What about “the new economy”?

Among the themes at Mobile World Congress (and elsewhere), there’s much talk of “the new economy”. What is it, and how does it affect the telecoms industry? Read on.

What is “the new economy” about which we’re hearing so much these days, and why should those of us in the telco industry be concerned? Given the degree of chatter around the subject, it’s worth taking a moment to find out.

The phrase new economy characterises a shift from the traditional, industry-driven economies we’ve long been used to to the technology, digital, and knowledge-driven industries that are now coming to the fore. Formal recognition of this change in dynamics has been brewing for at least the past couple of decades, fuelled by the rise of the Internet as well as economic trends like globalization and automation.

For the sake of simplicity, we can say that the new economy is characterised by five basic traits:

1. Growth is driven by technology, examples including the Internet, AI, blockchain and others. Technology plays central roles in the development of the emerging economic landscape.
2. Work is knowledge-based, with intellectual property, data, and creativity rather than physical outputs alone being sources of value.
3. Everything is decentralized, hallmarked by characteristics like remote work, the gig economy, and decentralised finance. In simple terms, businesses aren’t run the way they used to be.
4. The role of humans is changing, with AI, machine learning, and algorithms augmenting and sometimes replacing human labour.
5. The world is shrinking, driven by globalisation and interconnectivity whereby digital platforms enable businesses to supersede traditional borders.

In the new economy, services, software, and digital products are taking precedence over manufactured, physical goods.

But what about telco?

From the telco’s perspective, what’s the impact?  The new economy is a significant opportunity because it’s defined by a need for instant, global interactions necessary to support the required new business models, collaboration, and information exchange. High-speed internet, 5G, cloud computing, and AI-driven networks are thus table stakes components and connectivity in various forms plays a key role. For example:

• Ubiquitous High-Speed Internet (think fibre optics, 5G, and satellite internet) are required to enable real-time communication and remote collaboration, and to make location less relevant.
• The Cloud is fundamental for data storage, remote work, and AI-driven applications, thereby reducing the need for physical infrastructure.
• Decentralized Communications, for example blockchain and peer-to-peer networks, are challenging traditional telecom service models, because they enable the increasingly in-demand secure and independent interactions that drive the new economy.
• The Rise of IoT and its billions of connected devices are re-shaping the traditionl economy into a hyper-connected world.
• AI-powered Communication (for example, natural language processing, chatbots, and machine learning) are enhancing global connectivity, automating tasks and personalizing interactions.
• Edge Computing & Real-time Data Exchange are superseding centralized servers, reducing latency and enabling faster decision-making.

All these domains present opportunities for telcos, even where there are concerns (digital privacy, cybersecurity, and the digital divide), which telco can often address too. As a result, for the telecoms industry, far from being a threat, the new economy should be embraced.