6 The economic influence of data and their impact on business models 6.1 Introduction With the spreading of digitization and the Internet, as well as the evolution of devices connected to it, the ability to collect, analyse and utilize data has made huge leaps recently. Numerous, often innovative business models ranging from data transport and data storage to sophisticated data analysis as well as insights creation are based on revenues essentially derived from data collection and use. This indicates a trend towards data becoming a new driver of economic growth, with a significant impact on business models. This chapter will therefore start by tracing technical innovations that have enabled better access to, as well as transport and utilization of, data. Each of these innovations has given rise to new business models that ultimately will result in a sustainable ongoing structural change in various markets, resulting in a data-driven economy that policy-makers and regulators need to be alert to. Data have gained economic influence far beyond the ‘traditional’ ICT-actors. For instance, pharmaceutical, biological and chemical research and development has become very much data-driven. Cars feature Internet connectivity; collecting and analysing data to provide safety, maintenance and comfort functionalities. Home appliances have become ‘smart’ by being aware of their environment and reacting accordingly based on data. On the other hand, these data have to be made accessible to the end user. They have to be transported and process, otherwise, no meaningful services based on that data can be aggregated or successfully applied. As policies and regulation have a significant impact on whether all the many value propositions can work hand-in-hand and initiate positive economic effects, policy-makers and regulators need to understand the interrelations of different actors. To this end, this chapter develops a structural framework of the data-driven economy by defining stakeholder relationships – the data value circle - and analyses each segment of that structure. It also highlights some of the key characteristics of the data-driven economy, such as two-sided markets that already hold some policy implications. Building on this structure, it is important to recognise the economic importance and future of each sub-market and the role it plays for ongoing structural change in the economy. Besides cutting across numerous sectors, the data-driven economy shows some other rather uncommon features:• Data, unlike most other economic factors, become more valuable with increasing availability. • Consumers often “pay” by giving up their data not their money, but seem to be largely unaware of this. In light of these characteristics, the chapter analyses specific value propositions within the data-driven economy, as well as the business models that surround them. The focus is on the functioning of business models, their profitability and the strategic options they enable. Emerging challenges for actors within the data-driven economy, as well as policy-makers and regulators, will be identified. In fact, various challenges may emerge from the business models that characterize the data-driven economy and the strategic behaviour of its various stakeholders:• Strong incentives to gather more and more data about consumers have to be balanced against consumers’ interests and privacy. • Increasing data traffic needs to be dealt with in an efficient and fair manner to all competitors. • Consumers need transparency and empowerment as regards their own data. • Effective solutions have to be brought forward to clarify and simplify jurisdiction Authors: Dr René C.G. Arnold & Dr Martin Waldburger, Senior ICT Experts, WIK Consult Trends in Telecommunicaiton Reform 2015 153