“Plus ça change, plus c’est la même chose”
(The more things change, the more they stay the same)
All good things come to an end, so they say. So perhaps that’s a good reason for bringing Just A Thought (JAT) to a conclusion. The first JAT blog appeared November 2009 under the heading “Separation: Will It Work?” and questioned the economic basis of separating Singtel’s network into a NetCo and an OpCo when Singtel retained the option of developing its own competing highspeed broadband fibre network. The concern was that SingTel would be conflicted over serving its own broadband markets and devoting resources to the new national highspeed broadband network. As events unfolded, that conflict of interest did indeed arise, and the structure of ownership of the new network was revised to remove Singtel’s influence. Happily, the outcome, despite the hiccups, has been a success, with notable competition at the retail level and island-wide highspeed broadband access. It is a model that could well be used elsewhere, for example, in Malaysia, but there the state remains a financially interested party in Telekom Malaysia. In Singapore, sensibly the government distanced itself and became a sovereign investor rather than an owner.
The case remains of interest because the developments in ICTs over the past decade have been characterised first and foremost by access to highspeed broadband. Progress has been most marked on the wireless mobile side of the industry, but without a fibre backhaul, broadband mobile would be a very limited service. What should have been an easy choice for most countries, namely treating broadband as a public right of way, comparable to a motorway and highway system, and subsidised where necessary as an economic good, even if not as a financial good – an economic good produces social returns whereas a financial good is judged by whether it produces a profit on investment in each market – has been a political football between interventionist and market-led interest groups. From a social perspective, it should be a no-brainer.
Riding on top of the broadband network has been the meteoritic rise of apps and over-the-top (OTT) services such as streamed video. The essential point of these is they by-pass accounting gateways, and thereby destroy value for the incumbents. This involves a parametric shift, as in, for example, the shared economy in which smartphone hailing apps come complete with GPS maps. This is often referenced as ‘disruptive’ technology, but no more disruptive than non-digital technologies over the past century or two. The difference, insofar as there is one, lies in the speed of change. Internet time is so much faster. It took Microsoft twenty years to become an elephant-in-the-room. Facebook become an elephant in a decade. Uber in half a decide, and so on. But in a jungle, size matters in the food chain. Thousands of start-ups, like wildebeests and zebras, become food for lions. Mythical animals like unicorns (start-ups that reach a billion-dollar valuation) appear and disappear because the financing of IT-related companies is percentage-based. Like Hollywood movies, one in maybe 20 makes an absolute killing, the others are killed. The end of each cycle looks just like the end of the previous cycle, a few multinational IT giants dominate the market, only their names and business models have changed.
But something more fundamental has taken place. Each cycle brings a change in the nature of employment and in the modes of consumption. Labour markets are increasingly stretched between the IT-literate – not the educated and non-educated – and the rest. The real earnings of the IT-literate may not rise, but the earnings of the rest, except for financial specialists who know a good thing when they see it, fall. This is compensated to a degree by a fall in the real costs of IT-related products and services. Most consumers can afford a smartphone – in India they cost less than USD25 – and watch videos OTT. While the world has seen reductions in absolute poverty, the prospect of continual improvement in living standards has stagnated for the majority. The commercial success of the Internet is based upon consumption, so a slowdown in growth of real incomes is a challenge. Not surprisingly, Internet giants like Amazon and Alibaba are moving into online financing in a big way. When selling bicycles, selling the oil that greases the wheels is equally profitable. During the California gold rush the steady money was made selling wheelbarrows.
What worries economists and others is that a spiral of growth has turned into a plateaux of cycles. The data shows worse than that. The data suggests levels of investment in ‘real things’, as opposed to finance and payments, is mostly stagnant – electric and autonomous vehicles notwithstanding. This is at the root of the debate about why ICTs are failing to raise levels of productivity across economies. The real gains in incomes mentioned above are explained by the productivity gains being passed on as price reductions to consumers. There are, of course, areas of real investment, such as in Artificial Intelligence (AI) applied to, for example, healthcare assessment, but how about AI applied to marketing Big Data or cybersecurity? These are not activities that for society create value as opposed to competing for value or protecting value. They are the rising costs of doing business. Profitable for the few, a cost to the rest.
And therein lies the essential dilemma of developments in ICTs evident during the past decade. Next generation technologies, such as AI, render human interaction less relevant, but at the same time require greater management coordination, for example, of smart cities. A company will disappear if its business model is disrupted and it cannot adapt, but a central or local government is a permanent fixture. The mismatch between social management – for example, arthritic systems of legislation and regulation – and the economy driven by ICT innovations – regulating taxi hailing apps is just a minor example – is provoking a ‘Minsky-moment’ when a market economy is conflicting with a market society. The withdrawal of political society from the goings on of civil society, which became the leitmotiv of neo-liberalism, has resulted in a society in which the ‘losers’ from innovation are not compensated from the gains of the ‘winners’. The idealist vision for ICTs was of a more equal opportunity society as the cost of access to ICTs became minimal and everyone could become their own business. The stark reality is that ICT business thrives on the economies of scale, on the ‘long tail’ of global access, a tail that was initially thought of as consisting of small scale companies. In the world of ICTs, everything has changed and nothing has changed.
