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The pandemic has brought significant challenges to everyday life, also throwing a spotlight on the digital divide and the urgent need for socially balanced services, inclusive education, and industrial development addressed through digital technology infrastructure. The future will be resolutely digital first with this technology and infrastructure driving economic growth and green development. Huawei is committed to bringing digital to every person, home, and organization for a fully-connected, intelligent Asia Pacific (APAC).
From connectivity to cloud computing, Information and Communications Technology (ICT) infrastructure is the foundation of the Digital First Economy (DFE). However, its development is uneven around the world.
Among the Association of Southeast Asian Nations (ASEAN), cloud penetration is less than 20%, Long Term Evolution (LTE) penetration sits around 54%, and fixed broadband penetration is approximately 35%. Such numbers show that millions of people and families still lack digital access.
Aside from basic network coverage challenges, the quality of network connections also needs to be improved, to ensure that the ICT infrastructure base is robust enough to support a digital first world. Indeed, strengthening ICT, in order to develop the digital economy, is now a commonly held priority for countries in the region. Urgent action is therefore required, in order to prepare for the digital economy.
To this end, 170 countries have already laid out detailed national digital strategies to drive economic digital transformation. Some 58 countries have rolled out 5G and fiber dual gigabit networks for frontier technologies. And some industries — notably, the transport, finance, and education sectors — have expedited digital transformation based on ICT networks and the cloud.
Looking forward, the world is evolving toward a data and intelligence driven digital society, casting data as the key asset of the age. From 2021 to 2024, data consumption will increase accordingly, from 70 ZB to 150 ZB. Data governance monetization will move from US$2 trillion to US$13 trillion. Energy consumption is also expected to increase by 50% by 2050, with renewable energy and ICT technology helping to reduce carbon emissions and improve energy efficiency, promoting a green and sustainable economy.
It is now a consensus that the DFE is the next evolution of the wider economic model. But what actually is the DFE and what does it involve? In short, the DFE drives rapid — green — growth through the use of digital technology and digital infrastructure, prioritizing the development of the digital economy as a part of wider national Gross Domestic Product (GDP) growth.
Consumers, enterprises, and governments alike now all think digital first when it comes to developing new products, services, business models, and data assets. As such, the DFE represents a fundamental shift in business and operating models, where organizations focus on achieving business outcomes by using digital technologies. This economy includes the production and consumption of digital products and services, using digital platforms and other business activities that are enabled by digital technologies.
Research jointly conducted by Huawei and global market intelligence firm the International Data Corporation (IDC), reveals that digital infrastructure is critically important for economic development, using five key factors to gauge the level of digital infrastructure: this is the DFE Index.
The first of those five factors focuses on the level of industrial policy, digital policy, and planning: all must be updated to incorporate the very latest digital technologies, laying out clearly defined plans that provide direction and guidance for ICT infrastructure construction, complying, of course, with local laws and regulations.
Next, the levels of ICT investment and talent development must be enhanced, to build up capabilities to drive digital transformation. The shortage of digital skills and talent, and a lack of ICT investment, will impose significant constraints on the digital transformation of industries, which, in turn, impacts the digital transformation of the entire economy. Simply put, the DFE is driven by innovation, with talent cast as the foundation of innovation and capital the guarantee of implementation.
Digital connectivity is also foundational. Network connectivity is now just like water and electricity: it is essential and should be universal, so that all people can enjoy basic services. At the same time, immersive Extended Reality (XR) and metaverse services will require higher quality connectivity and faster uplink speeds, as well as placing higher requirements on latency. Digital connectivity needs to achieve wider coverage, too, connecting the unconnected and delivering higher bandwidth throughput to improve the quality of the experience using digital tools. This is essential, in order to open access to cloud-first Anything as a Service (XaaS) and other high value digital services.
Cloud computing sits at number four. Any future competition will be the competition of computing power, which ultimately determines efficiency. More cloud computing workloads will drive the creation of more data assets for citizens, industries, and governments. These assets can be analyzed and monetized through Artificial Intelligence (AI).
Finally, the fifth factor is data assets. Data is often regarded as the oil of the digital era and a valuable production factor. Indeed, AI applications require massive data in order to learn, train, and infer. As such, data is the prerequisite of AI services. As a new economic sector, data asset governance and monetization are expected to drive the next phase of the DFE's growth, where the world needs to be digitalized, processed, and analyzed for data monetization.
Data assets and monetization build up the data economy but require investments in connections and cloud infrastructure. The digitalization of data, analytics, and AI are necessary to realize benefits.
Improving the foundations for the DFE will help countries speed up their economic growth.
Although facing an unprecedented crisis in 2020 and 2021, APAC is now on the way to economic recovery, with an improvement in the competitiveness of its digital economy. According to management consultancy firm Roland Berger, ICT infrastructure directly contributes to GDP growth: the cloud contributes 17%, AI 15.7%, data assets 13.2%, and 5G 9%.
APAC countries are actively planning to develop the DFE to sustain their growth. Digital technologies are no longer mere tools but a key driver of economic competitiveness. The DFE also correlates closely with GDP growth, meaning that APAC countries can grow GDP per capita by developing digital first foundations.
Indeed, there is potential to grow GDP by US$1123 per every point of improvement according to the DFE Index. For developing countries, every US$1 increase in ICT spending per capita sees a higher return.
