"The UAE is on the edge of becoming a 'Frontrunner' in Huawei's 2017 Global Connectivity Index," said Mr. Sami Nashwan, VP Strategy at Huawei Middle East, discussing the company's fourth annual study at a press briefing in Dubai on April 30. The report provides a "strong view" on how countries have evolved their ICT infrastructure, and also how they have evolved from digital transformation, during the last three years.
Huawei's Global Connectivity Index (GCI) compares how 50 countries are progressing in their digital transformation based on 40 unique indicators that cover five technology enablers: broadband, data centers, cloud, big data and Internet of Things (IoT). Investing in these five key technologies enables countries to digitize their economies, the report suggests.
Digitally-advanced and digitally-developing nations continue to gain strong economic growth and secure larger ICT investments, according to the report, while less developed nations see much slower growth, widening the digital divide between nations into a chasm.
"The GCI report measures the relationship between ICT investment and GDP growth, and shows that every additional US$1 of ICT infrastructure investment made could bring a return of US$3 in GDP at present, US$3.70 in 2020 and the potential return increases to US$5 in 2025," said Sami speaking at the press briefing.
"While this presents a clear case for increasing investment in ICT, the report also reveals that countries who invest in ICT gain an accumulated advantage over time which has a multiplier effect and enables them to distance themselves ahead of competitors, and causing a widening of the digital divide to become a digital chasm," Sami added.
Connectivity has driven some of the largest and most successful projects in the Middle East, Sami said. Take Souq.com, for example, which is in talks to be acquired by e-commerce giant Amazon, which betted that e-commerce in the Middle East is poised to take off. E-commerce has been driven in the Middle East by "the fact that there is connectivity at your fingertips," said Sami.
The report says UAE, Qatar and Saudi Arabia remain top 'Adopter' economies in terms of connectivity within the Arab world. All three of these countries saw an increase in their GCI score. Other 'Adopter' economies include Spain, Portugal, Italy, China, Malaysia, Russia, Poland, Brazil, Chile, Czech Republic, Romania, South Africa, and six others. The UAE is only two places away from being in the 'Frontrunners' category, behind Spain.
Digital transformation has driven ICT investments across the top three performing Middle East nations. Investments in the UAE such as Expo 2020, UAE Vision 2021, the Smart Dubai initiative, and IMG Worlds of Adventure have all been driven by the nation's digital drive. Similar projects in Qatar such as Qatar National Vision 2020 and Lusail City have had a similar effect on its economy, as well as in Saudi Arabia with projects like Vision 2020, and the National Transformation Program 2020.
From virtual reality country tours to holographic football matches, the Middle East will be investing heavily in ultra-fast 5G network infrastructure by 2021. According to a recent report by consultancy Deloitte, Middle East mobile operators are expected to invest US$50 billion in network infrastructure from 2017-2021, with particular focus on 5G networks.
"Regional investments in ICT and particularly in the areas that lead to accelerated digitization, underpin the Arab world's ability to transform economies and sustain growth for its future generations," said Sami. "Regional countries need to understand this widening digital divide will have a dramatic impact on every sector of their economy and society, and will greatly influence their nation's ability to feed, educate and create jobs for their people."
The US leads the 'Frontrunners' list in Huawei's GCI report, followed by Singapore, Sweden, Switzerland, UK, Denmark, Netherlands, Japan, South Korea, Norway, Australia, Germany, New Zealand, Canada, France and Belgium. Of the 50 countries that were analyzed, 16 are considered 'Frontrunners', 21 'Adopters', while the remaining 13 are 'Starters'.
'Frontrunners' (with an average GDP per capita of US$50,000) are mostly developed economies, continually boosting digital user experience, using big data and IoT to develop more intelligent, efficient societies. 'Adopters' (average GDP per capita of US$15,000) are focused on increasing ICT demand to facilitate industry digitization and high-quality economic growth.
Economies such as Egypt, Philippines, Indonesia, Vietnam, Venezuela, India and seven others are grouped in the 'Starters' category. 'Starters' (average GDP capita of US$3,000) are in the early stage of ICT infrastructure build-out, and focus on increasing ICT supply to give more people access to the digital world. These clusters reflect nations' progress in digital transformation, says Huawei.
According to the GCI report, global progress towards a digital economy is picking up pace, with the world's GCI score moving up four percentage points since 2015. The report also shows that ICT has become an engine of economic growth, with the 50 countries assessed by the GCI 2017 accounting for 90 percent of global GDP and 78 percent of the world's population.
The report also indicates that expanding broadband remains a priority for all clusters as it plays an important role in economic growth. With such capability, nations can identify niche market opportunities based on their unique capabilities and ensure continuous development.
In addition, cloud capabilities can act as a powerful equalizer for 'Adopters' and 'Starters', in particular, to take giant steps ahead in the technology stack, drive innovation, and achieve sustainable growth. Moreover, investment in ICT infrastructure initiates a chain reaction of digital transformation, the report says, with cloud as a potent catalyst in the chain and a gateway to the power of big data and IoT.
As nations around the world compete for the same digital economy pie, those that slow ICT Infrastructure investment will likely fall behind and become less competitive. Therefore, Huawei's GCI report aims to encourage governments and industry leaders to drive ICT infrastructure development which is necessary for enabling digital transformation.
With the increasing role ICT plays, ICT infrastructure investment is expected to bring a multiplier effect to economic growth in the years to come, the report says. Every additional US$1 invested in ICT Infrastructure could bring a return of up to US$5 in GDP from 2016 to 2025. As such, with an additional 10 percent ICT infrastructure investment each year, this will bring an accumulative potential impact of US$17.6 trillion in GDP by 2025.
What will the ICT enabled world be like in 2025?
Huawei's 2017 GCI report suggests that global connections in 2025 will reach 100 billion, cover 77 percent of the population, and will accelerate the renovation of human society. Personal intelligent devices will reach 40 billion and will become a basic platform for human life and business. What's more, broadband will be "popularized" to 75 percent of households.
The report also predicts that there will be "better performance on connections" by 2025. Cloudification will be an "inevitable choice" for enterprises' digital transformation. Carbon emissions of the ICT industry per connection will drop by a staggering 80 percent the report predicts, and daily communication traffic per capita will reach 4GB, while mobile traffic will increase 30 times.
Finally, the report predicts that data generated and stored annually will reach 180 ZB, and information processing will mainly depend on machine learning. In addition, the report says intelligent personal assistants with cloud-based brains will serve 90 percent of intelligent device users, and intelligent service robots will serve 12 percent of families, becoming the core of 'smart homes'.