Gibraltar is a British overseas territory located at the southern tip of the Iberian Peninsula, perched at the crossroads of Europe and Africa. Known locally as ‘the rock’, it covers 6.8 square kilometres and has a population of just under 35,000 residents. Unusual for many jurisdictions of its size, Gibraltar is served by three separate fibre to the home (FTTH) networks – the traditional incumbent and two privately owned operators. Between them services include 5G mobile, fixed-line telephony, fibre broadband and data centre solutions. The networks are entirely independent, each operated by a different entity with little or no shared infrastructure. This has resulted in a climate of intense competition. This article will explore the significance of this strategy for local residents and businesses, and for Gibraltar’s economy. It will also examine the unique regulatory challenges and considerations that this distinct infrastructure has presented for the Gibraltar Regulatory Authority (GRA) and its mandate in overseeing the telecommunications sector.
A thriving online gambling sector
Gibraltar has been the global epicentre for the online gambling industry for over a decade now and the territory oversees 60 per cent of online global gaming.1 It is also one of the largest for gaming governance in the world, with a robust regulatory regime.2 Gibraltar has a highly competitive tax regime.3 However the backbone of the gaming industry is Gibraltar’s telecommunications infrastructure, which is pivotal in delivering the services required for the sector to operate seamlessly. Gibraltar has attracted some of the largest companies in the online gambling industry. It is estimated that 72 per cent per cent of UK online betting takes place in or from Gibraltar, with several major UK-facing online brands located within Gibraltar’s jurisdiction.4 In order to thrive, the online gambling industry has a series of demanding requirements. These include:
- High-speed internet: Online gambling platforms require uninterrupted, fast internet to provide players with real-time gaming experiences.
- Data security: Telecommunications infrastructure is required that can transmit secure, encrypted data in compliance with international standards. This is essential for maintaining the integrity of online gambling operations and secure financial transactions.
- Low latency: Many online casinos offer live dealer games. These require efficient video streaming and minimal latency for a seamless player experience. Latency commitments are specified in individual service level agreements between customers and operators.
- International connectivity: Operators depend on fast and reliable international connectivity for global reach. The territory’s geographical location facilitates strong connections to Europe and North Africa.
- Redundancy and reliability: With multiple operators providing high-speed connectivity, mobile networks and broadband is essential for the online gambling sector. In the event of a technical issue or maintenance downtime with one operator, users can seamlessly switch to another, minimising disruptions and ensuring a more reliable internet experience.
- Regulatory framework: Gibraltar’s online gambling industry is underpinned by a framework designed to ensure fair play, responsible gambling and legal compliance, setting high standards for operators and providing a safe and fair gaming environment.
The online gambling sector is a significant contributor to Gibraltar’s economy, responsible for c.25 per cent of GDP, but it also creates jobs and spurs ancillary industries, including hospitality, real estate, tourism and legal services.5 The telecoms operators themselves benefit from this economic growth, with increased demand for cutting-edge infrastructure to support the sector’s expansion.
In addition to the online gambling sector, Gibraltar is recognised as a leading offshore financial centre, regulated by the Gibraltar Financial Services Commission (GFSC).6 The sector caters to a wide range of services, including banking, asset management and insurance. As is the case with gambling, telecoms infrastructure plays a crucial role by enabling secure and efficient financial transactions, data transmission and secure communication with international clients.
The value of non-shared infrastructure
The benefits of infrastructure sharing amongst telecoms operators are well documented and often encouraged across Europe for a range of reasons. Regulatory bodies play a crucial role in determining the extent to which infrastructure sharing is allowed and under what conditions. They aim to strike a balance between promoting competition in the telecoms sector and ensuring the efficient use of resources.
Infrastructure sharing can take many forms, including passive, active and fixed access network sharing. The extent of infrastructure sharing varies from country to country and is influenced by factors such as regulatory policies, market dynamics and competitive considerations. However, where feasible, infrastructure sharing can be a pragmatic approach to addressing the challenges of expanding and maintaining a robust telecommunications network.
Gibraltar’s three FTTH networks, each independently owned and operated, has created a non-shared infrastructure which has transformed the territory’s telecommunications landscape
While space in Gibraltar is at a premium and operators have to be as efficient as possible when rolling out their networks, Gibraltar’s relatively small size has mitigated the high costs often associated with network roll out in larger jurisdictions. For this reason, and despite provisions in Gibraltar’s local telecoms legislation that provide for both passive and active infrastructure sharing, this has not always been the favoured or even most cost-effective or suitable approach to expanding privately owned networks. This contrasts with trends across the rest of Europe. The sharing of passive infrastructure where physically possible does take place in Gibraltar, but to a much lesser extent than in the rest of Europe. (This applies to infrastructure owned by utility companies and other operators as well as telecoms networks.)
