New Technology is Interesting to Some; Frictionless Business is Interesting to Many

With the caveat that most people conflate any number of related developments with “5G,” and that many see artificial intelligence as a product rather than a capability, the Gartner hype cycle suggests we should soon begin hearing about 5G disappointments and dashed hopes. Gartner believes a period of disillusionment happens with most new technologies, and 5G is about at the peak of such expectations. 

source: Gartner

Hype around various forms of artificial intelligence continues to build and will likely be even harder to comprehend than 5G, as AI represents different ways of using computing to derive insights, but also is not a “product” one buys. 

People can buy 5G service, 5G phones and devices; they cannot purchase “AI” off the shelf as a product they consume and use directly. Instead, AI will enhance the performance of all sorts of devices, software, apps and networks. 

That can make conversations about “AI” quite difficult. A better way to approach matters is to view any number of emerging capabilities and technologies as ways to reduce business friction, allowing firms to understand and target customer needs; improve the quality of their experiences with a product; reduce the cost of creating and providing products; increase sales; boost profit margins and heighten customer delight. 

The more practical the setting, the less likely it is that people, executives or firms will want to spend too much time hearing about AI. But any number of emerging and new technologies have value because they promise to take friction out of any business process.

And friction means cost, waste, delay, customers less happy than they might otherwise be, less precise satisfaction of customer wants and needs.

Big Cities have Best Broadband; Small Towns Tend to Have the Worst:Altman Solon Report

A new report by Altman Solon likely confirms what you would suspect, namely that the largest cities, with the greatest density and population, are least likely to feature municipal-owned networks, as private internet service providers have ample incentive to provide service. Conversely, small communities are the places where the incentives for private operators are lowest, and where municipal efforts are more common. 

source: Altman Solon

In communities with fewer than 1,000 total households, about 11 percent of the communities are “unserved,” defined as places where at least half of homes cannot buy internet access at speeds of 25 Mbps downstream. There are virtually no communities among tier one cities--with at least 100,000 households--where half of homes cannot buy 250 Mbps service.

PTC Academy Now Offers IACET Continuing Education Credit

The PTC Academy offers professional training with an award of recognized continuing education credit to mid-career professionals upgrading their skills in the telecom industry. This year, for the first time, because of the global Covid-19 pandemic, the classroom course is being offered online. Sept. 14 to 30, in the Singapore time zone. 

Participants of this course (it is graded) will receive 1.2 Continuing Education Units administered by Submarine Telecoms Forum, an International Association for Continuing Education and Training (IACET)-accredited continuing education provider. Attendees also receive a PTC Academy Certificate of Completion.

The course features instruction on:

• Business context of the telecom industry: the key changes since the monopoly era gave way to competition; structure of the industry and broader ecosystem, business, and revenue models; key customer trends, value chain roles, and functions; key industry issues including revenue, revenue growth, profit margins, product life cycles, product substitution, regulation, competition, and the impact of the Internet

• How C-level executives can manage or benefit from over the top competition and opportunities

• C-level perspectives on balancing stakeholder welfare (customers, employees, partners, and society)

• Key issues and trends in data center and cloud computing, and how they affect communications

• How C-level executives approach key revenue, competition, cost, and innovation challenges (workshop)

• How mid-level managers can prepare for C-level advancement

• Overview of the data center and cloud computing businesses; customers; products; growth

• The connectivity business in an Internet era

Does Mobile Broadband Cause Economic Growth?

Shockingly, it might be a myth that mobile broadband contributes to economic growth. Perhaps even more shockingly, some argue mobile broadband could, in some instances, actually retard growth. 

Counter to common expectations, the relationship between expanded mobile broadband usage and economic growth is chaotic: it might help, it might have no effect, or it might, shockingly, harm economic growth. Some studies suggest relatively small effects, if we can indeed isolate broadband from all the other forces contributing to economic activity. Yet other studies interpreted as suggesting causation actually only show correlation. 

The reasons for such non-correlation (ignoring for the moment causation) are likely that economic growth is the result of many interacting forces. Broadband alone is hard to isolate. 

“Since broadband is an access technology for data communications, it only has an economic effect in combination with the adoption of information technology, and the implementation of organizational and process changes in enterprises,” the United Nations Broadband Commission has noted. “In other words, for broadband to have an impact on productivity, the ICT ecosystem has to be sufficiently developed.”

In other words, broadband alone does not explain very much, from an agency that believes broadband must be extended to increase economic benefits. 

You might well suppose that mobile broadband, and broadband generally, has the greatest impact where information work is most intensive. Conversely, you might expect clear impact to be least where that is not the case. That is what the U.N. study found. 

“This very surprising conclusion comes from Businessweek having a look at some recent UN numbers on broadband and telecoms more generally around the world,” says Forbes. “We get the highly counterintuitive result that an expansion of mobile broadband coverage leads to a reduction in the rate of economic growth.”

“Focusing on the top 20 leaders in the mobile group, we see there is actually a negative relationship between GDP growth and broadband penetration,” Forbes notes. “It’s not even fair to say that the fastest-growing economies are the fastest growers in broadband.”

That said, most observers instinctively believe more mobile broadband is helpful. Correlation is highest in developed countries; lower in developing countries. 

“Economic benefits to sub-Saharan Africa stemming from Facebook’s connectivity initiatives can exceed USD50 billion over the next five years (2020–2024) in nominal current GDP terms,” say analysts at Analysys Mason. Most of the impact comes from the value and impact of internet traffic on the wide area and local access infrastructure Facebook has put into place. 

source: Analysys Mason

Methodology and assumptions are everything in forecasts. Analysys Mason derives its estimates by applying a rule of thumb used by the International Telecommunications Union. 

