The 2022 Global Trends in the Telecoms and Digital Sector and Some Regulatory Challenges
Technology is quickly reshaping the world. We are living through an ongoing wave of digital transformation that’s affecting all businesses and every aspect of our lives. From machines that think for themselves to disruptive ideas like blockchain that could upend entire industries, the pace of technological progress often outpaces the ability to regulate. This can create challenges when it comes to ensuring that change takes place in a way that is safe, ethical, and non-discriminatory.
To this end, regulatory intelligence company Cullen International, where I have been a board member for many years, has compiled a list of the most important trends that are affecting regulated industries such as the high-tech and communications sectors. These are all developments that leaders and policymakers should have a clear understanding of over the coming 12 months and beyond, as each one promises to deliver its own set of challenges that have to be addressed.
Split into three categories covering intelligent connectivity, digital platforms, and the data economy; the trends intersect technology, economics, and politics. These topics have been picked out as essential learning by Cullen International’s analysts for those attempting to lead their organizations into a post-pandemic era. So let’s take a look at them …
5G vs full fiber
While in many places full fiber and 5G are rolled out as complementarity technologies, the arrival of 5G in emerging countries is sometimes seen as a credible alternative to wired fiber networks. Typically wireless networks involve different rules and regulations for service providers, which is something businesses in the sector will have to get to grips with if they want to take advantage of the increased speed and functionalities that 5G broadband can offer.
Consolidation in mobile markets
Mergers such as those already seen between Indosat Ooredoo and Hutchison in Indonesia at the start of this year are likely to just be the first in an ongoing trend. Regulatory approval is always an integral part of these big business deals that aim to restructure organizations, driving efficiency while also lowering costs, as well as working towards other key objectives such as sustainability.
Low Earth Orbit satellites are an increasingly affordable way for businesses to take advantage of the potential of space technology. 2022 will see a number of countries introduce legislation regarding the use of LEO and other satellites, including the EU space policy, which aims to set out a framework for a secure satellite communication system.
Should OTTs contribute to network costs?
Big tech provides services (known as “Over The Top” services) that can only operate thanks to the availability of network infrastructure. Often these services generate vast revenues, but the OTT providers – the likes of Netflix and YouTube – pay little or nothing towards the high costs of upgrading and running the networks, according to several network operators around the world. The latter have been calling for regulation to correct this perceived injustice for some time, but this could be a hot regulatory topic, again, in 2022.
This year we will also see continued investment from these same big tech companies into expanding their cloud infrastructure and data centers, as well as laying new undersea cables to increase their ability to reach new markets. Companies like Google, AWS, and Meta, are planning to build new data centers. The continued rollout of cloud services into new markets will be a strong trend throughout the year.
The Market power of big tech
Jurisdictions across the world from China and Australia to the EU will continue to adopt policies and legislation aimed at limiting the power of big tech companies. In the EU, the Digital Markets Act and Digital Services Act aim to enforce the ability of agencies to deal with dangerous and harmful content shared online, as well as a crackdown on anti-competitive business practices. Companies face fines of up to 10 percent of global revenues for regulatory breaches.
Who’s leading the AI race?
The race to lead the world in the development of artificial intelligence (AI) technologies is heating up. However, at the same time, governments are becoming increasingly aware of the importance of regulation keeping pace with the speed of technological progress. China, the EU, and the UK have all either introduced or are in the process of introducing legislation on automation of decision-making that affects the lives of individual citizens. Understanding and interpreting the impact that this will have on the development of communications and high-tech industries within the affected markets will be key to doing business in 2022.
Data sovereignty and sharing
Regulation concerning where data on private citizens can be stored, exported, or processed is another busy area of activity. In recent years, countries like China, South Korea, and Russia have imposed “data localization” requirements, where personal data, or at least copies of the data – depending on countries – must be stored on servers within the country. Other jurisdictions, including India and South Africa, are proposing legislation in this area too.
These are just some of the areas where proposed and incoming legislation are likely to affect any business involved in the technology or data economies during 2022. As the importance of data (and the transformative impact of digital transformation) continues to grow, regulators will be under increasing pressure to ensure they are not lagging behind the innovators in the global technology arms race. The direction that legislative initiatives will take may not always be easy to predict, but what is clear is that understanding how laws and regulations are likely to impact industries in the months and years ahead has never been as essential as it is now, in terms of maintaining competitiveness.