Gibraltar is an example of how network autonomy with only limited infrastructure sharing can lead to a competitive and innovative marketplace. Gibraltar’s three FTTH networks, each independently owned and operated, has created a non-shared infrastructure which has transformed the territory’s telecommunications landscape. Gibraltar now has some of the fastest internet speeds in the world.7
The value of sharing infrastructure cannot be overlooked, but exclusive networks can also have benefits. These include:
- Increased control: When a telecoms company has exclusive control over its infrastructure it can maintain high standards of network management, security and quality of service. This allows for more efficient troubleshooting and maintenance.
- Customisation: Exclusive infrastructure ownership enables operators to customise their network according to their specific needs and requirements. This can lead to better optimisation and performance, tailored to the company’s services and user base.
- Competitive advantage: Owning and controlling infrastructure allows for differentiation in terms of service quality, coverage and innovation. This can both attract and retain customers, giving the company an edge in the market in terms of service plans, speeds, bundled products, bespoke services and competitive pricing.
- Faster deployment of new technologies: Companies can implement and deploy new technologies efficiently without being dependent on coordination with other telecoms operators. This agility can be crucial in adopting the latest advancements in telecommunications.
- Security and privacy: Exclusive control over infrastructure can enhance security measures and privacy protection. Operators can implement robust security protocols and have more control over access points, reducing the risk of unauthorised access or cyber attacks.
- Investment and Innovation: When a telecoms company owns its infrastructure, it may be more motivated to invest in research and development to improve and expand its existing capabilities, leading to increased innovation and development of advanced telecommunications technologies.
- Flexibility in pricing models: Exclusive infrastructure ownership allows telecoms companies to have more flexibility in designing pricing models for their services. They can adapt pricing strategies based on their cost structures and market conditions.
- Reduced interoperability challenges: Sharing infrastructure often creates problems of interoperability. By having exclusive control, a company can avoid the complication involved in integrating technologies and standards used by other operators.
Each operator in Gibraltar has almost 100 per cent fibre broadband coverage, or otherwise the ability to service certain hard-to-reach areas within a relatively short space of time should a request for services be made. This renders the concept of infrastructure sharing virtually redundant. With the exception of the upper rock, which has very few residents, there are no rural or far-to-reach areas, unlike other larger jurisdictions which may rely, to a certain extent, on the traditional incumbent’s legacy network for connectivity in hard-to-reach and non-profitable areas. It is also important to note that whilst the demand for fixed broadband in the upper rock is relatively low, the entire area is nonetheless serviced by 4G/5G mobile coverage with very few dead spots.
Due to the topographical nature of the rock and the coverage challenges it presents, mobile operators have had to deploy a greater number of cell sites than would usually be required in other territories. Furthermore, Gibraltar shares a land border with Spain and is close to North Africa, meaning that efficient spectrum coordination is also important given the interference issues occasionally experienced. So it is vital to note that geographical location may also determine a regulator’s mandate and priorities as well as those of operators in respect of infrastructure deployment.
Charting the high-speed landscape
Gibraltar’s three broadband operators currently offer a choice of FTTH residential bundled packages with symmetric download/upload speeds ranging from 500 megabits per second (Mbps) to 2 gigabits per second (Gbps). These bundled packages are also available for small to medium size businesses. However, all three operators cater for larger business customers who rely on heavy data flows, increased resilience, redundancy and reduced latency by offering ‘tailored solutions’. These may include prioritised network traffic, increased security, 24-hour support and enhanced service level agreements.
This is significant when compared to the average download/upload speeds of some larger jurisdictions within Europe. Among the compared markets, France, Spain and the UK appear to stand out with the best observed broadband speeds, recording average download speeds of 121 Mbps, 114.4 Mbps and 66.1 Mbps respectively. On the other hand, average upload speeds are 88.5 Mbps, 91.4 Mbps and 20.6 Mbps respectively. However, it is important to note that these figures represent averages that may be lower than expected due to the connectivity issues inherent in larger jurisdictions with rural areas and the impact this may have. It is crucial to note that, in the more densely populated parts of France, Spain and the UK, for example, download speeds of 5, 30, 80, and 500 Mbps as well as 1 Gbps are available.8 However, in certain cases this is still provided via dated ADSL/VDSL and fibre to the node technologies, with the exception of areas where FTTH roll out has been achieved.9
With economies of scale in mind, the fact remains that owing to Gibraltar’s unique topography and level of established infrastructure, it has progressed significantly in terms of global connectivity with extremely fast, symmetric FTTH broadband speeds widely available.