“A 2019 study by the ITU used econometric analysis of data from the majority of countries in Africa to determine that a 10 percent increase in mobile broadband penetration (e.g. from 20 percent to 22 percent) in Africa would yield a 2.5 percent increase in GDP per capita in a given year, over and above the baseline growth projected for the country or region,” Analysys Mason says. 

Virtually nobody would disagree that having quality broadband is correlated with some amount of economic growth. The problem is that we have no certain way of knowing the full causal chain. 

Would gross domestic product grow even in the absence of more-ubiquitous broadband? Almost certainly. But does more-ubiquitous broadband access “cause” faster growth, or does faster growth lead to higher demand for broadband? It is a question we cannot answer. 

One must assume the ITU formula of “mobile broadband and mobile broadband adoption” illustrates a causal relationship and not merely an associative relationship. In other words, ubiquitous broadband somehow creates economic growth, rather than economic development driving demand for more broadband.

Though correlation is not causation, it might also be said that, in terms of the relationship between mobile broadband adoption and gross domestic product, the correlation might be positive, neutral or negative. 

That is not what people tend to believe, or want to believe. But neither does evidence necessarily support the notion that mobile broadband causes, or leads to, economic growth.

source: Yankee Group

"There are just too many other factors that affect GDP growth for mobile broadband to have any significant and measurable effect,” said Yankee Group Research VP Declan Lonergan. 

Still, it is fair to say virtually everyone wishes to believe that more-extensive mobile broadband does have a positive impact on economic and social development. We simply cannot say for sure when, and how much, mobile broadband might contribute. 

Most of us believe there is a correlation between widespread broadband access and economic growth or wealth. But there also is a clear correlation between education, income and age and supply or use of broadband and the internet. It’s hard to distinguish between chickens and eggs, in terms of “which came first?”

How Much Demand Remains, in U.S., for Low-Cost Broadband?

Comcast, the U.S. cable TV and internet company, has had significant success offering its own low-cost broadband service to low-income households, signing up about eight million customers for a 15-Mbps service costing $10 a month. Most other major internet service providers offer something similar, though it seems few have been as successful as Comcast. 

source: Axios

While government subsidy programs will continue, and can be important, one wonders how much demand exists for customers who would buy, but believe the cost is too high. Most customers who value fixed network internet access likely already buy.

Some People Just Do Not Wish to Use the Internet

To solve a problem, one must have a theory about what causes the problem. Consider broadband non-adoption. Some households cannot subscribe because service is not available at the home. The solution there is to build and extend networks so the option to buy is available. 

For households that can purchase service, they do not for a variety of reasons, including the inability to pay the market price. Subsidies can help, in that case. Non-interest is a much-harder problem, and is not easy to solve, since it is hard to sell a product, no matter what the price, if the product solves no perceived problem. 

“Consistently, the U.S. Census Bureau surveys reveal that the primary cause for non-adoption is a lack of interest in what the Internet offers,” says George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Studies chief economist. “A distant second reason is the expense of the service and/or the devices required to use it.” 

Surveys by the National Telecommunications and Information Administration clearly show that “do not need it” has become the main reason households do not buy fixed network internet access, by about a three to one margin over respondents who say it is  “too expensive.”

source: Phoenix Center

According to U.S. Census Bureau statistics, the main barrier to adoption now seems to be that potential buyers do not see the need. Very few say cost is the main barrier for not buying. 

source: Phoenix Center

The point is that internet access adoption cannot be “solved” completely by any single tactic. Extending networks works if one assumes those new locations want to buy and use internet access. Subsidizing usage might convince a small percentage of people to buy. But some consumers might simply refuse to buy, no matter what is available and at what price, because they do not wish to use the internet and do not find it useful.

Confounding Economic Data Might Mean "Not as Much Permanent Change" as We Think

For anyone who believes “everything has changed” since the advent of the Covid-19 pandemic, measurable economic data is confounding. What we can measure is equally confounding. The Institute for Supply Management non-manufacturing index already has shown a sharp “V” recovery, far more sudden than the recovery from the Great Recession of 2008. 

source: Wall Street Journal

The index is a monthly composite index based on surveys of 300 purchasing managers throughout the United States in 20 industries in the non-manufacturing area. The index is released on the first business day of the month and covers the previous month’s data, which makes it particularly timely. If the index is above 50, it indicates that the economy is expanding. Values below 50 indicate a contraction.

Within the overall index, there are nine subindices: new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, and import orders. The index is believed to reflect future movements in gross domestic product,

However haltingly, the index suggests the non-manufacturing part of the U.S. economy is rebounding sharply from its March plunge. That might indicate that “some things could change,” but likely not that “everything” will change. 

Similarly, about 80 percent of respondents say they are growing again after the Covid-19 economic shutdown. That is likely unprecedented in the modern era. 

source: ISM

Employment, as much of the retail, hospitality and transportation sectors of the economy remain closed or operating at a fraction of former capacity, has yet to return to “normal” levels. But job losses in the wake of the internet bubble burst of 2001 and the Great Recession of 2008 also suggest that normalization will happen. 

sources: Nordea, Macrobond

That is not to deny an acceleration of trends already underway prior to the pandemic striking. It is a caution that the amount of permanent change we see in daily life, schooling and work might not be anywhere near as great as many suggest.