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Content and App Provider Net Infrastructure Investment

The Internet is a collection of interconnected networks. It was designed to enable a computer or device connected to one of these networks to access information and services from any computer or device connected to any of the other networks.

While the Internet is often abstracted as a cloud -- and may seem somewhat virtual or intangible to its users -- it relies on networks, facilities, and equipment including billions of discrete devices connected by millions of miles of telecommunication cabling, plus a vast array of other equipment.

Investment in these networks, facilities, and equipment is incurred by a wide range of market participants -- Internet Backbone Providers, Internet Access Providers, Content and Application Providers, and a range of specialized service providers all invest in the networks that have come together as the Public Internet.

According to the latest market study by Analysys Mason, Internet content and application providers invest over $30 billion per annum in physical networks, data center facilities and equipment, and nearly $100 billion between 2011 and 2013.

The lion's share of this investment -- $30 billion over three years -- goes to Europe. It's the first time this investment has been captured in a comprehensive way, and highlights how Internet players are now major contributors to the fabric of the Internet.


This growing investment includes their scale-out infrastructure within data centers, in submarine communication cables and the multitude of cloud computing servers that store, process and serve content to end users.

This infrastructure is necessary to deliver the content that end users want, and comes in addition to the money these companies already spend on content and associated software. It benefits the Internet as a whole, end users, and the other players who invest in the physical fabric of the Internet.

"Internet players are already putting big money on the table -- and into the ground and under the sea. They are getting into increasingly large partnerships with investors and telecom operators. That comes in addition to investment in their core business of content and software." said David Abecassis, principal at Analysys Mason.

Companies highlighted in the market study include pure online companies -- such as Spotify, Google or Facebook -- as well as online businesses of multi-platform players such as the BBC or the New York Times.

Europe is the largest destination for this type of investment -- over a third, amounting to $10 billion annually -- goes into European networks and facilities. This recognizes Europe's continued role as a hub for Internet traffic. Many international cables meet in Europe. It hosts the world's largest IXPs, and has a large population of Internet users.

As a result, it is attracting investment by leading U.S. companies, especially in data center facilities, as well as investment by local Internet players such as Spotify and the BBC.

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