Digital infrastructure as a driverof competitiveness
Future of connected infrastructure

February 2019

Content
Executive summary3

1. The future belongs to connected infrastructure

4

2. A long-term strategy guarantees success7

3. Strategic priorities for the future10

4. Conclusion

13

Originally published as the chapter “Location strategy findings” in the Future Business Austria (FBA)Infrastructure Report 2019

Authors:

Andreas Rudas

Karim Taga

President Arthur D. Little Austria, Vienna
rudas.andreas@adlittle.com

Managing Partner and Global PracticeHead TIME*, Vienna
taga.karim@adlittle.com

Alexios Seibt

Engin Beken

Principal, Public Services, Vienna
seibt.alexios@adlittle.com

Principal, Operations Management,
Viennabeken.engin@adlittle.com

We thank Daniel Guzmics, Dieter Nirschl, Dominic Sattler and Casper Tolstrup for the consolidation and preparation of, and theirvaluable contributions to, this report.
*TIME=Telecommunication, Information, Media & Electronics

Executive summary
The importance of infrastructure for any country
is without a doubt a major driver for any
country’s competitiveness. So far, countries
have focused on gradually improving theirrespective infrastructures for traffic,
communication and energy. By contrast, Arthur
D. Little argues for a paradigm shift: Only
intelligently and maximally connected
infrastructures can serve as the basis for future
growth; Only an interconnected ecosystem canserve as the basis for new business models– both benefitting a country’s citizens andboosting the sustainable development of theeconomy.

ICT
Road

Rail

Digitalization

EnergyAviation

Water
ways

3

1. The future belongs to connected
infrastructure
In this report, Arthur D. Little analyses the status of infrastructurefrom a strategic perspective regarding the competitiveness ofa country – using the example of Austria. The findings focus
on the necessary networking of infrastructure enabled bydigitization. Understanding these processes is essential, as
Austria‘s competitiveness heavily depends on its infrastructureand synergies in this area must be used efficiently. Both the FBAInfrastructure Report 2019 and the reports of earlier years cometo a clear conclusion: there will be no opportunities to build
the infrastructure of the future without a well-developed andmodern information and communications technology (ICT) andenergy infrastructure. In the following location strategic findings,
Arthur D. Little examines this thesis more closely.
In this context, the question arises of what is to be understood
today as infrastructure. It is clear that the term no longer covers
only transport routes – above all, road and rail, followed byaviation and shipping. First, energy supply moved into focus,

and then ICT recently took a central place in the understandingof infrastructure. This is especially evident from the point ofview of digitization, which increasingly positions ICT as central
and connecting infrastructure. As Arthur D. Little has been
observing for years, not only is this trend continuing, but thelevels of convergence between individual infrastructure sectors
and ICT are steadily increasing. In addition, interaction between
ICT infrastructure and energy technologies plays a key role, as
climate-friendly energy supplies must be ensured for broadimpact applications beyond digital networks (e.g., 5G). The needfor modern and comprehensive ICT and energy infrastructureis thus already apparent at first glance. However, not only areconvergence levels of individual infrastructure areas increasing,but infrastructure itself is becoming an important factor inAustria’s competitiveness. For example, when the Hajek
Institute asked domestic managers about the most importantfactors for Austria’s competitiveness, infrastructure ranked
second only to well-educated workers.

Figure 1: Requirements for Austria’s competitiveness (top 5)

68

Education, well-educated workers

61

Good infrastructure
Digitization

40

Innovation, R&D

39

Deregulation

32

Source: Future Business Austria

As the importance of infrastructure to the Austrian position is clear, we turn now to the question of which infrastructure projects
should have high priority. At the top of that list are implementing energy efficiency projects, securing core IT infrastructure, andexpanding 5G.
Figure 2: Which infrastructure expansion projects are high priorities for competitiveness? (Top 3)
73

