’,

but to some extent still uses 4G

infrastructure.

Secondly, expected

growth in data consumption

–

especially over mobile networks

–

will re-

quire further investment in digital infrastructure to ensure a robust network that can accommodate

future data consumption. The demand for digital services is expected to increase substantially both

in Denmark and in the EU as a whole. In Denmark, data consumption over mobile networks is fore-

casted to increase from around 22 GB per month in 2022 to 96 GB per month in 2030 correspond-

ing to a compound annual growth rate (CAGR)

of 20 per cent, see Figure

16.

The trend is similar

for fixed infrastructure where consumption will increase to more than 1,000 GB per month in 2030

European Commission (2024), White Paper

– How to master Europe’s digital infrastructure needs?

(link). The range is

including additional investments in ‘transport corridors’:

“current Digital Decade

targets for Gigabit connectivity and 5G

may require a total investment of up to EUR 148 billion

(…).

A further EUR 26-79 billion of investments may be required

under different scenarios to ensure full coverage of transport corridors including roads, railways, and waterways, bring-

ing the required total investment needs for connectivity alone to over EUR 200 billion”.

European Commission (2024), State of the Digital Decade 2024 report (link).

See ETNO (2024), State of Digital Communications 2024 (link), p. 98.

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a specified period, assuming con-

sistent growth each year.

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up from 278 GB per month in 2022 corresponding to a CAGR of 18 per cent.

We expect that espe-

cially for

–

but not limited to

–

mobile networks further investments are needed to accommodate

the growth in data consumption.

Figure 16

Forecast of data consumption over mobile infrastructure in Denmark

GB per month

100

CAGR +20%

2022

2023

2024

2025

2026

2027

2028

2029

2030

Note:

Source:

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a specified pe-

riod, assuming consistent growth each year.

Arthur D. Little (2023), The evolution of data growth in Europe (link), Table 1.

Thirdly,

new technologies

will drive an increased need for investments. In a whitepaper concern-

ing digital infrastructure needs, the European Commission states that new business models and en-

tirely new markets are emerging from technological developments around the App Economy, IoT,

Data Analytics, or AI. These applications will require a continuous exponential increase in data pro-

cessing, storage, and transmission. A new model of networks relies not only on traditional elec-

tronic communications equipment, network and service providers but also on a complex ecosystem

of cloud, edge, content, software and component suppliers, amongst others.

In the same white paper, the European Commission highlights that Europe's traditional position of

strength could be at risk as hybrid networks, edge computing, and full cloud migration change the

nature of digital infrastructure. To preserve a leading global position in telecommunication equip-

ment and competencies, it is important to embrace and integrate the new technologies when they

become available.

These new technologies and business cases entail that successfully reaching connectivity goals and

preparing for future demand will not imply that digital infrastructure is fully developed. Instead, it

will only be a step in the continued development that requires significant investments going for-

ward.

Arthur D. Little (2023), The evolution of data growth in Europe (link), Table 1.

European Commission (2024), White Paper

– How to master Europe’s digital infrastructure needs?

(link).

European Commission (2024), White Paper

– How to master Europe’s digital

infrastructure needs? (link).

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Finally, the implementation of

stricter security requirements and legislation

across the EU,

such as the NIS2 Directive and the Critical Entities Resilience (CER) Directive, are expected to in-

crease investments in both cybersecurity and physical security measures.

The NIS2 Directive, which came into force in 2023, modernises cybersecurity requirements to ac-

count for the growing digitisation and evolving threats across sectors. It expands the scope of cyber-

security measures and imposes new requirements on both public and private entities, including the

telecommunications industry.

This expansion is likely to compel telecommunications operators to

invest in enhancing their cybersecurity infrastructure, including systems for incident response,

physical security upgrades, and recovery.

The Critical Entities Resilience (CER) Directive, which came into effect in early 2023, imposes obli-

gations on Member States to ensure the resilience of essential services, including those provided by

the digital infrastructure sector. This directive covers telecommunications networks as a critical ser-

vice, requiring operators to conduct regular risk assessments and implement measures to safeguard

their infrastructure.

3.2

Continued investments are required to keep delivering

value and socio-economic benefits

In this section, we demonstrate how future telecommunication infrastructure investments, along

with the adoption of better technologies, will provide continued value and socio-economic benefits

to the Danish economy.

Firstly, we find that if the telecommunications

sector’s

infrastructure investments continue at the

levels realised in 2019-2023, they will contribute DKK 5.6 billion to the Danish economy and sup-

port 8,000 jobs annually until 2030 in direct and induced effect. Secondly, we explore how future

increases in download speeds will contribute to GDP, identifying an annual contribution of 0.10-

0.18 per cent to GDP until 2030. This is equivalent to between DKK 2.9 and 5.0 billion in GDP con-

tribution annually. Finally, we estimate that between 2023 and 2030 further improvements in the

network’s energy efficiency could contribute between 17 and 24 percentage points to

the total fur-

ther reductions of 83 to 89 per cent

in the network’s emissions from electricity consumption.

We also note that in addition to these findings, continued investments in cybersecurity and resili-

ence will generate significant socio-economic benefits in the future as digital dependency is likely to

become even stronger.

3.2.1 Future investments will continue to provide value to the Danish

economy

Over the last 10 years, the telecommunications sector in Denmark has invested 20 per cent of reve-

nue on average with higher levels in recent years (2019-2023) than previously (2014-2018), see Fig-

ure

These (past) infrastructure investments have provided substantial economic value and socio-

economic benefits, as described in Chapters 1 and 2.

European Commission (2022), Directive on measures for a high common level of cybersecurity across the Union (NIS2 Di-

rective) (link).

NIS2Directive, Digital Infrastructure sector (link).

Critical-entities-resilience-directive, The Critical Entities Resilience Directive (CER) (link).

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While legacy investments will continue to provide benefits, substantial further investments by the

sector are required to keep pace with technological developments and increasing demand for digital

services and to fulfil connectivity targets, as discussed above. However, future investment levels are

uncertain by nature and are driven among other things by the framework conditions faced by the

sector.

If future investments stay at similar levels as realised in 2019-2023, i.e. DKK 10.3 billion yearly, we

estimate that investment will contribute DKK 5.6 billion to the Danish economy and support 8,000

jobs yearly in direct and indirect effects until 2030. Additionally, induced effects will contribute

DKK 3 billion to GDP and support 3,100 jobs yearly. This level of investments is in line with what

the sector considers as potential yearly investments towards 2030 (i.e. DKK 60 billion) if frame-

work conditions are investment friendly.

However, if investments drop to a lower level, the economic contributions of GDP and employment

will consequentially also be lower. For example, if investments drop by 33 per cent, we estimate that

this will

–

all else equal

–

lead to DKK 1.9 billion lower GDP contribution and 2,700 fewer jobs (di-

rect and indirect effects) supported by investments in the telecommunications sector every year.

3.2.2 Continued investments in modern broadband technologies could

contribute 0.10 to 0.18 per cent annually to GDP until 2023

As evident in Figure

11,

download speeds have increased significantly in recent years. With contin-

ued technological advancement, as described in Section 3.1, and the adoption of modern broadband

technologies, this trend is likely to continue.

To estimate the future impact on GDP of increasing download speeds, we consider two download

speed growth scenarios, see Figure

below. First, for the optimistic scenario, we assume that

download speeds will grow at the Cisco

forecasted compound annual growth rate (CAGR)

plus 5

per cent, resulting in a projected CAGR of 24.2 per cent. Second, for the conservative scenario, we

apply the Cisco forecasted CAGR minus 5 per cent, giving a projected CAGR of 14.2 per cent.

Teleindustrien, Dansk Erhverv, and DI (2024). Aftale om Digital Infrastruktur 2025

–

2030 (link).

We estimate his using the same method as in Section 1.1.2, see Appendix A for further information.

A CAGR of 19.2 per cent is estimated in Cisco (2020), Cisco Annual Internet Report (2018-2023) White Paper (link).

CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a specified period, assuming con-

sistent growth each year.

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Figure 17

Scenarios for future fixed broadband download speeds in Denmark

Mbps

1,466

Optimistic scenario (CAGR 24.2%)

Conservative scenario (CAGR 14.2%)

951

766

815

714

1,181

617

496

400

368

420

479

547

625

2024

Note:

2025

2026

2027

2028

2029

2030

Source:

Cisco estimates a CAGR of 19.2 per cent. Based on this, we add 5 per cent in our optimistic scenario, re-

sulting in a CAGR of 24.2 per cent, and subtract 5 per cent in our conservative scenario with a CAGR of

14.2 per cent. CAGR (Compound Annual Growth Rate) represents the average annual growth rate over a

specified period, assuming consistent growth each year.

