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  • 2021 July 1 15:42

    AEC: Investment matrix for digital connectivity projects in the Arctic

    The Arctic Economic Council (AEC) says it has developed a matrix to guide investments into connectivity projects in the Arctic region. The matrix is a part of the report on the Arctic telecommunications infrastructure, led by Dr. Pam Lloyd from the Alaskan GCI communications.

    The Arctic Economic Council (AEC) has developed a matrix to guide investments into connectivity projects in the Arctic region. The matrix is a part of the report on the Arctic telecommunications infrastructure, led by Dr. Pam Lloyd from the Alaskan GCI communications.

    During the pandemic we saw a massive digitalisation of business operations and public services across the world. Yet, not all parts of the globe were able to follow it. COVID-19 has highlighted the digital divide in many parts of the Arctic, which has been poorly addressed before. For many years, the most remote parts of the region, especially in North America and Russian Arctic, have continuously lacked investments. On top of that, there are not always large companies that can serve as anchor tenants for major connectivity development projects present in these areas.

    Today digital connectivity is critical for community resilience. Many businesses – both large corporations as well as SMEs – operate online, for example, mining companies rely on state- of-the-art equipment connected to the Internet. Investments in telecommunications have become even more crucial as they enable access to education and clinical services.

    The AEC working group on connectivity has developed a tool to guide policymakers and investors that work with connectivity in the Arctic, a region where distances between settlements are long, climate conditions are harsh, and population density is low.

    The Arctic Connectivity Sustainability Matrix distinguishes several project types most common in the region. It guides potential guides investors to capture the region’s potential and encourages coordination between different market segments, which could create game changing synergies.

    The matrix identifies specific models among the multitude of funding vehicles possible. These range from full public support to private support for connectivity projects. Particularly, in the North America and Russian Arctic, there is a need to combine private investment with public funding sources, such as grants, loans or subsidy programmes. The AEC Connectivity Report shows that the combination of private investment and public funding can have a profound impact on the long-term financial viability of connectivity infrastructure projects.  The  matrix moreover provides a description of each approach, how-to-use examples and fundamental considerations to be taken into account when investing in the Arctic.  Overall, these programmes improve the business case for construction in the Arctic, especially in remote areas and among underserved communities.

    Furthermore, the matrix emphasize the importance of indigenous and local communities, which need greater support to ensure that disparities do not continue to grow, given their historical differences in access to economic opportunities and modern infrastructure. Therefore, any investment in the Arctic should follow the Arctic Investment Protocol (AIP) which calls for local participation and include the rights, needs, and knowledge of indigenous communities in any investment.

    The AEC encourages decision-makers to consider multiple investments models when planning the construction or expansion of  the connectivity infrastructure. We acknowledge that the modest residential revenues will be incapable of covering the high costs of engineering a network that provides the same opportunities as other places outside the Arctic. Therefore, a holistic approach is also needed, in which business, health care, education, research and government are thought of together.

    In the North American Arctic there is a need for a combination of private investment with public funding sources, such as grants, loan or subsidy programmes. The AEC Connectivity Report demonstrates that combining private investments with public funding can have profound impacts on the long-term financial sustainability of connectivity infrastructure projects. On the whole, such programs improve the business case for construction in the Arctic, especially in remote regions and to underserved communities.

    Source: www.arcticeconomiccouncil.com




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