Implementing energy efficiency projects

58

Securing core IT infrastructure
Expanding 5G

50

Source: Future Business Austria

42

Development in recent years strongly indicates the need toengage intensively with digitization, critical infrastructure andnew energy technologies. Austria has a lot of catching up to
do in these areas compared to European and international
benchmarks. A large-scale fiber optic network supported by
fixed wireless access (FWA), 5G and a sustainable energy
supply is the basic prerequisite for ensuring that Austria cancontinue to compete internationally. A technically and digitallyknowledgeable population is also required – one that takes
advantage of digitization and develops new business models
before competitors from other countries do so. This knowledge
is especially important for Austria’s many small and mediumsized companies.
The opportunities created by ICT are especially evident withthe so-called Internet of Things (IoT). This trend will further
accelerate networking of individual industries and infrastructure
sectors. By 2020, the IoT market volume in the EU is expected
to exceed €1 trillion. Best-practice examples include: Barcelona‘ssmart street lights, which analyze required brightness via the
IoT and have contributed to a 30 percent energy reduction;a networked and intelligent transport system on the M42
motorway in the UK, which has decreased travel time by 25
percent and accident frequency by 50 percent; and IoT-based
health monitoring of patients with multiple chronic diseases
in the Netherlands, which has led to a 20 percent increase inefficiency.
The European Union has acknowledged the importance of
ICT for years, e.g., by promoting development of critical IT
infrastructure with the European Cloud Strategy of 2012. Its
growing importance is also evident in the Digital Single Market(DSM) initiative, one of the Commission’s 10 core programs.
The initiative is based on three pillars: better online access for
consumers, high-performance infrastructure and clear policies,and development of ICT and related technologies such as
big data and cloud computing. The importance of the DSM
becomes readily evident when seen in light of the EU’s own
calculations; a networked and digital single market in the EU
could create an added-value contribution of up to €415 billion
a year, in addition to hundreds of thousands of jobs. Within
the EU, there are other important digitization projects, such as
the Smart Village initiative, adopted in 2016 as part of the Cork

Strategy 2.0. The initiative will help to better connect rural areas(notably e-health, e-education, and e-governance) to counteract
urban migration and increase the competitiveness of thoserural areas. Finally, the Commission proposed another initiativein June 2018, the Connecting Europe Facility, for the next
long-term budget (2021–2027), with €42.3 billion attached – anincrease of 47 percent.
The Southeast European states, especially the EU accession
candidates, have also recognized the need to invest in core
infrastructure areas, not just to catch up with the member
states of the EU, but, if necessary, to overtake them in key
areas. The EU-backed Regional Cooperation Council (RCC)
has made digitization a top priority, especially with its WestBalkan Six (WB6) strategy. Expansion and networking of digital
infrastructures is thus high on the agenda. The other states in
the region, including EU members, are also increasing theircompetitiveness in this area – Romania’s and Bulgaria’s internet
speeds are currently faster than Austria’s.
Arthur D. Little has identified key levers in the infrastructure
sector, which Austria and its companies should address toremain competitive in the future. In addition, ADL is continuously
monitoring and highlighting the potential of this sector, suchas in its recently published study, “The Future of Mobility 3.0”,
in anotherreport, published in 2017, on possible scenariosof 5G expansion in Austria and many other publications.
The potential is not just limited to high-tech sectors such as
autonomous driving. Fundamental service infrastructures
such as health and education, even agriculture, will needcomprehensive digital supply in order to survive and thrive.
Among key levers is the expansion of fiber-optic networks,
which is indispensable if the country is to connect and further
develop individual infrastructure areas and thus have modern
infrastructure ready to compete internationally in the future. ICT,
especially fiber expansion, must be considered the backbone ofAustrian infrastructure. Finally, the term “infrastructure” must
be expanded and modernized, convergences identified, andsynergies optimized. Here, too, Austrian managers agree: 77
percent of respondents saw great or large synergy effects fromuse of new technologies.

5

In principle, Austria has also recognized the imperatives
mentioned in this report, and, in recent years, the Federal
Ministry of Transport, Innovation and Technology (BMVIT)
has presented several initiatives and strategies that address
broadband deployment and introduction of 5G, such as the 2020
broadband strategy published in 2014. The plan of the strategy
was to position Austria as the leading nation in ICT among EU
countries by 2020. Unfortunately, the country has not lived up
to this target; with the current expansion of high-speed, highperformance access, Austria is only in 24th place. According
to the latest figures from the Computer Measurement Group(2018), the share of fiber-to-the-home (FTTH) fiber optic
connections in Austria is only 1.1 percent. By comparison, theEuropean benchmark is over 50 percent and the EU average
is 13.9 percent. The BMVIT 5G study also acknowledges theneed to catch up on the availability of high-speed internet. Thisis also confirmed in the 2018 Hayek Institute management
study commissioned by Future Business Austria, in that IT,
telecommunications and energy were recognized as the areas
with the greatest potential for improvement.