With ICT infrastructure laying the foundation of the digital economy, the DFE also drives digital inclusion, new business new models, digital resilience, and green sustainability.
Digital inclusion is improved in terms of connections and experiences, embracing every person, industry, and government agency. Digital first also proves to be inspirational, driving new digital business and new models for governments and enterprises of every size.
Countries need to increase their cloud computing resources, given that the cloud is a key platform enabling new ICT business models that drive economic value. As an example of ICT infrastructure contributing to a digital first approach, Siriraj Hospital, the oldest and largest hospital in Thailand, implemented smart healthcare through advanced mobile network technologies and the cloud, partnering with Huawei. This enabled remote consultations, intelligent medical image analyses, and autonomous medical vehicles, ultimately providing more efficient patient care, reducing the workload of doctors, minimizing contact, and dramatically reducing the risk of cross-infection.
It's clear: digital first is the foundation to build digitally resilient organizations, enabling digital transformation and creating data assets. As such, more and more enterprises are transforming traditional businesses and going digital, using digital technologies, digitalization, and data governance to improve productivity, reduce costs, and increase efficiency, thereby effectively improving organizational resilience.
The goal is to drive sustainable economic growth while reducing the carbon footprint. With the planet facing huge challenges, digital technologies are a means to solving them. Green sustainability is therefore a basic requirement for the use of digital technologies and digital infrastructure to drive economic development.
ICT, then, is a new engine, driving a green industrial revolution and promoting a sustainable world. Indeed, diverse industries are now focusing on conserving energy and reducing emissions, to meet carbon neutrality goals. The renewable power market is predicted to grow by as much as 10 times as the world strives to cap global warming at 1.5°C by 2050. Solar power and digital technologies are key enablers to help make this happen and achieve a green, sustainable DFE.
Huawei combines digital and electronic technologies to develop innovative digital energy sources and minimize the carbon footprint of ICT infrastructure, using clean power generation, electric transportation, and smart energy storage.
If the core theme of the DFE is the use of digital technology and digital infrastructure to drive economic development, what kind of infrastructure should countries build and how can they ensure that they are leading the way?
Every country should push forward targeted DFE development policies and planning recommendations, focusing on ICT digital infrastructure to drive national economic competitiveness and GDP growth.
To begin with, developing policies and top-level plans for digital transformation have to be priorities.
A shift from a reactive response to proactive planning will bring clear benefits, creating new value and improving the competitiveness of enterprises. Organizations need to reprioritize digital investments to increase business resilience and prepare for digital transformation. It has been said that 4G changes life while 5G changes society. But 5G in APAC is still in its infancy. It is clear from the 4G example, in markets with high spectrum prices, 4G investment and development are relatively slow. But the APAC 4G penetration rate has already exceeded 50% and 4G prices are reasonable in major APAC countries.
As a key technology to improve national digital competitiveness, 5G spectrum prices should therefore be lower than 4G. China's model is worth learning from, where the government provides free spectrum to promote the development of the digital industry. This same digital industry continues to contribute tax revenue to the government, achieving a mutually beneficial outcome for the government, operators, and industry.
Government industrial policies, such as spectrum prices and tax incentives, therefore have a big role to play in promoting the digital industry. The advice to governments of developing countries has to be: adopt friendly industry, spectrum, and tax policies to encourage long-term investment and innovation in digital infrastructure, in order to take a position of leadership in the age of the DFE.
Next, new economic horizons are emerging, enabled by ICT investment and ICT talent. This requires countries to accelerate ICT infrastructure capabilities and skilled digital talent, in order to plan and guide technologies such as a national broadband network, the 2GHz spectrum, 5G and the Fifth-Generation Fixed Network (F5G), Fibre To The Room (FTTR), cloud-first, XaaS, and more.
Talents are the driving force of digital innovation but the distribution of talent across APAC is uneven. APAC countries should increase investment in talent planning and actively cooperate with universities. Huawei is willing to contribute to talent development in APAC, through its Seeds for the Future program, which provides students with opportunities to access the latest technologies, and the Huawei ASEAN Academy, which already works with governments and enterprises, and has trained 88,000 ICT talents since 2019.
Over the next five years, Huawei will cultivate a further 300,000 local ICT talents in APAC, empowering the development of the region’s digital economy.
New cloud native business practices should be adopted by building business capabilities on the cloud then growing on the cloud. In the future, the majority of data will be stored and processed on such a cloud platform, making cloud infrastructure a fundamental core for digital industrial development and a key part of economic resilience.
Most developing countries should proactively plan a 30/6X carbon peak and carbon neutrality commitment with National Determined Contributions (NDC) to avoid carbon trading taxes or trade barriers set up by developed countries.
When building a cloud data center, use the very latest technologies to boost Power Usage Effectiveness (PUE), bringing the figure down to 1.2. Power consumption per bit can be minimized by using bits to manage watts: this is where Huawei's leading ICT infrastructure combines digital and electronic technologies to improve the world's energy efficiency and enable cloud computing that's genuinely green and sustainable.
Huawei is willing to strengthen cooperation in 5G, cloud services, and AI technologies, to become a strategic partner of all APAC countries for digital transformation, building leading digital infrastructure in the region and accelerating progress toward the DFE.