Copenhagen Economics based on Klimadatastyrelsen, Internet dataark, 2. halvår 2023 (link) and Cisco

(2020), Cisco Annual Internet Report (2018-2023) White Paper (link).

Based on these two growth scenarios for future fixed broadband download speeds, we estimate for

Denmark an average annual GDP contribution from increasing download speeds of 0.10 per cent in

the conservative scenario, and 0.18 per cent in the optimistic scenario, equivalent to DKK 2.9 to 5.0

billion in GDP

Since fixed and mobile broadband adoption, measured in the number of subscribers, have been sta-

ble in recent years in Denmark, we do not estimate the future contribution of broadband adoption

to GDP

–

while broadband adoption as a driver of GDP has already been established in the litera-

ture and should be considered an ongoing economic effect contributed by the present digital infra-

structure in Denmark.

3.2.3 Further adoption of modern broadband technologies could reduce

CO2 emissions further

Past investments in digital infrastructure

in parallel with consumers’ increased adoption of modern

broadband technologies led to improved energy efficiency of the network, as discussed in Section

2.2. Improvements

in the network’s energy efficiency

observed in the past (see Figure

13)

are likely

to continue in the future if sufficient investments materialise and increased adoption continues. 5G

will continue to become even more energy efficient as the technology matures. Orange estimates

that 5G technologies

“divide

the energy consumption per gigabit transported by a factor of 10

Based on the GDP in 2023 of DKK 2,805 billion, see Statistics Denmark (link).

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compared to 4G once they reach maturity by 2025, and then by a factor of 20 by 2030”

. In addi-

tion, further technological advancements, for example optimisation of the network based on artifi-

cial intelligence, are likely to have an impact on future energy efficiency.

To estimate the environmental benefits of future network energy efficiency improvements, we con-

sider two scenarios.

First, for the

optimistic scenario,

we assume

that the network’s total electricity consumption re-

mains constant. This is in line with Ericsson’s finding that there does not seem to be a correlation

between data traffic and electricity consumption.

In addition, we use forecasts for data traffic

growth in Denmark by management consulting firm Arthur D. Little, who estimate a 20 per cent

and 18 per cent CAGR for mobile and fixed data traffic, respectively.

Combined, the electricity con-

sumption and data traffic forecasts result in an acceleration of network energy intensity reductions,

from a historic CAGR of -9.5 per cent between 2019 and 2023, to a CAGR of -15.5 per cent from

2024 to 2030.

Second, for the

conservative scenario,

we assume that the network energy intensity continues to

decrease at the historical rate, that is a CAGR of -9.5 per cent, see Figure

18.

Orange (2020), 5G : energy efficiency “by design”

(link).

Teleindustrien, Dansk Erhverv, and DI (2024), Aftale om Digital Infrastruktur 2025

–

2030 (link), p. 16.

Ericsson (2023), ICT energy - The energy use and enablement effect of the Information and Communication Technology

Industry (link).

Arthur D. Little (2023), The evolution of data growth in Europe (link), Table 1 and 2.

For a more detailed description of the methodology, see Appendix .

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Figure 18

Future development in the mobile and

fixed broadband network’s energy intensity

MWh of electricity/PB of data

6.9

7.4

6.7

5.8

4.9

Optimistic scenario (CAGR -15.5%)

6.0

Conservative scenario (CAGR -9.5%)

5.5

5.0

3.5

4.2

3.0

4.5

4.1

2.5

2024

Note:

2025

2026

2027

2028

2029

2030

Source:

In the conservative future scenario, we assume that the historical trend continues. In the optimistic future

scenario, we assume that the network’s total

electricity consumption remains at its 2023-level, while the

data traffic in the network increases by 20 per cent and 18 per cent annually for the fixed and mobile in-

frastructure, respectively. CAGR (Compound Annual Growth Rate) represents the average annual growth

rate over a specified period, assuming consistent growth each year.

Copenhagen Economics based on TDC NET (2023), Annual Report 2023 (link); Arthur D. Little (2023), The

evolution of data growth in Europe (link).

We estimate that in Denmark,

the network’s emissions from its electricity consumption could

de-

crease by 89 per cent in the optimistic scenario, or 83 per cent in the conservative scenario, between

2023 and 2030. Of this total reduction,

we estimate that improvements in the network’s energy effi-

ciency could contribute between 24 percentage points in the optimistic scenario, and 17 percentage

points in the conservative scenario.

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CHAPTER 4

CHALLENGES TO CONTINUED INVESTMENT

As covered in previous chapters, continued investments will be required to ensure future-proof digi-

tal infrastructure. However, operators across the EU and in Denmark may face challenges that

weaken their ability and incentive to continue investing in digital infrastructure.

Firstly, we explain the challenges that

may weaken the sector’s ability and incentive to invest,

in-

cluding administrative constraints and low return on investments in digital infrastructure (see Sec-

tion 4.1).

Secondly, we explain how the regulatory framework that governs the telecommunications sector

may influence

the sector’s ability

and incentive to invest. We focus on sector-specific regulation, ad-

ministrative processes, and competition law which sets boundaries for operators’ ability to collabo-

rate and consolidate (see Section 4.2).

4.1

Challenges that may weaken

the sector’s

ability and

incentive to invest

Similarly to the rest of Europe, operators in Denmark may face challenges that

weaken the sector’s

ability and incentive to invest. In this section, we describe how

operators’

ability and incentive to

invest may be weakened by administrative and financial obligations as well as by insufficient re-

turns on investments.

4.1.1 Administrative and financial obligations

Long and burdensome administrative procedures may weaken operators’ ability and incentive to

invest in digital infrastructure. Investments in fixed or mobile network infrastructure (e.g., masts,

towers or ducts) often involve administrative procedures such as permit granting, as well as the

conditions at which agreements are obtained. This creates at least two challenges for operators.

First,

permitting rules can vary between regions of municipalities, making compliance complex and

uncertain.

Second,

processes can be lengthy and burdensome, thus consuming resources and poten-

tially delaying network deployment or expansion.

The European Commission has acknowledged that administrative procedures can hinder invest-

ments in networks and tried to address it. Several European initiatives have sought to reduce the

administrative burden of deploying network infrastructure.

For example, the Gigabit Infrastruc-

ture Act established principles to simplify licensing and authorisation procedures in the EU

E.g. European Parliament and the Council (2024), Regulation (EU) 2024/1309

(Gigabit Infrastructure Act, “GIA”) (link)

and European Parliament and the Council (2014), Directive 2014/61/EU

(Broadband Cost Reduction Directive, “BCRD”)

(link).

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(including permitting and rights of way) and sought to address the lack of harmonisation that previ-

ous initiatives failed to eliminate.

In Denmark, operators have faced important barriers to timely investments. Danish operators con-

tributing to this study told us that they spend significant resources in selecting and getting agree-

ments from landowners and in obtaining municipal permits to build masts and fibre infrastructure

across the country. This is also in line with reports from Danish Authorities, as we outline below.

Firstly,

operators report that finding suitable areas to deploy infrastructure is challenging, both in

cities and rural areas. In cities, there are significant restrictions due to local urban planning and leg-

islation. In rural regions, there are frequent issues concerning the closeness to current structures,

while confirming that the site is conducive for mast placement is a related uncertainty. An addi-

tional challenge concerns voluntary agreements with landowners, with some operators reporting an

increasing tendency for landowners to withdraw their agreement during the installation of infra-

structure.

Secondly,

permitting can be lengthy and burdensome. The main challenges relate to the complexity

of the processes, the lack of resources to handle the procedures in the municipalities and the

lengthy processing (e.g., through political committees and planning appeals boards involved in the

approval process). Based on input from a tower company active in Denmark, getting a permit can

take on average more than 11 months from when the request is submitted. The average time for per-

mit approvals experienced by some operators has increased 88 per cent in the last 4 years, see Fig-

ure

19.

Figure 19

Average waiting time for mast permit approval

Days

+88%

298

347

257

185

187

2020

2021

2022

2023

2024

Note:

Source:

The waiting time is measured as the number of days between the date of the application for a permit,

and the date at which all permits have been granted.

Copenhagen Economics based on input from a Danish tower company.

The lack of harmonisation in the implementation of the BCRD was one of the reasons why the European Commission re-

placed the BCRD with the GIA. According to BEREC (2021), BEREC Opinion on the Revision of the Broadband Cost Reduc-

tion Directive (link),

the BCRD “was transposed with significant delays in most Member States and its implementation has

been inconsistent across the EU, therefore, hindering the potential to foster a more efficient and fast deployment of elec-

tronic communications networks across

the EU”.

