x Abu Dhabi, UAEFriday 28 July 2017

Digital investment could solve crisis

Building the next generation of telecommunications infrastructure should be a priority of governments.

Building the next generation of telecommunications infrastructure should be a priority of the economic stimulus plans being drafted by governments, according to an influential economist and telecoms expert. Leonard Waverman, a professor of economics at the London Business School, has spent the past year researching the progress made by countries in digitising their economies. The result is what he calls a connectivity scorecard, which will be released next month.

But his conclusions, shared at an industry conference on Wednesday, can be summarised simply: much more needs to be done, quickly. "The solution for the economic turmoil today is not more cement in the ground - we don't need the infrastructure of yesterday," he said. "What we need is the infrastructure of tomorrow." In the group of countries that he described as innovation-led economies, Prof Waverman said big investments needed to be made in rolling out fibre-optic communications lines directly to homes and offices, boosting internet bandwidth by a factor of up to 100.

Such investments not only generate large-scale employment through public works, he said. They act as a multiplier for the productivity gains made by access to technology. In the UAE, Etisalat and du are already building a national fibre-optic network. Such investments are crucial to keep up with the growing demand for bandwidth, said Bruno Guissani, a technology writer and analyst who is the European director of the TED (Technology, Entertainment, Design) conferences.

"The internet is booming in pretty much every possible way," Mr Guissani said, as users produce and share an increasing amount of content. Last year, US-based video sharing sites such as YouTube consumed more bandwidth in an average month than the entire internet did in 2000, he said. As such exponential usage trends continue, the need for new infrastructure will become more pressing. While building high-speed fibre networks may require government-led investment, simple demand will drive the increased penetration of wireless telecoms systems, said Jürgen Walter, the head of the converged core business unit at Nokia Siemens Networks (NSN), the network equipment maker.

The company, which sponsored Mr Waverman's research, works with telecoms companies around the world, building the mobile and fixed-line infrastructure needed to offer more services to more people. The company was created by the merging of the networks businesses of the Finnish mobile maker, Nokia, and Siemens, the German engineering conglomerate. Five billion people will be connected to mobile networks by 2015, Mr Walter said, with the challenge for network builders like NSN being how to ensure that the new networks it rolls out - mainly in low-income, emerging economies where consumers will spend just a few dollars each month on their mobile - are economically viable.

"We have to be prudent on what deals we pick - we won't just pick everything because we are keen on growing," he said. "There is risk management inherent in our processes. "In this industry, everyone has grown up in the last 10 years saying 'growth, growth, growth'. We recognise now that we need to balance that out with profitability and cash. Since the beginning of the year, we have changed our strategy and become more prudent on what we take on, and it puts us in a better position to weather the storm, whatever comes up."

@Email:tgara@thenational.ae