The curative power of connectivity: using digital technology to support economic growth

By on 27/07/2020
(Photo by Guiseppe Milo via flickr).

Coronavirus has shone a spotlight on the need for resilient digital infrastructure. Those watching a recent Huawei webinar – now available on demand by completing the form below – learnt just how important investment in connectivity will be, both in aiding economic recovery and in heading off future crises.

The COVID-19 pandemic has demonstrated just how important resilience is. As countries went into lockdown, people began working from home en masse, putting a strain on broadband networks not before seen. Happily, existing infrastructure appeared to cope remarkably well. But as the webinar’s panellists argued, if the UK is to meet its target of delivering gigabit-capable broadband nationwide by 2025, and rely in-part on digital technology to grow the economy, it can’t rest on its laurels.

During the webinar, hosted by Global Government Forum on 8 July, vice-president and economic advisor of the government affairs team at Huawei Technologies, Andrew Williamson, talked viewers through the various ways digital tools have been used to tackle the pandemic in the Far East, and how COVID-19 has prompted governments to invest huge amounts in their digital futures.

The countries first hit by coronavirus – China, South Korea, Taiwan, Hong Kong, Japan and other Far Eastern nations – are now well into the recovery phase. These countries coped better than many others because “a lot of institutional knowledge existed” following the SARS outbreak of 2002, Williamson said. But that wasn’t their only advantage. What’s really come to the fore this time, he said, is the use of information communication and digital technologies in fighting the virus and as the foundation for economic growth.

In China, for example, cloud computing and artificial intelligence (AI) meant patients could be tested and diagnosed six times faster than was previously possible using manual methods; robots were rolled out to disinfect hospital wards; police officers wear special glasses that can read the temperatures of people in crowds; and QR codes were introduced to verify people as they entered public buildings as part of the tracing and tracking effort.

Andrew Williamson: “In China, technology is being used to resume business activity and to enthuse consumers back into consumption.” (Photo by Michael Davis-Burchat via flickr).

Another trend already seen in China but which has been greatly accelerated by the pandemic, Williamson added, is digital money. “Cash is essentially dead in China – people aren’t using notes or coins anymore. Almost every financial transaction done in the smallest shop to the biggest supermarket is done using QR codes, WePay and AliPay… this kind of QR code and app ecosystem has been rolled out extensively to almost every facet of life.”

Many of these interventions were made possible by previous investments in connectivity. “The government had already pumped a lot of money into alleviating network shortages and increasing capacity, particularly in rural and poorer parts of the country,” Williamson said.

Recovery drive

And now the emphasis is on using those existing networks and the technologies they support to drive the recovery. “In China, technology is being used to resume business activity and to enthuse consumers back into consumption,” Williamson said, citing digitally-enabled shopping festivals and the use of virtual reality to facilitate remote house viewings and test drives.

He reiterated that such initiatives are made possible by digital infrastructure and that greater investment is needed if the potential gains are to be realised.

Andrew Williamson

He pointed to research by the IMF which suggests that investment in digital infrastructure provides the best returns, and to a European Commission study which estimates that the fiscal multiplier on 5G infrastructure alone is around 2.5. And the benefits aren’t only financial – there’s plenty of evidence, Williamson said, to suggest that investment in digital infrastructure will provide the greatest return for society, especially in the medium to long term.

“What’s clear is that governments can help shape economic recovery in a way they couldn’t after the global financial crisis,” Williamson, who is a former economist, said.

“The countries that are already well on their digital transformation journey are the countries that should recover much more quickly than others,” he added. “Governments don’t need to be convinced of this. They are aware of the compelling arguments behind it and they’re already acting – certainly through May we saw a slew of announcements by governments about earmarking very large sums of money to digital infrastructure and digital transformation.”

He gave the example of Germany, which has proposed investing US$28bn-US$31bn in future mobility, in which digital infrastructure will play a part. US$5bn would be spent on expanding 5G networks – the primary aim, Williamson said, is to support smart manufacturing – while US$3bn would be earmarked for a federal digital infrastructure fund.