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This is consistent with reports from the Danish Authorities, which in recent years have underlined

the need to simplify procedures related to installing digital infrastructure. For example:

•

In 2020, in the action plan for 5G rollout published in 2020, the Danish Energy Authority

(DEA) recognised the need to (i) reduce

“administrative barriers to rolling out 5G net-

works”

(ii)

“prepare

guidelines on standardised case administration for public authori-

ties”

and noted

that it was ‘of

great importance to mobile operators to have good and pre-

dictable conditions for their work’.

They proposed to create such conditions by ensuring

smooth case administration and hereunder a more uniform case administration across the

country’s municipalities.

In 2021, the DEA noted that

“Strict

Danish rules governing access to the rural open land-

scape and the preservation of the open coastal line are, however, still among the main

challenges for the operators in providing full coverage. This is true even though the socie-

tal need for a nationwide digital infrastructure is well acknowledged.”

In 2022, the Agency for Data Supply and Infrastructure published a toolbox to facilitate

the rollout of digital infrastructure and reduce the complexity associated with building an-

tennas and masts faced both by the telecommunications sector and the municipalities. The

toolbox recognises that municipalities retain significant autonomy in establishing rules af-

fecting network rollout and provides advice to municipalities to create transparency about

documentation needs and an established practice that the operators can follow.

•

In addition to administrative procedures, potential financial obligations can further limit operators’

ability and incentive to invest. Such obligations translate into additional costs, i.e., consuming fi-

nancial resources that could otherwise be channelled to investments. Such obligations include (i)

spectrum licencing fees, (ii) regulatory compliance costs, (iii) infrastructure sharing and access fees,

and (iv) taxes and levies.

4.1.2 Recent financial performance is indicative of concerns over

sufficient returns on future investments

Many European policymakers have expressed concern regarding the economic sustainability of in-

vestments in digital infrastructure. The low profitability of these investments is perceived by some

as a significant threat to the operators’ ability and incentive to continue making further invest-

ments. The lack of economic sustainability of investments is especially a concern given the ongoing

digital transformation in the EU where substantial investments are needed to keep up with techno-

logical developments, as noted by the European Commission

100

and in the Draghi report

101

100

101

See Danish Energy Agency (2020), 5G Action Plan for Denmark (link), p. 8.

International Telecommunication Union (2020), Balancing infrastructure sharing

–

The Danish experience (link).

Styrelsen for Dataforsyning og Infrastruktur (2022), Otte gode råd til kommuner om mastesager (link).

While not clear-cut, there is some evidence that high spectrum costs hamper investments and reduce consumer welfare

under certain circumstances. See e.g., NERA (2017), The Impact of High Spectrum Costs on Mobile Network Investment

and Consumer Prices (link).

European Commission (2024), White Paper -

How to master Europe’s digital infrastructure needs?

(link), p. 10.

Draghi notes that

“the

declining profitability of the telecom sector now may represent a risk for industrial companies in

Europe, in a phase when state of the art infrastructure is required to digitise manufacturing, supply and distribution

chains. this poses significant challenges to raise capital from lenders and investors.”

Draghi (2024), The future of Euro-

pean competitiveness - In-depth analysis and recommendations (link), p. 70.

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There is a growing concern that operators may have been unable to recover the costs of their recent

investments. For example, Draghi (2024) notes that

“in

recent years, return on capital has been

lower than the weighted average cost of capital”

102

. Similarly, the European Commission has also

recently suggested that investments by EU operators yield low profitability.

103

Insofar as returns on investment are insufficient to recover the costs and enable sufficient return on

investments, operators could see future investments as uncertain and potentially unsustainable.

This may impact their ability and willingness to continue to invest in new digital infrastructure. As

the European Commission explains, low profitability may lead to

“(…)

lack of market confidence in

the potential for sustainable long-term growth in revenues”,

thus

hindering operators’ ability and

incentive to invest.

104, 105

It would be necessary to conduct a detailed analysis of profitability to assess whether operators in

Denmark have been able to recoup the costs of their investments. While an exhaustive profitability

analysis is beyond the scope of this study, there is indicative evidence suggesting that operators in

Denmark face similar challenges as the industry across the rest of the EU, see Box 3.

Box 3 Return on capital employed in the Danish telecommunications sector

There are different

methods to assess operators’ profitability,

financial performance and invest-

ment incentives. One of the methodologies involves comparing the Return on Capital Em-

ployed (ROCE) and the Weighted Average Cost of Capital (WACC). This comparison measures

the efficiency with which an operator generates profits from its investments (i.e., capital ex-

penditure).

In recent years, the Return on Capital Employed (ROCE) by the largest telecommunications

operators in Denmark has been lower than the Weighted Average Cost of Capital (WACC) in

the EU proposed by Draghi (2024), see Figure

20.

Low profitability can signal that operators will

be unable to recover the cost of future investments (similar to past investments in recent years),

which can also affect

operators’

ability to secure enough funding for new investments.

106

While the WACC analysis provides a valuable point of reference and has been reported in EU

policy reports and by the UK regulator Ofcom, it should be approached with caution. Firstly, a

ROCE vs WACC comparison offers only a partial view on profitability, and a more detailed

analysis (out of the scope for this report) would require complementary analysis. Secondly, an

average WACC at the EU level may not accurately represent the cost of capital faced by

102

103

104

105

106

The report compares the EBIT adjusted return on employed capital with the average weighted cost of capital (WACC).

See, e.g., European Commission (2024), White Paper -

How to master Europe’s digital infrastructure needs?

(link).

European Commission (2024), White Paper -

How to master Europe’s digital infrastructure needs?

(link).

Draghi also discusses how low profitability can make

“(…)

the financing of future investments problematic”.

See Draghi

(2024), The future of European competitiveness - In-depth analysis and recommendations (link), pp. 71.

Financing large-scale investments typically requires a combination of instruments beyond the reinvestment of operational

profits, involving borrowing capital (through debt instruments) or ensuring equity infusions. Regardless of the instrument

or combination of instruments chosen, the expected profitability of investments likely affects the ability to secure funding

for investments in digital infrastructure.

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Danish operators (due to different economic conditions or regulatory environment).

107

Third,

there is some uncertainty about how the WACC from Draghi (2024) was calculated (e.g.,

whether it includes only network operators or also virtual operators) and other authors have es-

timated different costs of capital for telecom operators in Europe.

108

Figure 20

Return on capital employed is below the weighted average cost of capital per

year

DKK/month

Note:

Recognising that there are company and country-specific differences in the WACC, for the purposes of

this illustration, we have used the WACC of the EU-wide telecommunications sector in line with the com-

parison set out by Draghi (2024). ROCE is a pre-tax measure of the return of the capital employed. We

calculated the weighted average ROCE in Denmark based on aggregated financial data from TDC Net,

3DK, Telenor DK, Telia (estimated ROCE for operations in Denmark, see appendix).

109

It is unclear whether

the WACC reported by Draghi (2024) is pre-tax or post-tax. We take a conservative approach and con-

sider that the reported WACC is pre-tax (thus potentially underestimating it). The comparison between

ROCE and pre-tax WACC offers a reasonable basis to assess profitability

without accessing companies’

management accounts.

110

Source:

Copenhagen Economics based on Draghi (2024) for WACC (EU) and ROCE (EU) and publicly available

information from financial statements and reports to calculate ROCE (DK) (see detailed calculations for

ROCE in Denmark and sources in the Appendix A).

In particular, Danish operators appear to have faced a challenging balance between high invest-

ments and low retail prices. In 2022, Denmark was estimated to have the highest capex (encom-

passing costs related to upgrading and maintaining networks) per capita among 27 European coun-

tries.

111

At the same time, Denmark has been one of the countries in Europe with the lowest prices

107

108

For example, i) KPMG estimated that cost of capital for telecom operators in Germany, Austria and Switzerland in 2022 and

2023 was on average 5.8 and 7.3 per cent, respectively - see KPMG (2023), Cost of Capital 2023 (link); ii) PWC estimates

that the average WACC for telecom operators in Germany was 5.8 per cent

– see PWC’s

eValuation Data (link).

For example, Professor Aswath Damodaran of NYU Stern, using several sources (Bloomberg, Morningstar, Capital IQ and

Compustat), estimates that in the beginning of 2023 and in the beginning of 2022 the WACC for companies in Europe

providing telecom services was 7,18 and 3.92 per cent, respectively

–

below the estimates presented in Draghi (2024). See

Damodaran Online (link).

Norlys Fibernet

– Norly’s group

arm owning the fibre network

–

was not included because the publicly available financial infor-

mation does not allow for

a comparison of Norly Fibernet’s ROCE across

the period considered. The available financial information is

not adjusted to account for the impacts of (i) the merger of Norlys Fibernet A/S with both SE Fibernet A/S and Verdo A/S, and (ii)

the demerger of the Digital Business activities to Stofa A/S.