Complexities in regulation
A system involving three independent network operators in a small area brings with it a unique set of complexities and considerations.
- Market saturation: With a population of just under 35,000 people, operators share a limited market. The GRA regularly gathers statistical data from all three operators in order to actively monitor market shares and make regulatory assessments pertaining to ‘significant market power’. The authority observed huge fluctuations in market shares when the two private network operators initially rolled out their services. The market became increasingly competitive as the years progressed and this was especially evident in the residential broadband sector. However, each operator now has a fairly balanced share of the market which has showed little change over the 2021-23 period, indicating that these shares have now settled, with the individual needs of customers being met.10
- Business models: The relative ‘stagnation’ in residential and, to a certain extent, business market shares, calls into question the long-term viability of some business models. This may be due to the similarities between the products offered in terms of pricing, bundling of services, tailored business solutions, etc. This could hypothetically lead to a financial strain on operators and whilst this does not currently seem to be an issue within Gibraltar, there exists the potential for operators to struggle to generate further revenue in order to cover any future infrastructure investments and operational costs inherent in an increasingly competitive market.
- Potential for service fragmentation: The presence of three separate operators may limit flexibility, for example in choosing to focus on specific areas or demographic groups. This could leave the territory with subpar internet access in certain areas, even with regulatory interventions such as universal service and functional internet access. So far, service fragmentation does not appear to be an issue, with each operator having significant coverage of the territory in terms of market reach.11
- Interference and congestion: Gibraltar’s unique geographical location and close proximity to both Spain and North Africa also present challenges that require good spectrum management and regulatory collaboration in order to mitigate the risk of interference. Furthermore, the limited physical space in Gibraltar can exacerbate the potential for network interference and congestion issues among the three separate networks. Overlapping frequencies and crowded network channels can lead to degraded performance for some users in certain circumstances, making it challenging for operators and necessitating regulatory intervention in some cases.
- Increased risk of cybersecurity threats: Having multiple operators managing their own networks may increase the risk from cybersecurity threats. Each operator has their own unique set-up and security protocols, making it harder to establish a single unified defence against cyber threats. In extreme cases, this could render broadband infrastructure vulnerable to attacks, potentially compromising the privacy and security of users. For this reason, and in addition to ensuring operators implement best industry practices, the GRA periodically reviews the security measures in place and strongly encourages open and transparent dialogue. The GRA collaborates with the operators to strengthen network security measures and ensure that information regarding security threats is shared.
Lessons from Gibraltar’s approach
In hosting three separate, non-shared, full-fibre networks, Gibraltar’s telecommunications infrastructure is distinctive. It demonstrates the potential of such an approach in respect of fostering competition, ensuring reliability and providing a wide array of choices and redundancy for residents and businesses.
Gibraltar’s transformation into an online gambling and financial services hub has been achieved through a combination of regulatory engagement, favourable tax conditions and advanced telecommunications infrastructure. The interplay between telecommunications and these two sectors has not only fuelled economic growth but has positioned Gibraltar as a prominent player in the global online gambling and financial services industries.
However, in structuring an approach, regulatory bodies and operators alike should take into account factors such as geographical size, existing infrastructure, competition, market dynamics, differing technologies and their target user base when considering any type of infrastructure sharing. Furthermore, this should be assessed on a case-by-case basis in order to provide the most advantageous platform for service innovation and future market growth. Mutual cooperation and understanding between differing network operators must also be encouraged. To this end, Gibraltar’s telecommunications landscape shows the transformative power of investing in advanced independent infrastructure, whilst also being aware of the potential drawbacks, demonstrating the power of non-shared infrastructure to shape a prosperous future.
Operators’ decisions to engage in limited infrastructure sharing has proved to be a winning strategy. However, striking a balance between competition and cooperation in the telecommunications sector is a complex challenge to which Gibraltar, like other regions, must continually evaluate and adapt to ultimately ensure that residents and businesses benefit from high-quality, accessible, and innovative telecommunications services without the drawbacks.