Williamson notes that Germany doesn’t currently score very highly in terms of its existing digital infrastructure. “It has this gap it knows it needs to plug to help boost the economic recovery of the country,” he said.

The Spanish government, meanwhile, is focusing on connecting rural areas of the country and closing the digital divide. “A lot of government money is going to support the network operators to help make the economic argument, draw up the business plans and to establish the capability needed to connect rural areas that were often left unconnected, much more viable,” Williamson explained.

President of the Republic of Korea, Moon Jae-in, announced the Digital New Deal in July. (Photo by Jeon Han, courtesy Republic of Korea via flickr).

But perhaps the biggest announcement, according to Williamson, has come from South Korea. The US$19bn outlined in its Digital New Deal will be spent on 5G infrastructure, AI ecosystems, cloud computing, the Internet of Things, smart manufacturing and smart cities and will, the government says, take Korea from being a follower nation to a pace-setting, digital nation. “It’s a real big play from them in terms of aiding the economic recovery and digitalising the entire nation,” Williamson said.

Six steps for policymakers

Matthew Howett, founder and principle analyst of communications market specialist Assembly Research, who presented alongside Williamson during the webinar, looked into the role of connectivity in the UK’s post-pandemic bounce-back and noted six actions governments and policymakers could take to speed up progress.

Matthew Howett

Britain, he said, is arguably one of the world leaders when it comes to superfast broadband coverage with 95% coverage across the country, but it lags behind other nations when it comes to gigabit-capable speeds. To remedy this, prime minister Boris Johnson set a target late last year to deliver gigabit-capable broadband nationwide by 2025.

Howett pointed to recent research by Assembly, telecommunications company Openreach, and the Department for Digital, Culture, Media and Sport, which estimates that gigabit-capable broadband would boost productivity from around £50bn (US$64bn) in 2025 to almost £69bn (US$89bn) by 2030.

“We’re talking about a huge contribution to the economy, and any delay to achieving that very ambitious target risks materially missing out on those productivity benefits,” Howett said. “As any economist will know, you don’t get those productivity improvements back – you don’t just simply push them down the line, they end up getting lost. We think to miss that target by even a couple of years would mean a hit to the economy of between £10bn-£30bn (US$13bn-US$38bn).”

Howett believes the industry stands ready to support the government’s ambitious connectivity target “so long as there are the right enablers in place”.

At present, he said, there are six things policymakers should focus on if they are to encourage the industry to “plough ahead” and put in the investment that would enable the 2025 target to be met: building on positive regulatory progress; maintaining a neutral approach to technology to include full-fibre, cable and 5G; supporting the market entry of alternative network operators; providing the necessary funding so that infrastructure can be installed in non-commercially viable areas; removing business rates and other barriers to deployment; and encouraging demand from citizens.

Not a luxury, but a necessity

“The pandemic has laid bare just how important access to reliable futureproofed digital infrastructure is – it’s not a luxury, it’s very much a necessity,” Howett said.

“I think we need to see something like what Germany’s doing, this idea of industry 4.0, in the UK,” he added. “We talk about smart cities and have been doing so for more than a decade. We need to actually start to realise that, to take now as an opportunity to build them and to be able to compete in the post-Brexit environment with countries like Germany. Being able to attract investment from the big manufacturers will be particularly useful in terms of economic recovery.”

Williamson closed the discussion with a warning: “The UK scores highly internationally when it comes to connectivity. There are many fundamental pieces of the puzzle that you need to put in place and the UK has done very well – particularly London, which is recognised as a leading global hub for the digital economy. But you can’t rest on your laurels.

“Many countries are now realising the importance of putting down the foundations for the future digital economy and a lot of them have earmarked very large sums of money to facilitate that. The race is really on and if you start prevaricating and questioning different types of technology then you risk falling behind and losing the ‘first mover’ advantage.”

For more insights into the potential of digital infrastructure investment, view the webinar on-demand and access the presentation slides by completing the form below.

For further information, please email [email protected], call +44 20 3472 6350 or +44 7557 589 158, or visit the website here.

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