109

110

111

See, e.g., Oxera, Ava, (2003), Assessing profitability in competition policy analysis, Economic Discussion Paper 6, pp. 10-12.

(link).

See Analysys Mason (2024), Higher-income European countries have the highest capex intensities (link).

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for mobile and fixed broadband.

112 113

Additionally, we note that operator’s

profits (EBIT) have

de-

creased by 13.4 per cent in 2023 compared to 2022 in real terms.

114

One commonly cited reason for insufficient profitability is insufficient scale. It is well documented

that telecommunications networks exhibit significant economies of scale with high up-front invest-

ments in establishing infrastructure (cables, masts, antennas, etc.). Larger scale allows operators to

spread large fixed costs over a greater number of users, thereby leveraging economies of scale to

make investments more efficient. Consequently, as operators increase their customer base, they can

significantly lower their average costs, enhancing their investment capacity.

Several reports, including from the European Commission, suggest that operators in the EU may

lack the scale necessary to make investments in digital infrastructure

–

i.e., that market fragmenta-

tion may be weakening the operator’s ability and incentive to invest significantly in infrastructure.

115

The policy reports suggest that European operators generally have less scale compared to operators

in other regions as they have fewer customers on average.

116

While a detailed analysis of the economies of scale of Danish operators is beyond the scope of this

study, indicative evidence suggests that operators in Denmark face similar challenges as the indus-

try across the rest of the EU. By way of an indication, we note that the Danish mobile operators

serve on average fewer customers than the EU average, i.e. less than half the average European op-

erator’s scale.

While Danish mobile operators serve on average less than 2 million customers

117

, the

average number of subscribers per operator is 5 million in the EU, as Letta reports.

118

4.2

Policy instruments that affect the sector’s

ability and

incentive to invest

In this section, we discuss the key elements of the legal framework governing the telecommunica-

tions sector. Policymakers and regulators can use legislation and policy to

influence operators’

abil-

ity and incentive to invest in digital infrastructure. Firstly, we set out the main regulatory tools that

policymakers can use to address administrative and financial constraints. Secondly, we outline how

different forms of consolidation and network sharing can increase investment incentives by gener-

ating cost efficiencies and discuss how there is a growing emphasis in EU policy debate on

112

113

114

115

116

117

118

See European Commission (2022) Mobile and Fixed Broadband Prices in Europe 2022 (link).

Caution should be exercised with simple ARPU comparisons. For instance, these comparisons may not account for differ-

ences in vertical integration among operators, nor do they distinguish between market power and higher quality (and thus

more expensive) services.

Klimadatastyrelsen, Økonomiske Nøgletal for Telebranchen 2023 (link).

See e.g., Draghi (2024), The future of European competitiveness - In-depth analysis and recommendations (link); European

Commission (2024), White Paper -

How to master Europe’s digital infrastructure needs?

(link); Letta (2024), Much more

than a market - Speed, Security, Solidarity (link), pp. 52:

“enduring

fragmentation hinders the scale and growth of pan-

European operators, limiting their ability to invest”.

See e.g., Letta (2024), Much more than a market - Speed, Security, Solidarity (link),

pp. 52: “The

scale of disparity is stark:

an average European operator serves only 5 million subscribers compared to 107 million in the United States and a stag-

gering 467 million in China.”

Average number of mobile subscribers of Telenor, Telia, 3DK and Nuuday, based on financial statements.

Letta (2024), Much more than a market - Speed, Security, Solidarity (link). The exact methodology used by Letta, or source,

is unclear (e.g., it is not indicated whether it considers only MVNOs or MNOs, and whether mobile operators only or also

fixed operators).

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considering also non-price benefits when scrutinising collaboration and consolidation in light of

competition law.

4.2.1 Telecommunications operators must comply with sector-specific

regulation

Telecommunications operators in the EU must comply with a specific regulatory framework estab-

lished primarily by the European Electronic Communications Code (EECC). This framework covers

multiple dimensions

119

and is primarily aimed at promoting competition, the internal market, con-

sumers’ interests

and pursuing a connectivity objective

120

, prescribing that “[b]oth

efficient invest-

ment and competition should be encouraged in tandem, in order to increase economic growth, in-

novation and consumer choice.”

121

Ex-ante regulation continues to be central to (especially fixed) the telecommunications sector and

consists of ex-ante remedies that seek to pre-empt any exploitation of market power that could be

detrimental to competition and ultimately consumers. To impose ex-ante remedies, National Regu-

latory Authorities (NRAs)

–

in Denmark, the Danish Business Authority (DBA)

–

must demonstrate

that operators have significant market power (SMP) and that significant structural barriers to com-

petition exist.

122

Remedies may include, for example, requiring network access for competitors and

service providers and enforcing non-discrimination or structural separation measures.

123

Under the

EECC, regulators conduct regular market reviews to determine if ex-ante remedies are necessary

and proportional, considering the costs and benefits of each measure.

124

125

Generally, it is well-docu-

mented that any ex-ante regulation should be proportionate in addressing the specific type of com-

petition concerns identified

–

i.e., the choice of remedies should be the least burdensome possible

to achieve the regulatory aim. Several dimensions can be adjusted to ensure this balance, including

price, duration, geographic scope and operational targets.

Certain administrative regulatory aspects are determined at the national level. The EECC provides a

harmonised framework for telecommunications regulation across the EU. However, some aspects

are determined by each Member-state, such as i) the assignment of radio frequencies and associated

conditions, ii) the granting rights of way for the roll-out of networks and associated facilities or the

iii) universal service obligations.

119

120

121

122

123

124

125

The EECC addresses various aspects of telecommunications services, including for example market competition, consumer

protection, network access, spectrum allocation and management and broadband deployment.

See, e.g., European Parliament and the Council (2018), Directive (EU) 2018/1972 of the European Parliament and of the

Council of 11 December 2018 establishing the European Electronic Communications Code (EECC) (link), recital 23.

See, European Parliament and the Council (2018), Directive (EU) 2018/1972 of the European Parliament and of the Council

of 11 December 2018 establishing the European Electronic Communications Code (EECC) (link), recital 26, pp. 7. The same

principle was made clear in the European Commission’s Digital Single Market For Europe, where the Commission noted

that “the

review of the telecommunications framework would focus, on measures that aim to provide incentives for invest-

ment in high-speed broadband networks”,

among other aspects (EECC, recital 3, pp.

1).

Ex ante regulation should be applicable only in market all of the following criteria are met: (i) high and non-transitory bar-

riers to entry, (ii) a structure that does not tend towards effective competition and (iii) competition law alone is insufficient

to adequately address the identified market failures (see.

Non-exhaustive. For a more comprehensive set of remedies that NRAs can impose on operators in different circumstances,

see e.g., articles 60-69 of the EECC.

Considering, e.g., how regulation may affect incentives for investments and the market position of affected operators.

In designing remedies, regulators are encouraged to weigh, and avoid, possible disincentives to further investments. See,

e.g. European Commission (2024), Recommendation on the regulatory promotion of gigabit connectivity (link).

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4.2.2 The GIA act is an opportunity to improve administrative

processes that affect infrastructure investment incentives

As we described in Section 4.1.1 challenges faced by the sector due to long and burdensome admin-

istrative procedures may weaken operators’ ability and incentive to invest in digital infrastructure.

Policymakers could simplify authorisation and permitting processes to overcome municipal barriers

to investment. Streamlining and harmonising the permitting across different areas can minimise

delays and uncertainties, thus facilitating a more efficient rollout of new infrastructure.

Potential solutions could include establishing i) standardising local regulations, ii) maximum re-

sponse times for permitting, iii) standardising requirements across municipalities and iv) identify-

ing challenges that rendered previous attempts at simplification ineffective. This is particularly rele-

vant considering how previous measures seem to have been insufficient in preventing long and bur-

densome procedures associated with network rollout (see Section 4.2.1).

The entry into force of the

EU Gigabit Infrastructure Act (GIA)

is an opportunity to review the

Danish legislation and improve conditions for investment. The Gigabit Infrastructure Act Regula-

tion is set to take effect in November 2025 and member states need to ensure that national legisla-

tion does not contain any obstacles to its uniform and effective application. In this process, policy-

makers should consider implementing measures that could help overcome local barriers to the

rollout of high-capacity digital infrastructure and accelerate investments.

Moreover, policymakers could consider whether any existing financial burdens could be alleviated.

One of the levers to alleviate financial burdens on operators is for example spectrum fees. While we

have not investigated the effect on investment in the Danish context specifically, lower spectrum

fees can under certain conditions alleviate the financial burden on the sector and strengthen opera-

tors’

ability and incentives to invest.

