"Lies, Damned Lies and Statistics"

What is a “fact,” and how do we know? 

Consider any number of statistical correlations we might care to investigate: whether crime, mental health (changing diagnostic criteria alter prevalence rates); poverty (different poverty line calculations yield dramatically different numbers); education (standardized test focus narrows what's measured as "learning," but some relatively objective means has to be used); public health (disease surveillance systems prioritize certain conditions over others). 

The statistics we collect about crime and human behavior are powerfully shaped by the decisions about what to count, how to count it, and what to prioritize. Whether one believes that is a reflection of societal power or something more simple, our choices about what to count influences both the “numbers” and the sense of significance. 

To use an obvious example, to the extent we decriminalize or legalize use of marijuana, the amount of crime related to “illegal” use goes away. Then there are issues related to which crimes we choose to prioritize over others which also are legally crimes. Law enforcement agencies, for example, have finite resources. They might choose to ignore some infractions to focus on others. That directly shapes crime statistics (enforcement increases volume; ignoring decreases volume of reported instances). 

There also is a difference between unreported and reported; prosecuted and not prosecuted; acquittal and conviction rates. 

Also, changes in recording practices can create statistical variances. Redefining deviance upwards or downwards (what is a crime; what is not) will affect the statistics. 

During the Covid-19 pandemic, there were complexities in how deaths were classified when COVID-19 was detected alongside other health conditions. 

In most jurisdictions, including the United States, the standard practice followed CDC guidance: deaths were counted as COVID-19 deaths if COVID-19 was listed as a cause of death on the death certificate, either as the underlying cause or as a contributing factor. 

This approach meant that someone who died with multiple conditions could be counted in COVID-19 mortality statistics if COVID-19 played a role in the death. But there were at least three distinct categories:

• Deaths directly caused by COVID-19 (e.g., respiratory failure due to COVID-19 pneumonia)

• Deaths where COVID-19 was a contributing factor that exacerbated existing conditions

• Deaths where someone tested positive for COVID-19 but died primarily from unrelated causes

The controversy centered on the inclusion of category 2 and sometimes category 3 cases. 

The CDC eventually distinguished between deaths "from" COVID-19 and deaths "with" COVID-19, though public reporting didn't always clearly separate these categories.

These classification decisions had significant implications for our understanding of the pandemic's impact and highlighted how methodological choices in mortality statistics can shape our perception of public health crises. 

The point is that there are “statistics” and there are “lies, damned lies, and statistics.” In other words, seemingly objective statistics are only partly thus.

Impact of Covid on Telecom, IT Spending Not Yet Completely Clear

When all the data is available, it is likely we will find that the Covid-19 related work-from-home and other measures reduced global service provider revenues  a couple of percentage points, though some firms might have seen far-worse hits, and some see higher revenues. 

Overall, full-year global results might show less than one percentage slippage of service provider revenue, IDC predicts. 

source: IDC 

And in many cases, it will be hard to separate specific Covid-19 impact from the underlying trend of declining growth. Something similar might happen for information technology spending, even for cloud services which have been on a steady growth path.

Though it might seem obvious that information technology executives increased cloud computing spend to support remote workers during the Covid-19 pandemic, it is not yet so clear how much spending actually might have changed. It is possible we might actually see spending fairly close to what had been predicted prior to the pandemic. 

An October 2020 survey of 230 information technology professionals by OpsRamp finds 60 percent of firms increased IT budgets while 22 percent reduced spending in the second and third quarters of 2020. Some 63 percent of respondents reported accelerated or maintained digital transformation initiatives because of Covid-19.

The survey included IT professionals in the United States and United Kingdom working for firms with  at least 500 employees and $5 million in annual IT budgets. 

Reported priorities for IT leaders included information security and compliance (59 percent), remote work and collaboration (55 percent), public and multi-cloud infrastructure (50 percent) and monitoring and management (42 percent). 

Among capabilities acquired were artificial intelligence for IT operations (57 percent); digital experience monitoring (50 percent) and network performance monitoring and diagnostics (50 percent). 