6

Figure 3: Investment in Telecommunication
% GDP
0.6

Switzerland
0.5
0.4
0.3

Austria

0,2
0.1
0
2010

2011

2012

2013

Source: IMD world competitiveness center

2014

2015

2016

2017

2. A long-term strategy guarantees success
The main hurdle of the broadband strategy has proved to be
its financing plan: „Investments in this sector will, in principle,
have to be borne by the private sector.“ This view is also
shared by leading scientists. University Professor Dr. Felderer
pointed out in 2017 that digitization was „one of the mostpowerful processes of change in our life and business world.“
University Professor Dr. Kummer described ICT and digitization
as so influential that it was possible to speak of a new phaseof infrastructure in a 2017 analysis. The latest results fromthe management survey support the views on this trend.
In this area, a clear, long-term strategy is needed to counter
Austria‘s negative trend in ICT. Former Finance Minister andVice-Chancellor Hannes Androsch (SPÖ) had already in 2009
recognized the need for a report on the „Future of National
Infrastructure in Austria“ with a time horizon up to 2030. In stark
contrast to this need, there is currently no such plan in Austria.

Arthur D. Little makes the argument that digitization requires
the state to adopt a national economic view of ICT, since thenecessary investments in comprehensive fiber expansion are
currently not economically profitable for telecommunications
providers. A glance at Arthur D. Little’s 5G expansion study
from 2017 will confirm this. Arthur D. Little shows here thatin recent years, this industry has been under pressure frommassive declines in sales, coupled with constant investment
requirements. Between 2005 and 2015, telecommunications
providers‘ revenues almost halved (a 46 percent drop), whilegross capital formation fell by only 13 percent in the same
period. Due to this development, the telecommunicationsindustry – which is the supporting pillar of the 5G expansion– cannot be expected to independently raise the financial
resources needed for large-scale fiber expansion in the near
future.

Switzerland provides a positive example of a long-term
infrastructure strategy – more precisely, the strategy devisedby the Swiss Federal Department for the Environment,
Energy, Technology and Communications (UVEK). In 2010,
this department developed a comprehensive, integrated
plan for Swiss infrastructure to 2030, thereby strengthening
Switzerland’s competitiveness considerably. With a strategy
stretching two decades, UVEK underlines the importance of
reliable infrastructure networks and transparent long-term
strategies. This report on the future of national infrastructure
networks not only enumerates potential and risks over 92
pages, but also provides detailed information on the projected
investment requirements to 2030. Notable among these are
the predicted telecommunications expenses of 40 billion CHF –almost as high as for expansion of the road network.

Figure 4: Revenues in ICT

The success of a long-term strategy shows itself in thecomparison between Switzerland and Austria. Since theadoption of the UVEK strategy, diverging infrastructuredevelopment can be distinguished between the twoneighboring countries. In terms of energy, health and distribution
infrastructure, the two countries were approximately equallystrong in 2009, according to IMD. About 10 years later,
Switzerland could note slight improvements in those areas,
while Austria suffered significant setbacks across the board.
Investments in technological infrastructure show the sametendency.

Source: ADL 5G study€ bn

Other ICT businessTelecommunications

35
30
25
20
15
10

-46%

5
0

2005

2015

Arthur D. Little noted in 2017 that Austria – assuming it would
take on the position of pioneer in this area – could expect anincrease in GDP of up to €4 billion per year and 35,000 new
employees after implementation. However, only if Austria
succeeds in ensuring a well-developed 5G network for its
population by the end of 2022 and, above all, for resident
companies, can its competitiveness be decisively improved. Thisfinding is also confirmed by the national managers: More7than three-quarters of the respondents believed the Austrian
infrastructure would quickly lose ground without the use ofdigitization. Similarly, more than half of respondents believed
the government should focus on expanding digitization over the
next three to five years, even at the cost of reducing investment
in road and rail development. To carry out the 5G expansion
as planned by BMVIT, additional government funds must be
invested in the expansion. Importantly, telecommunications
providers will only have stronger business incentives to invest
in further network expansions and 5G services once theeconomically necessary technology infrastructure foundation
has been laid and consumer demand for the new technologies
has increased.
There are several ways for the Austrian federal government
to stimulate fiber and 5G expansion, in addition to direct
investment. The Swedish Post and Telecommunications
Authority provides a relevant example. The Authority allocatesradio frequencies explicitly for grid expansion – especiallyin rural areas – to promote further development of 5G
infrastructure. In the same manner, the Austrian Broadcasting
and Telecommunications Regulatory Commission should also
condition its frequency allocations more strongly on network
expansions; however, in return, the Commission will have togive up part of the licensing fees to give the telecommunications
providers the financial scope for expansion. In addition, thetwo factors of 5G consumer demand stimulation and effective
transfer of knowledge of the new technical possibilities should
not be neglected. The 5G demand could, for example, beboosted by showcasing them at large-scale events such as the
Hahnenkamm ski race, which would position the technology
prominently in the public eye. Such actions would increase
the approval of government investments in 5G and motivate
telecoms to act more quickly. Meanwhile, Huawei has alreadyannounced its first 5G-enabled smartphone for 2019, which will
give the Austrian public the chance to directly experience theadvantages of the new technology.
As already mentioned, Austria‘s progress in digitization depends
not only on fiber and 5G expansion, but also on the ability ofAustrian consumers to use these new technologies, which will
mainly be developed through the Internet of Things. The studyof digital transformation of small- and medium-sized enterprises