126

A possible approach entails converting spectrum fees into

specific investment targets and aligning administrative procedures with the wider policy goals of

promoting efficient investments.

4.2.3 Competition law sets boundaries for operators’

ability

collaborate and consolidate

As we describe in this section, different forms of collaboration and consolidation between operators

can increase their incentives to invest by achieving greater scale and can be associated with several

benefits. Any form of collaboration needs to comply with general competition law and benefits need

to outweigh any harm from a reduction of competition. While competition authorities will continue

to scrutinise proposed consolidations and collaborative agreements on their merits, there is cur-

rently a growing policy impetus in Europe towards a more thorough consideration of non-price ben-

efits, such as innovation and investment enabled by greater scale. This is reflected in the approval

i.e. clearance of

a ‘four-to-three’ merger between Vodafone and 3UK

by the UK Competition and

Markets Authority.

Recent policy reports have suggested that low returns on investment and lack of scale are associated

with how regulators have historically disincentivised consolidation and favoured infrastructure-

126

See footnote 94.

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

based competition.

127

One the one hand, different forms of collaboration and consolidation can allow

greater scale and result in lower average costs if operators can spread their costs efficiently across a

larger user base, thereby supporting increased incentives to invest. On the other hand, market frag-

mentation may adversely affect operators’ scale and agility to adapt to technological changes.

128

However, collaboration between competitors can also reduce competitive pressure between them,

which can in some cases reduce incentives to invest. Competition authorities scrutinise different

forms of in-market collaboration and consolidation in accordance with competition law and seek to

strike the balance between reaping the benefits from economies of scale while preserving sufficient

competition on prices and on quality, e.g. through network investments. This trade-off has been

central to concerns voiced by some policy makers and industry stakeholders alike.

129

130

Different forms of collaboration and consolidation to reduce the need for network duplication and

achieve economies of scale include:

•

Co-investments

where two or more operators invest together in network infrastructure,

•

Network-sharing agreements

where e.g. operators share the fibre infrastructure used

to provide fixed broadband access or share basic site infrastructure, radio access networks

or spectrum for mobile broadband, and

•

Mergers

where two or more companies consolidate into a single entity.

From an economic perspective, these types of collaboration and consolidation can result in benefits

to consumers. Plausible benefits include cost reductions to the extent they are passed on to consum-

ers, and enhanced ability to invest in higher-quality networks.

131

Some empirical analysis suggests

that the impact of mergers on industry investment and quality has typically been positive.

132

How-

ever, other authors have found that consolidation in the telecommunications sector may lead to

higher prices for users with limited positive effects

133

and that the impact on total investments is not

conclusive

134

. On the whole, the available evidence and regulatory case practice suggest that the ef-

fects depend crucially on the design of the transaction or collaborative arrangement and the market

circumstances. It is therefore important that each transaction is assessed on its merits, recognising

both the price

effects and implications for operators’

incentives and ability to engage in quality-

127

128

129

130

131

132

133

134

Draghi (2024), The future of European competitiveness - In-depth analysis and recommendations (link), p. 70.

Other authors include e.g., Letta (2024), Much more than a market - Speed, Security, Solidarity (link), pp. 52, where the

author points to how competition authorities’ approach may have contributed to the lack of scale of telecom operators in the

EU. E.g., “an

antitrust approach focused on market entry when evaluating mergers led to the same result

[“of

excessive

small-scale, territorial focused operators”]”.

For example, in October 2023, the

European commissioner for the Internal market argued that “Telecoms

operators need

scale and agility to adapt to this technology revolution, but market fragmentation holds them back. Too many regulatory

barriers to a true telecoms Single Market still exist, on spectrum acquisition, consolidation, legacy networks, security, and

so on”.

See

Commissioner Breton’s Linkedin blog post, 10 October 2023

(link).

See e.g., Letta (2024), Much more than a market - Speed, Security, Solidarity (link).

European Commission (2024), White Paper -

How to master Europe’s digital infrastructure needs? (link).

See European Commission (2023), Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the Eu-

ropean Union to horizontal co-operation agreements (link); European Commission (2004), Guidelines on the assessment of

horizontal mergers under the Council Regulation on the control of concentrations between undertakings (link) and

European Parliament and the Council (2018). Directive (EU) 2018/1972.

See, e.g., Padilla (2024) Do Four-to-Three Mobile Mergers Harm Consumers? A Deep-Dive into the UK Market (link).

European Commission (2024), Protecting competition in a changing world, Evidence on the evolution of competition in the

EU during the past 25 years, (link), p. 131.

Genakos, Valletti, and Verboven (2018). Evaluating market consolidation in mobile communications. Economic Pol-

icy, 33(93), 45-100 (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

enhancing investments and innovation.

In practice, case law confirms that competition authorities’

scrutiny has frequently led to interventions, e.g. through the imposition of structural remedies forc-

ing operators to divest network assets or spectrum, see Box 4.

Box 4 Collaboration and consolidation in telecoms is closely scrutinised

Different examples across Europe illustrate how some operators have struggled to get regula-

tory approval for in-market collaboration and consolidation.

•

Since 2012, almost all mergers in Europe that reduce the number of players from four to three

we conditional on structural commitments imposed by competition authorities, such as di-

vesting spectrum to new entrants.

135

•

In 2020, following a decision by the European Commission, operators engaging in a network

sharing agreement in Czechia had to make a set of commitments to address competition

concerns.

136

•

In Italy, in 12 months between 2020 and 2021, “four investigations or decisions [were] con-

ducted in relation to domestic network sharing deals (…)”. The deals that were cleared “are

subject to strict commitments relating to non-discriminatory access and transparency.”

137

•

In 2024, a merger between MasMovil and Orange in Spain was cleared but only with sub-

stantial commitments.

•

In 2024, the Belgian Competition Authority opened an investigation into a proposed joint in-

vestment in Belgium between Proximus and Telenet.

138

In Denmark, regulators have also scrutinised collaboration and consolidation closely in several

cases, which may have reduced the potential for more economies of scale:

•

In 2012, the Danish Competition and Consumer Authority analysed a network-sharing agree-

ment between Telia and Telenor, imposing conditions to clear the agreement.

139

•

In 2015, Telenor and Telia abandoned a proposed merger following an in-depth investigation

by the European Commission.

140

•

Recently (2024), the Danish Competition and Consumer Authority concluded its investigation

into Norlys' purchase of Telia's Danish business, imposing several conditions to clear the

agreement.

141

While existing competition rules already recognise that pro-competitive effects of collaborative ar-

rangements may outweigh competition risks in some circumstances,

142

there is a growing policy

135

136

137

138

139

140

141

142

Copenhagen Economics (2024), VODAFONE/3 UK: Signs of A new playbook for mobile mergers? (link).

Foros, Hansen, and Vergé (2023), Co-operative investment by downstream rivals: network sharing in telecom markets

(link); Maier-Rigaud, Ivaldi, and Heller (2020), Cooperation Among Competitors: Network Sharing Can Increase Con-

sumer Welfare (link).

CMS (2021), The latest trends in network sharing regulation - a snapshot (2018-2021) (link).

Telecompaper (2024), Belgian competition watchdog confirms investigation into Proximus, Telenet fibre alliance (link).

Danish Competition and Consumer Authority (2012), Radio Access Network sharing agreement between Telia Denmark

A/S and Telenor A/S (link).

European Commission (2015), Statement by Commissioner Vestager on announcement by Telenor and TeliaSonera to with-

draw from proposed merger (link).

Danish Competition and Consumer Authority (2024),

The Competition Council intervenes in Norlys’ acquisition of Telia

Company AB’s Danish activities

(link).

For example, the recently revised Guidelines on horizontal agreements includes new guidance for the assessment of mobile

telecommunications infrastructure sharing and recognise potential benefits that come from cost reductions or quality im-

provements. See European Commission (2023), Questions and Answers on adoption of the new Horizontal Block Exemp-

tion Regulations and Horizontal Guidelines (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

impetus in the EU whereby several authors and stakeholders, including Draghi, propose that com-

petition authorities put an even greater emphasis on the pro-competitive effects of mergers such as

innovation and investment.

143

The European Commission has also recognised in 2021 the need of

competition policy to contribute

to the EU’s main

economic and societal challenges, including the

digital transition and the need for investments in digital infrastructure.

144

145

These ‘non-price’ as-

pects are seen as crucial for innovation and network resilience, and as enablers of the green transi-

tion.