A Computer Economics survey in August and September 2020 finds a split pattern of information technology operations spending: 30 percent increasing spending while 29 percent were decreasing. About 41 percent of respondents say there has been no change in spending. 

Back in April and May 2020, 41 percent of respondents reported unchanged spending. But 30 percent already had made moves to reduce IT budgets in response to  To the extent there had Covid-19 work from home rules.

source: Computer Economics

The 30 percent of respondents who reported cutting spending seems not to have budged much. In the fall, the percentage of respondents reporting lower spending was still 29 percent, substantially the same as the 30 percent who reported cuts in April and May 2020. 

What changed was the percentage of respondent firms that boosted spending, probably for hardware, software or services related to supporting remote workers. “Of course, the big reason for increasing budgets is to respond to the increased need for employees to work from home,” said David Wagner, Computer Economics senior research director. 

source: Computer Economics 

It is hard to separate out the response to Covid-19 remote work on cloud computing, which has been growing robustly before the work-from-home mandates were imposed. And even some firms that one might assume boosted cloud spending to support at-home workers eventually reduced spending from surge levels. 

Some studies suggest cloud revenue growth from 2020 to 2021 will be about 12.5 percent, perhaps lower than many would have expected, even under normal circumstances. The only issue is whether the work-from-home rules affected cloud computing uptake rates. And that might ultimately be a different matter from earlier expectations that cloud computing among smaller businesses, for example, would increase because of the pandemic. 

To some degree, the changes might hinge on whether customers are active about turning off or reducing payment for unused cloud services. It also will matter how much aggregate demand changed when workers shifted from offices to homes. In principle, that might have shifted the location of consumption, but not the volume of use. 

Though early in the pandemic many expected increased reliance on cloud computing, beyond growth already expected, we will have to wait and see what actually transpired. Covid impact might ultimately turn out to have been less of a change inducer than we expected. 

Travel Restriction Impact on Telecom Revenue

Economic shutdowns and travel restrictions have been widely used during the Covid-19 pandemic to control the rate of infection. Sometimes it helps; sometimes it does not. Health policies should, when possible, disrupt economic activity as little as possible, a team of researchers says.

Though primarily affected travel-related industries, such travel bans also negatively affect mobile industry revenues by reducing the amount of roaming revenue. People who are not traveling also are not using their phones out of their home regions. Early March 2020 forecasts were that mobile operators globally could lose $25 billion in roaming revenue. 

In September 2020, research from roaming experts Kaleido Intelligence suggested a 53 percent fall in retail roaming revenues would happen in 2020. According to GSMA, that could represent a revenue hit of as much as four percent to eight percent. 

Combined with other revenue deceleration from reduced new customer acquisitions and upgrades, TBR estimates average revenue growth could dip about six percent in the first half of 2020 alone. Some estimates suggest revenue losses could be far greater, approaching 20 percent in some cases.  

source: TBR 

The issue, some might say, is striking a balance between public health and economic health, especially unemployment and recession, with economic contraction between five percent and eight percent in 2020, compared to 2019. 

The expected 2021 rate of recovery might also depend on how rapidly consumers are willing to resume “normal” life activities. 

Stringent travel restrictions might have little impact on epidemic dynamics except in countries with low Covid-19 incidence and large numbers of arrivals from other countries, or where epidemics are close to tipping points for exponential growth, a team of researchers reports.

“In May, 2020, imported cases are likely to have accounted for a high proportion of total incidence in many countries, contributing more than 10 percent of total incidence in 102 (95 percent credible interval 63–129) of 136 countries when assuming no reduction in travel volumes (ie, with 2019 travel volumes) and in 74 countries (33–114) when assuming estimated 2020 travel volumes. Imported cases in September, 2020, would have accounted for no more than 10 percent of total incidence in 106 (50–140) of 162 countries and less than 1 percent in 21 countries (4–71) when assuming no reductions in travel volumes,” say researchers Timothy Russell, Sam Clifford, W. John Edmunds, Adam J Kucharski and Mark Jit, working on behalf of the Center for the Mathematical Modelling of Infectious Diseases Covid-19 working group and published in the Lancet. 