8(SMEs) in Austria – conducted by Arthur D. Little in partnershipwith the Austrian Chamber of Commerce and Hutchison
3 – found that many Austrian companies were dedicated tocatching up with digitization. However, support was difficult tocome by, as both the management and SME studies found. For
example, less than one-third of all managers believed Austria
offered enough incentives for innovative, digital businesses,
while nearly half of surveyed SMEs reported needing advice
for implementing digital transformation. A particular challenge
for many entrepreneurs was lack of knowhow, coupled with
unclear legal conditions. To enable the digital development of
SMEs in particular, the government and other stakeholders must
offer individual transformation approaches and comprehensive
training courses, as well as create a clear legal framework. The
public support of SMEs in dealing with digitization challenges is
a must-have; otherwise these companies will find themselves
falling behind due to failing to fully exploit the possibilities ofdigitization – which will hurt their competitiveness, as well asthat of Austria in general.
On a positive note, it is worth pointing out that Austria’s
competitiveness has improved significantly for the first timein years. In the latest IMD Competitiveness Ranking, Austria
came 18th of 63 analyzed countries in 2018. Meanwhile, in the
more narrowly scoped Digital Competitiveness Ranking by thesame firm, the republic even ranked as high as 15th. All in all,apart from ICT and aviation, Austria‘s infrastructure is solid byEuropean standards. This is especially true for the energy sector.
Here, the republic couples the fourth-largest share of renewableenergies with decreasing dependence on energy imports – astrong position that can and should be expanded upon.
A look at the management survey clearly shows that Austria‘s
top management regards the energy sector, as well as its road
network, as extremely positive compared to those of other
European countries. The rail network is also well developed in
the EU comparison, in which, for example, Austria is among
the top five countries within the EU for electrification of railway
lines. However, the importance of these sectors is clearlyshifting. When asked about very important infrastructures forthe future, only two-thirds of respondents answered rail, while
there was almost unanimous agreement on the importance ofIT, telecommunications and energy.

Figure 5: Which infrastructure sectors will play important roles in the future? (Top 3)

99

IT

93
96

Telecommunication

93
95

EnergySource: Future Business Austria

In Austrian aviation, the third runway at Vienna International
Airport is currently the dominant project. Prioritizing this project
would contribute positively to the country’s competitiveness.
This view is also shared by companies’ top management,with a majority having stated that Austrian aviation was doing
poorly in comparison to the whole of Europe. In order tostrengthen the position of Austria and improve its connection
to foreign countries, air connections need expanding to andfrom Austria urgently. In addition, to ensure the attractivenessof the airport, the processes of ground, particularly passportand security controls, and baggage handling must be optimized.
It is important to exploit all opportunities digitization bringsand maximize customer benefit with innovative technologicalinnovations. In connection with the expansion of Vienna
International Airport Schwechat, mention should also be madeof the new bill from the Ministry of Economic Affairs. Thisbill would allow faster approval procedures for infrastructure
projects if they were in the public interest. According to
the WKO, a lot of time is spent on debates surrounding
infrastructure, as evidenced by the third runway, which had a„negative effect on the attractiveness of the position“.

84
2018

2017

Beyond the third runway, which will have a major impact on thegreater Vienna area, a strategy is needed for Austrian regional
airports – In particular Klagenfurt and Linz – as a result of the
EU’s tightening of the aid directive in the event of insufficientprofitability; this threatens airport closures after 2024. Therefore,
in addition to improving the domestic connections of theregional airports to the Vienna hub, great efforts are needed
to create new routes, combined with a comprehensive andmultimodal mobility concept for Austria.