As already became evident in the UK with the approval i.e. clearance of the Vodafone/3UK merger

by the Competition and Markets Authority (CMA)

146

, authorities across Europe may, going forward,

place a greater emphasis on thoroughly assessing innovation and investment related benefits in re-

views of consolidations and network sharing, and consider behavioural remedies. Each transaction

is still expected to face scrutiny and require appropriate economic evidence to substantiate that

benefits achieved through a merger and associated remedies will indeed materialise and would not

be possible otherwise.

While it is premature to determine how the Commission and national authorities will, in practice,

conduct the ‘balancing act’ between costs and benefits going forward, we foresee at least three im-

portant aspects that appear to warrant consideration:

First,

competition authorities can consider whether and how an assessment of collaboration be-

tween operators should account for

non-price benefits,

including efficiencies that accrue to the

consumers, that are (conceivably) harmed by a reduction in competition, in the form of increased

connectivity and higher-quality services. Economic tools are available to quantify benefits derived

from, for example, enhanced quality of services associated with network investments enabled by a

collaborative arrangement or a merger.

Second,

authorities may need to consider a

longer time horizon to assess the claimed bene-

fits.

While any adverse effects on competition manifested through higher prices are more likely to

take effect in the short-term, benefits from investments such as higher-quality networks may only

materialise in the longer term.

143

144

145

146

For example, Draghi (2024) proposes

that “In

the

EU’s rules for clearing mergers

[including in the telecom sector],

in-

crease the weight of innovation and investment commitments, as well as efficiencies in the form of improved quality vis-

à-vis price levels through extended assessment timelines”.

Other authors (see e.g., Duso, Motta, Peitz, and Valletti (2024))

have opposed the views that competition law need to have a different approach to consolidation in telecommunications

markets, arguing that “Empirical

evidence consistently shows that telecoms mergers lead to higher prices and are unlikely

to boost investment”.

See e.g., European Commission (2021), Competition: Commission outlines contribution of competition policy and its review

to green and digital transition, and to a resilient Single Market (link). As noted by the European Commission,

“Connectivity

networks are particularly important for the development of the digital economy and society, and are relevant to virtually

all businesses and consumer”.

For example, the European Commission emphasises that “To

increase the cost-effectiveness of their network roll-out, the

Commission encourages private operators to cooperate in so-called

“network sharing”, whilst ensuring that this is done

without unduly reducing competition”

(European

Commission (2021), Communication from the Commission to the Euro-

pean Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A competi-

tion policy fit for the new challenges (link), pp. 12-13).

The CMA found that 5G network investment commitments in tandem with short-term price commitments for both retail

and wholesale customers would (i) be sufficient to address competition concerns; and (ii) boost competition in the longer

term. See CMA (2024), Press Release, CMA clears Vodafone / Three merger, subject to legally binding commitments, (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Third,

authorities may consider on a case-by-case basis which

least intrusive combination of

remedies

can protect competition while also the pro-competitive effects of collaboration. Where

relevant, the commitments required to approve e.g. a merger or network sharing agreement should

be strictly required to mitigate otherwise potential harms to consumers. Competition authorities

consider in each case i) whether structural remedies reduce the benefits of consolidation and ii)

whether behavioural remedies may be appropriate and sufficient to safeguard competition. For ex-

ample, the CMA in the UK has in the cleared Vodafone / Three merger considered new types of be-

havioural remedies that seek to prevent price increases and require investment commitments from

the merging operators.

147

The legally binding commitments for this merger are: (i)

“Delivery

of the joint network plan, which sets out the network

upgrade, integration and improvements Vodafone and Three will make to their combined network across the UK over the

next 8 years. The group has concluded that by significantly improving the quality of the combined network, the full imple-

mentation of this plan would boost competition between the mobile network operators in the long term, benefiting mil-

lions of people who rely on mobile services.”

(ii) “Capping

selected mobile tariffs and data plans for 3 years, directly pro-

tecting large numbers of Vodafone / Three customers from short-term price rises in the early years of the network plan.”

(iii) “Offering

pre-set prices and contract terms for wholesale services (again for 3 years) to ensure that virtual network

providers can obtain competitive terms and conditions as the network plan is rolled out.”

See CMA (2024), Press Release,

CMA clears Vodafone / Three merger, subject to legally binding commitments, (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

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APPENDIX

METHODOLOGY

In this Appendix, we describe the methodology behind the key quantifications in the report. The

methodology is presented in the order in which it is used in the text:

•

Input-output modelling: Estimate the economic impact of the telecommunications

sector’s

operations. This is used to estimate

the sector’s contribution to GDP and employment

(Section 1.1).

•

Input-output modelling: Estimate the economic impact of the telecommunications

sector’s

investments. This is used to estimate the economic effects of investments in the sector

(Sections 1.2 and 3.2.1).

•

How digital infrastructure drives economic growth by boosting productivity. This is used

to estimate the impact of improved digital infrastructure on GDP (Sections 2.1 and 3.2.2).

•

How digital infrastructure enables the green transition by reducing CO2 emissions. This is

used to estimate the telecommunications sector's role in reducing CO2 emissions (Sections

2.2 and 3.2.3).

•

The cost of a breakdown in digital infrastructure for Danish companies. This is used to es-

timate the potential financial impact of infrastructure failures related to e.g. cyber attacks

(Section 2.3).

•

Financial performance of the telecommunications sector in terms of return on capital em-

ployed (ROCE). This is used

to evaluate the sector’s financial performance (Section 4.1.2).

INPUT-OUTPUT MODELLING: ECONOMIC FOOTPRINT OF

THE TELECOMMUNICATIONS SECTOR’S

OPERATIONS

In Section 1.1, we estimate the economic impact of the telecommunications sector in Denmark by

using an input-output (IO) model based on tables from Statistics Denmark.

148

The IO model pro-

vides insights into how the telecommunications sector interacts with the broader economy by cap-

turing the flow of goods and services between industries. This allows us to estimate the direct, indi-

rect, and induced effects of the telecommunications sector on the Danish economy.

The

direct effects

reflect the immediate economic activity generated by the telecommunications

sector in Denmark, such as GDP and job creation within the sector itself.

The

indirect effects

arise from the sector's demand for inputs from other industries. For example,

when the telecommunications sector purchases equipment or services from other sectors, it stimu-

lates economic activity along its supply chain. These indirect effects are calculated using multipliers

derived from the IO tables.

The

induced effects

capture the additional economic activity generated by employees in the tele-

communications sector and its supply chain spending their wages on goods and services. This con-

sumption drives further demand and supports additional jobs in the broader economy.

We have excluded intra-industry purchases within the telecommunications sector to avoid double

counting.

148

Statistics Denmark, Input-output (link)

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We use the IO tables from Statistics Denmark to model these effects, which describe the inter-in-

dustry linkages specific to the Danish economy. The Danish IO tables include all activity across 69

distinct economic sectors and include both domestic purchases and imports.

Our analysis focuses solely on the Danish context, ensuring that the results are tailored to the struc-

ture and characteristics of Denmark's economy.

INPUT-OUTPUT MODELLING: EFFECTS OF TELECOMMUNI-

CATIONS SECTOR’S INVESTMENTS

In addition to estimating the overall economic footprint of the telecommunications sector, we use

the IO model to estimate the specific impact of investments made by the sector in Section 1.2. The

following four steps outline our approach.

1) Revenue-Multipliers for GDP and Employment:

We first estimate

revenue-multipliers

using the IO model. These multipliers describe the direct,

indirect, and induced effects of revenue in each of the 69 sectors in the economy on GDP and em-

ployment. They provide the basis for understanding how each unit of revenue generates economic

activity across the Danish economy.

Direct multipliers capture profits, product taxes, and salaries in the sector. Indirect multipliers cap-

ture purchases of intermediary goods and services from domestic companies.

149

Induced multipliers

capture when employees in the sector spend their salaries.

2) Sectoral Breakdown of Investment:

Using the five most recent IO investment tables (2015-2019),

150

we estimate the average distribu-

tion of investments made by the telecommunications sector across the 68 other sectors. This helps

us understand which sectors benefit from these investments. Additionally, we calculate the share of

investments that remain within the domestic economy versus those used to import goods and ser-

vices.

151

3) Estimation of 2023 Investment Allocation:

We apply the shares estimated in Step 2 to recent data on the telecommunications sector’s invest-

ments from Klimadatastyrelsen for 2023.

152

This allows us to estimate how these investments were

distributed across sectors, how much of the investment remained within Denmark and how much of

the investments are used to import goods and services from other countries.

4) Multiplying by Revenue-Multipliers:

Finally, we apply the multipliers from Step 1 to the sectoral breakdown from Step 3. By doing this,

we calculate the direct, indirect, and induced effects of the 2023 telecommunications sector invest-

ments in different sectors on GDP and employment in Denmark.

149

150

151

152

When the sum of direct and indirect is below 1, it is due to purchases from foreign suppliers.