“Countries should consider local Covid-19 incidence, local epidemic growth, and travel volumes before implementing such restrictions,” they note. “Although such restrictions probably contribute to epidemic control in many countries, in others, imported cases are likely to contribute little to local Covid-19 epidemics.”

As a matter of science, travel bans might or might not have much material impact on rates of new Covid-19 infections. And the benefit has to be weighed against the costs of movement bans on economic performance, as any other public policy should be evaluated, one might argue.

Some Covid-19 Winners Boosted AI Spending Because Financial Advantage was Seen

In virtually every recession or economic panic, some firms, in some industries, are able to boost sales, take market share and maintain or even boost profit margins. Often known as high-performing firms, there might not be a single clear reason for success.

The firms could be in growing young markets, have leadership or capital access advantages, have made astute technology investments, or simply be in industries that benefit from the particular crises or recessions.

Likewise, some firms, across industries, seem to have continued to invest in artificial intelligence during the Covid-19 pandemic, and those firms seem to have done so because they saw clear advantages to use of AI in ways that helped their business models.

If the Covid-19 pandemic affected enterprise information technology investments, it arguably has slowed such investments at some firms, which have had to shift support to remote workers. On the other hand, some firms who already have found use cases, and invested more heavily prior to the pandemic, seem to have increased their investment level, a  McKinsey survey found.

Respondents from 61 percent of firms who report success with AI also say their firms increased investment in 2020. Patterns across industries show big variations.

 source: McKinsey

Firms in healthcare, pharma, medical products; as well as companies in the automotive industry were most likely to have increased AI investments in 2020. 

 source: McKinsey

Most enterprises likely have not yet found clear financial benefits from AI deployment, though. A survey of more than 3,000 company managers about their AI spend found just 10 percent had gotten significant financial benefits from their investment so far, a report from MIT Sloan Management Review and Boston Consulting Group found. 

A separate survey of U.K. firms found that 40 percent of 750 surveyed U.K. executives plan to invest in artificial intelligence in 2021, a survey by Fountech Solutions finds. 

  

Some 30 percent of respondents say their firms piloted an AI solution for the first time since the onset of the Covid-19 pandemic. New AI specialists will be hired by 41 percent of respondent firms. Also, 48 percent of respondents say their companies will seek AI training for existing staff.

As a rule, some firms managed to grow revenue and profit during recessions and crises, Boston Consulting Group data suggests. While 44 percent of firms might experience shrinking profit margins and sales growth in a recession or crisis, 14 percent have shown growth in both sales and profits. 

Some 28 percent of firms see lower sales but manage to increase profit margins. About 14 percent of firms see higher sales and lower profit margins. 

Firms in health and consumer staples are most likely to see winners in recessions. Companies in energy, information and communications technology and financial industries are least likely to emerge with higher sales and profits in a recession.

source: Boston Consulting Group 

It is possible--even likely--that firms continuing to invest in AI during the Covid-19 pandemic were already finding themselves gaining market share, increasing sales volume and maintaining or increasing profits. 

The McKinsey survey found, for example, that a small number of respondents at some firms attributed 20 percent or more of their firm earnings before interest and taxes (EBIT) to AI. Those companies planned to invest even more in AI during the COVID-19 pandemic. 

That is in keeping with the BCG data suggesting some firms gain market share and boost sales during recessions and crises. If such gains are attributed to AI, it makes sense that firms would maintain or boost such investments.

Telecom Revenue Recovery in Asia Pacific: How Soon?

Retail connectivity service provider revenues tend to track gross domestic product growth or contraction, so it would not be surprising to learn that the economic recession caused by Covid-19 public health measures have caused retail service provider revenue to contract, in Asia and the Pacific region. 