96

3. Strategic priorities for the future
Arthur D. Little has identified three core areas that will befundamentally transformed by a modern and integrated
infrastructure. These areas are essential for greatly improving thequality of life of Austrians and increasing the competitivenessof the country, so they must be met with a comprehensive
strategy and a sustainable implementation.

Future strategic priority 1: Smart Austria
A networked and digitized infrastructure will fundamentallychange our lives in the future. Fast grids will simplify life in
the city in rural areas and increase the quality of life; that is, if
synergy effects are optimized efficiently. Furthermore, smart
cities seek to constantly improve the lives of their citizens
and visitors, as well as conditions for successful businesses,
by becoming more efficient, technologically advanced,
environmentally friendly and socially inclusive.
Companies and cities will have to pursue clear strategies andcooperate to transform cities into smart cities. Fast, secure,high-performance internet and a secure energy supply form thebasis of this transformation process. In the medium term, edge
computing will play a greater and greater role as distributed dataprocessing relieves networks. Once the framework conditions
have been established, product solutions and services related
to the Internet of Things will become increasingly important inan urban context. Moreover, the smart city platform, the ICT
infrastructure and the cross-segment smart city ecosystem
will be integral parts of any smart city strategy. In addition, fastcommunication services and network security will play a keyrole in the cities of tomorrow. This will require public 5G and
WLAN networks, a seamless fiber infrastructure, and highavailability, low-power, wide-area networks to facilitate stable
and cost-effective data traffic.
In this environment, the importance of a secure IT infrastructure,resilient against cyber-attacks, is ever increasing. Smartalso means serving people in their everyday needs, suchas healthcare and education. In the city, as well as in the
countryside (smart villages), the quality of such care needs

10

to show constant improvement. Digitized healthcare will
enable efficiency through digital patient records and seamless
communication between hospitals, pharmacies and patients.
Innovations such as telemedicine and mobile health create newtreatment methods that massively reduce long journey times
to the doctor, especially in rural areas. Smart education could
become a reality soon, especially as a result of the digitization of
educational institutions, and will sustainably improve the learning
opportunities available to students.
The smart city study by eco, the association of the internet
industry, and Arthur D. Little (2018) also provides evidence thatsmart cities are gaining in importance and value. By 2022, thismarket is expected to grow to around €4.5 billion and nearly
double from 2018. A key condition to make efficient use of
the opportunities that arise and rapidly grow in this market iscomprehensive expansion of information and communication
technologies, especially in development of fiber optic networks– also in rural areas.

Future strategic priority 2: Smart mobility
9Arthur D. Little sees the future of mobility in offerings that are
sustainable, autonomous and shared, but the future will notappear overnight. In the foreseeable, conventional car-sharing
deals and electric-powered cars will remain niche products dueto their limited customer benefits. In addition, cars that drive
exclusively „autonomously“ would only increase the number ofkilometers driven with their increased benefits – for example,
by eliminating the search for a parking space. However, whenelectric cars, autonomous driving technologies and sharedbusiness models are integrated (“easi-mobility”), the number ofvehicles per city decreases and the environment is less affectedby realistic peak consumption. „Easi“ mobility offers maximized
benefits for mobility customers, because it allows them to travel
door to door at all times, without changing the environment
and with minimum latency. This area is very competitive andattractive, with multiple companies vying for the space.

The demands on an ecosystem to enable such business models
are not to be underestimated; they require complex, networked
infrastructure. Traffic flows have to be controlled in real time,
vehicle problems must be detected in fractions of a secondand communicated to all surrounding units, and cars must beable to charge nationwide. To enable these functions, the roadinfrastructure needs to change; in the short term it will have to
make extensive use of sensors, providing real-time information
about surface condition and use, and in the long term it willneed to integrate charging infrastructure, such as induction
plates.
To make such “easi-mobility” a reality in the future, a nationwide
5G network, as well as a dedicated, highly secure data centerfor traffic control are needed, with cyber security playing a
crucial role. In addition, the power grid must adapt to the newrequirements through central charging points with high peakcapacities or flexible, widely branched, decentralized charging
infrastructure with central control options.
The rail sector is also undergoing major changes as ICT evolves.
Above all, the Internet of Things will change rail infrastructure.
Rail is also expected to converge and cooperate more withother transportation services in the future, offering customers
multimodal, door-to-door service. The classic train ticket will bemade obsolete by modern, cross-mobility accounting systems,
and customers will be able to seamlessly switch between
different modes of travel (bus, train, car-sharing services, etc.).
This integration reduces travel time and booking efforts,
creates comprehensive transparency for the customer, andenables automated optimization of the connections used.
With increasing interconnection of trains and rail, trains canbe automated to a greater degree, which allows tighter timingof trips and reduces costs. Train users also benefit from auto­
nomous systems through increased punctuality. In the future,trains and rail will be constantly exchanging data, which will
make the network self-optimizing and enable it to respond toevents in real time. In the event of a train outage, travelers will
be informed promptly and in detail about the expected delay,and directed to alternative mobility services with minimal loss oftime.