Statistics Denmark, Input-output - Danish Investment matrices (DB07) (link).

See

Error! Reference source not found..

Klimadatastyrelsen (2024), Økonomiske Nøgletal for Telebranchen 2023 (link).

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EFFECTS OF DIGITAL INFRASTRUCTURE ON PRODUCTIV-

ITY AND ECONOMIC GROWTH

In Sections 2.1 and 3.2.2, we estimate the effect on GDP of advancements in i) increase in fixed

broadband download speeds, and ii) increase in mobile and fixed broadband adoption. The follow-

ing outlines our approach.

The effect on GDP of increasing fixed broadband download speeds

1) GDP increase due to an increase in broadband download speeds

We use the results from Telecom Advisory Services (2020)

153

, who find that a 100 per cent increase

in fixed broadband download speeds lead to a 0.26 per cent increase in GDP for download speeds

between 10 Mbps and 40 Mbps, and a 0.73 per cent increase in GDP for download speeds above 40

Mbps.

2) Annual growth in fixed broadband download speeds

We use data from Klimadatastyrelsen on the median download speeds between 2013 and 2023. To

forecast the future development of fixed broadband download speeds, we consider two scenarios,

which we construct based Cisco (2020)

154

who estimate that download speeds will continue to grow

at a CAGR of 19.2 per cent.

•

In the

optimistic scenario,

we assume that download speeds will grow at the Cisco fore-

casted CAGR plus 5 per cent, resulting in a projected CAGR of 24.2 per cent.

•

In the

conservative scenario,

we apply the Cisco forecasted CAGR minus 5 per cent,

giving a projected CAGR of 14.2 per cent.

Then, we calculate the annual growth in the median download speed between 2014 and 2030, both

in the optimistic and conservative scenario.

3) Annual GDP contribution from increased download speeds

Finally, we calculate the annual GDP contribution from increased download speeds by combining

the estimate from step 1) by the annual growth in the median download speed from step 2).

The effect on GDP of increasing fixed and mobile broadband adoption

1) GDP increase due to an increase in mobile and fixed broadband adoption

We use the results from Briglauer, Cambini, and Gugler (2023)

155

, who find that a 1 per cent in-

crease in fixed broadband adoption (measured in subscriptions per capita) leads to an increase in

GDP between 0.026 per cent and 0.034 per cent. For mobile broadband adoption, they find that a 1

per cent increase leads to a GDP increase between 0.079 per cent and 0.088 per cent.

153

154

155

Telecom Advisory Services (2020), Assessing the Economic Potential of 10G Networks (link).

Cisco Annual Internet Report (2018-2023) White Paper (link).

Briglauer, Cambini, and Gugler (2023) Economic benefits of high-speed broadband network coverage and service adoption:

Evidence from OECD member states (link).

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2) Annual growth in mobile and fixed broadband adoption

We use information from OECD on the number of subscribers per capita for mobile

156

and fixed

157

broadband in Denmark from 2013 to 2023. Using this data, we calculate the annual growth in mo-

bile and fixed broadband adoption. Due to stagnation in adoption in recent years, we do not con-

sider the future effect of mobile and fixed broadband adoption on GDP. Therefore, we do not fore-

cast adoption.

3) Annual GDP contribution from increased mobile and fixed broadband adoption

Finally, we calculate the annual GDP contribution from increased mobile and fixed broadband

adoption by combining the estimates from step 1) by the annual growth in adoption from step 2).

ENABLING THE GREEN TRANSITION BY REDUCING CO2

EMISSIONS

In Sections 2.2 and 3.2.3, we estimate the environmental benefits of increased network energy effi-

ciency. In particular, we estimate the CO2 emissions avoided due to historical and future improve-

ments in the mobile and broadband network’s

electricity consumption. The following four steps

outline our approach.

1) Total amount of data traffic in the Danish mobile and fixed broadband network

First, we estimate the total amount of traffic, measured in units of data, in the Danish mobile and

fixed broadband network. To do this, we use information on the total data traffic in TDC Net’s en-

tire network between 2019 and 2023

158

. To estimate the total data traffic in all of Denmark, we first

estimate how much of the total traffic is in the mobile and fixed broadband network, respectively.

To do this, we use information on the total up and download traffic at the consumer level in the

fixed

159

and mobile

160

broadband network. Combining this with TDC’s network market shares in the

fixed

161

and mobile

162

broadband network markets, we calculate the total amount of data traffic in

Denmark.

We forecast the total amount of data traffic in the Danish mobile and fixed broadband network until

2030 using a CAGR of 20 percent, and 18 per cent for the mobile and fixed broadband traffic, re-

spectively.

163

2) Electricity consumption per unit of data traffic

Second, we estimate the amount of electricity consumed by the network to deliver a unit of data. To

do this, we use information on the energy intensity, i.e. the amount of electricity (MWh) consumed

per unit of data (PB), in TDC Net’s network between 2019

and 2023

164

. We assume that the rest of

the Danish network consumes the same amount of electricity per unit of data as TDC Net’s network.

156

157

158

159

160

161

162

163

164

OECD, Going Digital Data Kitchen - Mobile Broadband (link)

OECD, Going Digital Data Kitchen - Fixed Broadband (link)

TDC Net (2023), Annual Report 2023 (link).

Klimadatastyrelsen, Internet dataark, 2. halvår 2023 (link).

Klimadatastyrelsen, Hovedtal dataark, 2. halvår 2023 (link).

TDC (2016), Svar på Erhvervsstyrelsens høring om bredbåndsmarkeder (link).

TDC Net (2023), Annual Report 2023 (link).

Arthur D. Little (2023), The evolution of data growth in Europe (link).

TDC Net (2023), Annual Report 2023 (link).

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We forecast electricity consumption per unit of data traffic in two scenarios.

•

In the

optimistic scenario,

we assume that the network’s total electricity consumption

remains constant. This is in line with Ericsson’s finding that there does not seem to be a

correlation between data traffic and electricity consumption.

165

In addition, we use fore-

casts for data traffic growth in Denmark by Arthur D. Little, who estimate a 20 per cent

and 18 per cent compound annual growth rate (CAGR) for mobile and fixed data traffic,

respectively.

166

Combined, the electricity consumption and data traffic forecasts result in

an acceleration of network energy intensity reductions, from a historic CAGR of -9.5 per

cent between 2019 and 2023, to a CAGR of -15.5 per cent from 2024 to 2030.

•

In the

conservative scenario,

we assume that the network energy intensity continues to

decrease at the historical rate, that is a CAGR of -9.5 per cent (from 12.14 MWh per PB of

data in 2019, to 8.15 MWh per PB of data in 2023).

3) CO2 intensity of electricity

Third, we use information on the average amount of CO2 used to produce and deliver one unit of

electricity, i.e. the annual average CO2 intensity of electricity. We use historical and forecasted val-

ues from Energinet.

167

4) Calculate the avoided emissions due to improvements in network energy efficiency

Finally, we calculate the avoided emissions due to improvements in network energy efficiency. We

calculate the annual emissions from the network’s electricity consumption as the product of the to-

tal data traffic from step 1), the electricity consumption per unit of data from step 2), and the CO2

intensity of electricity from step 3).

To calculate the historical avoided emissions, we present in Section 2.2, we calculate the difference

in emissions in two scenarios: 1) the scenario where the electricity consumption per unit of data

traffic decreases, from 12.14 MWh/PB in 2019, to 8.15 MWh/PB in 2023, and 2) the scenario where

the electricity consumption per unit of data traffic remains constant at the 2019-level of 12.14

MWh/PB. The difference in emissions allows us to isolate the emissions avoided due to improve-

ments in the energy efficiency of the network.

To calculate the future avoided emissions, which we present in Section 3.2.3, we follow the same ap-

proach as for the historical avoided emissions. We consider the difference between a scenario where

the energy efficiency of the network keeps decreasing until 2030, and a scenario where the energy

efficiency of the network remains at the 2023-level of 8.15 MWh/PB.

165

166

167

Ericsson (2023), ICT energy - The energy use and enablement effect of the Information and Communication Technology

Industry (link).

Arthur D. Little (2023), The evolution of data growth in Europe (link), Table 1 and 2.

Energinet (2023), Baggrundsdata for Miljøberetningen 2023 (link).

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THE POTENTIAL COST OF A BREAKDOWN IN OPERATIONS

FOR DANISH COMPANIES RELATED TO A BREAKDOWN IN

DIGITAL INFRASTRUCTURE

In Section 2.3, we estimate the potential cost of a telecommunications breakdown for companies in

Denmark to highlight the risks of inadequate digital infrastructure protection against cyber-attacks.