Always, telecom service spending tracks household income. So when income falls, telecom services spending tends to dip as well. During the Covid-19 economic lockdowns, when people were working from home, lower travel also meant lower roaming revenues, for example, though counterbalanced to some extent by higher spending on broadband access services.  

Virtually everyone expects a rebound as economic activity accelerates. So how fast will the Asia-Pacific recovery occur? It depends. Global tourism is expected to remain below pre-pandemic levels till 2023 and delay economic recovery in tourism-dependent economies, so that also is an issue. 

 source: World Bank

Among major economies of the Asia region, only China and Vietnam have followed a V-shape recovery path with output surpassing pre-COVID-19 levels in 2020, a World Bank report says.

Most of the other countries have not seen a full-fledged recovery in terms of either output or growth momentum, the World Bank says. 

By the end of 2020, output in the four other major economies had rebounded but remained on average around five percent below pre-pandemic levels, with the smallest gap in Indonesia (2.2 percent) and the largest gap in the Philippines (8.4 percent). 

 source: World Bank

As you might expect, economic contraction has been particularly severe and persistent in some of the small island economies with output in 2020, remaining more than 10 percent below pre-pandemic levels in Fiji, Palau, and Vanuatu. 

Longer term, it is possible that growth over the next decade could be as much as 1.8 percentage points lower than pre-Covid-19 projections for the region excluding China. 

Still, China and Vietnam already are on pre-Covid growth paths. Indonesia and Malaysia will be back to 2019 later levels this year. Thailand and the Philippines will do so by late 2022, the World Bank estimates. 

Connectivity service provider revenues should track those developments quite closely, with the caveat that tourism-heavy economies will take longer to recover than export-oriented economies.

Covid-19 is Not "Breaking the Internet"

The sudden adoption of “stay at home” policies in many countries will provide a “stress test” for communications networks at the same time, revealing which networks are resilient, and which are less so. So far, there are few reports of problems, though perhaps it is inevitable that speculation about breaking the internet will prove irresistible storylines. 

The real story is the absence of reports about actual service degradation. A few service providers already have released data on the spike in usage.

Verizon reported that between March 12 and March 19, 2020, total voice usage on Verizon networks was up 25 percent, with the primary driver being use of conference call services.

Cisco reports that traffic on the Webex backbone connecting China-based Webex users to their global workplaces has increased as much as 22 times since the Covid-19 outbreak began. During the same time period, Webex also saw four to five times as many users in Japan, South Korea and Singapore, with the average time spent on Webex video meetings doubling among users in those countries.

Mobile voice usage was up 10 percent, while call duration was up 15 percent. Presumably much of that is related to the use of conference calling services. Still, voice traffic requires so little bandwidth that none of that would affect user experience overall. 

Virtual private network traffic was up 25 percent and web traffic was up 22 percent. 

source: Verizon

From March 9 to March 16, 2020, Verizon noted a 75 percent increase in gaming; a 12 percent increase in video streaming and web streaming boosts of just under 20 percent.

source: Verizon

On March 19, OpenVault reported that data usage during business hours grew more than 41 percent. Average usage during the 9 am-to-5 pm daypart has risen to 6.3 GB, 41.4 percent higher than the January figure of 4.4 GB. 

Peak hour (6 pm–11 pm) usage has risen 17.2 percent from five gigabytes per subscriber in January to 5.87 GB in March. 

Overall daily usage has grown from 12.19 GB to 15.46 GB, an increase of 26.8 percent.

European Community networks, on the other hand, might be less resilient, judging by the EC request that streaming services reduce resolution to limit bandwidth consumption. 

A new analysis by Nokia also confirms unprecedented growth of internet traffic as a result of government policies keeping workers and students at home because of the Covid-9 virus pandemic.  

source: Nokia

Most networks have seen 30 percent to 45 percent  growth over a year, with Covid-19 period increases of perhaps 20 percent to 40 peak increases, typically in the evening hours over the past four weeks. 

“So far, networks appear to be meeting demand, but they were designed to grow that much in a year, not in days,” Nokia says. 