In the medium term, there is even a need to go one step further
in terms of mobility. The use of drones will change the aviationindustry and its associated infrastructure. Arthur D. Little sees
widespread use of unmanned aircraft systems (UASs) for
non-military purposes in the near future, especially agriculture(such as for distributing fertilizers and ripening planted food),monitoring infrastructure facilities (especially pipelines andpower lines), and early detection of impending disturbancesin the rail infrastructure (predictive maintenance). Drones offer
great opportunities, from potential cost savings to loweredrisk of personal injury. In a few years, they will even be used inpassenger transport, as the state of Bavaria currently shows
through media-effective investments in the development andconstruction of airline taxis. The autonomous CityAirbus, fromthe aircraft manufacturer of the same name, is slated to be
operational by 2023, able to transport up to four passengers in
inner-city airspace. Already, infrastructure projects in aviation
include new transport opportunities to minimize costs ofadapting to new technologies in the medium term.
Austria has the opportunity to become one of the pioneers
in this field, not only through innovative mobility concepts onroad and rail, but also in aviation. To achieve this status, dense,
ultra-fast internet connection is a requirement. In addition, basic
regulation of the European Aviation Safety Agency (EASA) plays
an important role as it sets union-wide framework conditions in
the field of UASs. Austria should define and optimize the legal
framework established by the EASA to respond to changing
market conditions optimally. For this purpose, appropriate zones
must be created for free or restricted traffic of drones.

11

in parallel, which would lead to reduced and shared investment
costs. Laying idle lines is another viable option that would open
up the possibility of cost-effectively expanding networks in the
future.

Future strategic priority 3: Smart utilities
Austria‘s utilities infrastructure is solid compared to thoseof other European countries, especially in energy. However,challenges remain, such as expansion of high-voltage lines,
which is time-consuming and cost-intensive. The same applies
to expansion of fiber optic networks in the telecommunications
sector. If the energy supply of the future is planned smartly
and synergies are optimized, utilities and telecommunications
providers will be able to jointly promote development andnetworking of infrastructures.
One goal is to sustainably secure the Austrian high-voltage
grid, especially with the 380 kV ring, which includes all major
consumer centers and power plant locations, as well as thetransmission grids of neighboring states. This expansion isnecessary to ensure long-term security of supply for thecountry. However, this process is proving difficult, since theAustrian Power Grid must involve many stakeholders and isconfronted with different licensing regimes in the individual
federal states. In addition, the process is extremely expensive.
Through cooperation with telecommunications providers, theelectricity and telecommunications networks could be expanded

12

Arthur D. Little believes that electric mobility will also enhance
the convergence between ICT and the energy sector.
Joint infrastructure development and comprehensive data
management will be important in this segment to efficiently
monitor resource consumption and delivery. The electricity
consumption of cars will be measurable and calculated
intelligently and fully automatically at charging points using the
IoT. In addition, the widespread use of intelligent metering –called smart meters, or iMsys – has the potential to bring ICT
and energy closer together. Data generated by these systems
could be handled and monetized by telecommunications
providers. In addition, more information about real-time power
consumption could be gathered, and bottlenecks avoided. As
has been evident for years, the number of virtual power plants
will also increase. The interconnection of small, decentralized
power plants – for example, solar systems of private households– will make an important contribution to the energy supplyof Austria and further reduce dependence on foreign energy
sources. It thus becomes clear that the energy supply of the
future will, in all probability, converge more with informationand communication technology, and cost savings can berealized, at least in the medium term, through joint infrastructuredevelopment.
94. Conclusion
To sum up, the European Union considers a comprehensive
digital supply central to the competitiveness of the continent,
and networking of the various infrastructure sectors
indispensable. 5G networks create the basis for integrating
the Internet of Things in all areas of life in the near future.
Austria should focus even more on ICT and digitization, which,with determined investment, will continue to ensure its
competitiveness. In addition, the country needs a clear, longterm infrastructure strategy, as has been evident in Switzerland
for almost ten years, and SMEs especially need to be better
prepared and supported for the digital transformation. Finally,
Austria should further expand its strong position in the energy
sector and implement the necessary classic infrastructure
projects – particularly the third runway at Vienna International
Airport – as quickly as possible.

