How can we lay the foundations for the digital economy?

With so much information at our fingertips, perhaps it’s no surprise that in 2018 UK consumers spent a total of one day a week online, more than twice as much as in 2007, writes Marija Simpraga, infrastructure strategist at LGIM Real Assets. This trend of increased data generation and consumption is set to continue, driven by data-intensive high-definition video streaming, videoconferencing, cloud computing and internet of things applications. Notwithstanding the exponential growth in usage, users still expect reliable and fast internet connections. Meanwhile, businesses have to find ways to securely and efficiently store and manage vast amounts of operational and consumer data. It is therefore no surprise that the government and digital operators are increasingly focused on making sure the right infrastructure is in place to enable users to fully enjoy the benefits of a digital economy. One aspect of enabling a digital economy relates to the quality of our internet connections. Full fibre networks reaching all the way to end users’ homes and offices are the fastest, most reliable form of broadband infrastructure. But laying down fibre networks can be very expensive; this is why most broadband connections in the UK are currently still delivered using a mix of fibre-optic and copper cables. ]In many cases, the fibre part of the connection reaches up to the street cabinet and the last stretch from the curb to user premises still uses the old copper network. The copper part of the connection acts as a constraint on the speed and reliability of the broadband connection. That said, this mixture of old and new networks generally works well enough to serve the current needs of most internet users. However, given the exponential growth in data usage and data intensity of online content, a nationwide full fibre roll-out is seen as central to future-proofing the UK’s digital infrastructure. Some countries – such as Portugal, Spain and Sweden – are well under way to nearly universal full fibre-to-the-home coverage, which provide exponentially faster and more reliable connection speeds to the consumer. The UK, on the other hand, is in the early stage, with less than 10% of households covered. The UK government is therefore encouraging developers to focus on nationwide full fibre deployment. This is could cost up to £30bn. With a large amounts of institutional capital available for deployment into UK infrastructure, the growth of the digital economy presents a significant investment opportunity over the next decade. Another aspect of enabling the digital economy relates to the ability of businesses to effectively manage the vast amounts of data being generated on their platforms daily. A recent report by The Economist suggests that 90% of all data ever created was generated in the last two years alone. With a focus on the UK’s cities of the future, at Legal & General we think a lot about connectivity, data and how that data is stored. An investment earlier this year in the Kao Data Campus – a state-of-the-art data centre development servicing the London to Cambridge corridor – is testament to this. Taking the lead in building out a UK-based data centre proposition, the Kao Data Centre is Legal & General’s inaugural investment in UK digital infrastructure. As the largest manager of pension savings in the country, Legal & General’s investment strategy naturally aligns with future-proofing the UK’s economy while, at the same time, delivering the best value for our clients. From its 35.2MW data campus, the Kao Data Centre provides the technology and infrastructure to meet the rising demand for data storage. Kao serves hyperscalers and enterpreneurial customers across the largest data centre market and technology cluster in Europe. Data is fast becoming one of the world’s most valuable resources. For the economy to benefit from a seamless flow and supply of data, investments must be made in the underlying infrastructure, laying the foundations for the UK’s digital future.