The edge and peering links of Content Delivery Networks (CDNs) seem to have enough headroom, but there is stress mostly on the aggregation networks and service edge routers, where demand may be reaching capacity maximums, Nokia says.

“We are also seeing unprecedented growth in latency-sensitive applications during business hours,” Nokia says, including 300 percent growth in teleconferencing apps in the United States, and 400 percent growth in gaming.

Is Covid a White, Grey or Black Swan? It Matters

Is the Covid-19 a white swan, a grey swan or a black swan? The answer portends the amount of disruption we could see, post-Covid. 

A “white swan” event that is one that could have rationally been expected to happen at some time, and has major effects. If Covid-19 was a white swan, the world will not be disrupted as much as many expect. Essentially, change will happen without expected and “normal” statistical ranges. In other words, Covid will have about as much impact as a normal recession. 

White swans are said to have relatively few negative implications, impacting the life of one or a group of people rather than the entire globe. 

Grey swans--neither a completely unexpected black swan nor a predictable white swan--can be devastating for many, and can have radically unsettling implications. To be sure, black swan or grey swan events can be positive, not just negative, though the most common outcome is a negative impact. 

The main difference between a grey swan and a black swan event is that one is known about beforehand, while the other takes us completely by surprise. But the bottom line is that a grey swan event can still be disruptive and devastating. 

If Covid-19 was a grey swan, we might see unexpectedly large outcomes, in terms of change. 

A true black swan event is typically expected to have disruptive implications. Black swans are outliers, events that are outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. 

Climate change, population growth or rising debt levels could be grey swans. Long-term water shortages could be a grey swan. 

Black swans typically have “extreme” or “massive” impact, exposing fragility in ideas or practices that had underpinned “normalcy.” Many would consider the personal computer and the internet as examples of black swans. 

Keep in mind that highly-disruptive events can still be white swans. Some consider the internet bubble burst of 2001 and the Great Recession of 2008 to be white swans. If that is the test, a grey swan or black swan would have unimaginable consequences. 

Others might consider the 2001 internet bubble burst a white swan, but the Great Recession of 2008 a black swan. World War I, World War II, the fall of the Soviet Union, the rise of Islamic fundamentalists, 9/11 and the internet might be called by some black swan events.

Others might consider the Great Depression and World War II as a single black swan event. Some consider the sinking of the Titanic a black swan event. Others might consider larger events, such as the Spanish defeat of the Aztecs, to be black swan events. 

The point of black or grey swan events is not “how to prevent them.” By definition, they cannot be predicted or prevented. But organizations can try and create robustness for their occurrence. 

Small businesses, sadly, almost by definition cannot create much robustness. 

Many businesses--large and small--will survive or die based on when economic activity can be resumed on a “normal” basis. A survey of U.S. respondents taken mostly in January 2021 suggests most believe it will be six months until they feel comfortable attending large public events. 

A plurality say it will be six months until they are comfortable taking a vacation. Other life sustaining activities--such as going to work--are largely believed safe now. A majority of respondents feel safe shopping in retail stores now. Less than half are comfortable eating at a restaurant. 

If these attitudes do not change, many restaurants and travel-related businesses will not be in business by the end of 2021. Failures in many OECD countries will eliminate more than three percent of jobs. 

source: Civic Science 

The number of active business owners in the United States plummeted by 3.3 million or 22 percent in just two months from February to April 2020. The drop in active business owners was the largest on record, according to the National Institutes of Health. 

By December 2020, 42 percent of small businesses surveyed on Alignable said they were in danger of going out of business. By the fall of 2020, at least 49 percent of businesses reported they were unprofitable. Some 18 percent were operating at about breakeven levels. 

It almost does not matter whether economic shutdowns and travel bans are classified as white, grey or black swans. For small businesses, they have the impact of a black swan, even if other segments of the economy will not be so affected. 

It remains unclear whether Covid will prove a black swan for cruise lines, retailing, the travel industry, airlines, entertainment or real estate. As with small businesses, Covid might well turn out to have black swan impact on some industries.