Arthur D. Little sees Austria at a crossroads. There is an urgent
need for targeted implementation of the digital development
process to prevent Austria from losing its competitiveness on a
massive, long-term basis. On the positive side, the country has
the potential to become one of the pioneers of digitization withthe right initiatives. It is now a matter of taking the right path.
The findings on the Austrian infrastructure are clear: if
substantial investments are not made, and urgently neededchange processes are not implemented effectively, Austria will
fall drastically behind European and international competition in
the medium term. In addition, it is well known, and confirmed byAustria’s top management, that many competitors are alreadyworking intensely on construction and expansion of networked
infrastructures; Austria threatens to lose its business appeal
drastically if it is not aggressively positioned for digital readiness.

Figure 6: GDP impact potential of targeted investments

Investment in ICT

Synergyeffects for all
infrastructure+4 bn GDP
p.a. impact potential
by 2022

Expansion offiber
network

Launch of 5G andcomprehensive IoT

Source: ADL Analysis

137

Figure 7: Consequences of underinvestment in broadband and digitization
83

Economic competitiveness falls behind

39
55

Technological progress is inhibited

22
41

Jobs are lost

14
33

Research quota falls

10
26

Foreign investment is reduced
Stock market becomes less attractive

9
14

2018

2007

3

Source: Future Business Austria

At the same time, great potential for the country can be realized
if necessary projects are financed quickly and consistently
implemented. The benefits are many in the smart Austria of the
future. Citizens could benefit from easier access to healthcare,education and public services; „easi“ mobility could sustainably
reduce the environmental impact of traffic and expand ourunderstanding of transportation; and drone technology could
enable many industries to evolve and reduce the dangers andcosts connected with work, which could be sourced from UAS

in a resource-efficient manner. The future of energy production
and distribution could also undergo major changes, helping
Austria maintain its supply independently of any international
crisis. Arthur D. Little is certain that the further development of
information and communication technology will have a lasting
positive impact on the lives of the Austrian population over the
next few years, provided that the necessary measures will betaken to expand and future-proof its essential infrastructure.

8

14

Contacts
If you would like more information or to arrange an informal discussion on the issues raised here andhow they affect your business, please contact:

Austria
Karim Tagataga.karim@adlittle.com

Japan
Shinichi Akayama
akayama.shinichi@adlittle.com

Spain
Jesus Portal
portal.jesus@adlittle.com

Belgium
Gregory Pankert
pankert.gregory@adlittle.com

Korea
Hoonjin Hwang
hwang.hoojin@adlittle.com

SwedenAgron Lasku
lasku.agron@adlittle.com

China
Shinichi Akayama
akayama.shinichi@adlittle.com

Latin America
Guillem Casahuga
casahuga.guillem@adlittle.com

Switzerland
Michael Opitz
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Czech Republic
Dean Brabec
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Middle East
Lokesh Dadhich
dadhich.lokesh@adlittle.com

TurkeyCoskun Baban
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FranceJulien Duvaud-Schelnast
duvaud-schelnast.julien@adlittle.com

The Netherlands
Martijn Eikelenboom
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UK
Jonathan Rowan
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Germany
Michael Opitz
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NorwayLars Thurmann-Moe
thurmann-moe.lars@adlittle.com

USA
Sean McDevittmcdevitt.sean@adlittle.com

India
Srini Srinivasansrinivasan.srini@adlittle.com

RussiaAlexander Ovanesov
ovanesov.alexander@adlittle.com

Italy
Giancarlo Agresti
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Singapore
Yuma Itoito.yuma@adlittle.com

Digital infrastructure as a driverof competitiveness
Future of connected infrastructure

Arthur D. Little
Arthur D. Little has been at the forefront of innovation since1886. We are an acknowledged thought leader in linking
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