Our approach uses two key factors: the average cost of a one-hour breakdown for large and smaller

companies and the number of large and smaller companies (i.e. more than 250 employees and be-

tween 10 and 249 employees) in Denmark. By multiplying these two, we estimate the hourly cost of

a nationwide telecommunications outage causing a halt in operations.

We use an average cost of DKK 2.3 million per hour for large companies and between DKK 57,000

–

177,000 for smaller companies, based on an estimated average downtime cost of USD 5,600 per

minute for large companies and USD 137 to 427 per minute for smaller companies.

168

This was con-

verted to DKK by multiplying by 60 (for minutes) and applying the 2023 average USD/DKK ex-

change rate of 6.8895.

169

For example, the estimate for large companies is calculated as 5,600 * 60 *

6.8895, which equals DKK 2.31 million.

We assume that the cost per minute can be linearly expanded to estimate the hourly cost associated

with downtime. This might be an overestimation if companies can adjust their operations. However,

since we do not have any evidence of how the cost would develop over time, we assume linearity.

According to 2022 data from Statistics Denmark, there were 927 large companies and 24,456

smaller companies in Denmark in 2022.

170

Based on this, we estimate that a nationwide breakdown

would cost these companies between DKK 3.5 and 6.5 billion per hour.

FINANCIAL PERFORMANCE OF THE TELECOMMUNICA-

TIONS SECTOR IN TERMS OF RETURN ON CAPITAL EM-

PLOYED (ROCE)

In Section 4.1.2, we estimate the return on capital employed (ROCE) of different Danish telecoms

operators

–

TDC Net, Three Denmark (3DK), Telenor (Telenor DK), Telia (Telia DK) and Norlys Fi-

bernet

–

based on publicly available financial statements. We use this to evaluate how well the sec-

tor performs under current market conditions.

ROCE is a before-tax measure of the operating return on debt plus equity and was calculated ac-

cording to the following formula:

�� =

��

, where

�� = �� − ��

The financial information used and calculations for each operator is presented below.

168

169

170

Forbes (2022), How to Guard Against The Cost Of Unplanned Downtime And Network Outages (link) and Pingdom (2023),

Average Cost of Downtime per Industry (link).

See e.g. Exchange-rates.org, US Dollar (USD) To Danish Krone (DKK) Exchange Rate History for 2023 (link).

See Statistics Denmark. FGF3: Preliminary general enterprise statistics by industry (link).

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Table 1

ROCE calculation for TDC NET

(million DKK)

METRIC

(a) Revenue

(b) EBITDA

(d) Total assets

(e) Total equity

(f) Total liabilities

(f1) non-current

(f2) current

(g) Capital Employed (d-f2)

(h) Investments

(i) ROCE (c/g)

Source:

2019

7,050

4,415

1,043

27,826

8,152

19,674

15,979

3,695

24,131

2,841

4.3%

2020

6,828

4,434

1,409

28,583

8,756

19,827

15,853

3,974

24,609

2,759

5.7%

2021

6,674

4,498

2,036

30,244

9,796

20,448

14,165

6,283

23,961

2,985

8.5%

2022

6,639

4,520

1,979

36,420

2,964

33,456

25,848

7,608

28,812

2,579

6.9%

2023

6,461

4,695

1,691

34,716

1,867

32,849

23,315

9,534

25,182

2,323

6.7%

Copenhagen Economics based on TDC Net (2023), Annual Report 2023 (link); TDC NET (2021), Annual

report (2021) (link); and TDC Net (2020), Annual Report 2020 (link).

Table 2

ROCE calculation for Three Denmark (3DK)

(million DKK)

METRIC

(a) Revenue

(b) EBITDA

(d) Total assets

(e) Total equity

(f) Total liabilities

(f1) non-current

(f2) current

(g) Capital Employed (d-f2)

(h) Investments

(i) ROCE (c/g)

Source:

2019

2,736

755

400

4,658

3,625

1,033

503

529

4,129

194

9.7%

2020

2,741

603

234

4,037

2,869

1,169

426

742

3,295

153

7.1%

2021

2,787

645

4,350

2,842

1,508

781

726

3,624

685

0.6%

2022

2,905

626

-717

3,936

2,253

1,683

981

702

3,234

768

-22.2%

2023

2,899

528

3,866

2,240

1,626

852

773

3,093

373

1.1%

Copenhagen Economics based on HI3G Denmark (2019), Annual Report for 2019 (link); HI3G Denmark

(2020), Annual Report for 2020 (link); and HI3G Denmark (2023), Annual Report for 2023 (link).

DIU, Alm.del - 2024-25 - Bilag 45: Socioøkonomisk analyse fra Dansk Erhverv om værdien af en fremtidssikret digital infrastruktur, udarbejdet af Copenhagen Economics

Table 3

ROCE calculation for Telenor DK

(million DKK)

METRIC

(a) Revenue

(b) EBITDA

(d) Total assets

(e) Total equity

(f) Total liabilities

(f1) non-current

(f2) current

(g) Capital Employed (d-f2)

(h) Investments

(i) ROCE (c/g)

Source:

2019

4,064

1,102

460

5,426

1,851

3,575

2,421

1,154

4,272

569

10.8%

2020

4,013

968

291

5,518

1,801

3,717

2,431

1,286

4,232

616

6.9%

2021

3,914

998

312

6,131

2,586

3,545

2,312

1,233

4,898

457

6.4%

2022

3,690

869

199

9,312

5,967

3,345

2,127

1,218

8,094

388

2.5%

2023

3,775

817

110

9,354

5,361

3,993

2,557

1,436

7,918

335

1.4%

Copenhagen Economics based on Telenor (2023), Annual report for the period 1 January

–

31 Decem-

ber 2023 (link).

Table 4

ROCE calculation for Telia (estimates for Denmark based on group level data)*

(million DKK)

METRIC

(a) Revenue Telia Group

(b) Total assets

(d) Capital Employed (b-c)

(e) Revenue Telia DK

(f) Share of DK revenues (e/a)

(g) Capital Employed DK (f*d)

(h) EBIT Telia DK

(i) ROCE (h/g)

Note:

2019

85,965

264,072

50,287

213,785

5,675

14,113

-45

-0.3%

2020

89,191

226,683

40,101

186,582

5,464

11,430

-25

-0.2%

2021

88,343

237,025

42,746

194,279

5,214

11,466

-299

-2.6%

2022

90,827

222,793

42,741

180,052

5,298

10,503

-594

-5.7%

2023

88,785

226,468

54,158

172,310

5,679

11,022

-253

0.0%

Source:

*The available annual report did not contain i) balance sheet information for operations in Denmark and

ii) the EBIT for Telia Denmark in 2023. The following adjustments were made to allow an estimation of the

return of capital employed: i) The capital employed for Telia Denmark was calculated based on group

level capital employed assuming a split proportional to the weight of Danish revenues on the total reve-

nues of the group; ii) EBIT for 2023 corresponds to the average annual EBIT margin (relative to revenues)

as that of period 2019-2022. iii). The official currency exchange rates from the Danish Central Bank were

used to convert SEK to DKK to enable aggregation with data from other operators.

Copenhagen Economics based on Telia Company (2020), Annual and Sustainability Report 2020 (link);

Copenhagen Economics based on Telia Company (2022), Annual and Sustainability Report 2022 (link);

and Copenhagen Economics based on Telia Company (2023), Annual and Sustainability Report 2023

(link).

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ARPU CALCULATION

Table 5

ARPUs of telecom operators in Denmark (2022)

OPERATOR

REVENUE (DKK)

USERS

ARPU (DKK/MONTH)

Mobile

Telenor DK

Telia DK

Three Denmark

Fixed

TDC Net

Note:

n/a

2,681,371,440

2,821,045,500

n/a

1,712,000

1,513,570

102.9

130.5

153.0

2,576,000,000

1,192,000

180.1

Source:

1) Mobile ARPU for Telenor was retrieved directly from the

Telenor groups’

Q4 2022 financial report; 2) We

considered the Total service revenues in Denmark (reported in the

group’s

Q4 2022 financial report, and

the number of mobile subscriptions in Denmark (reported in the

group’s cover Annual and sustainability

report 2022). Values in SEK were converted to EUR, using a 0.088 conversion rate; 3) We consider total

revenues and the number of mobile subscribers at the end of 2022; 4) We considered the reported ser-

vice revenue and the total number of broadband revenue generating units.

Copenhagen Economics based on 1) Telia Company (2022), Year-end report January - December 2022

(link), p. 8; 2) Telia Company (2022), Year-end report January - December 2022 (link) and Telia Company

(2022), Annual and Sustainability Report 2022; 3) HI3G Denmark (2022), Annual Report for 2022 (link); 4)

TDC Net (2022), Annual Report 2022 (link).