Adam Smith, considered the father of modern economics, identified three “factors of production,” namely land, labor and capital, in his famous work “An Inquiry into the Nature and Causes of the Wealth of Nations.” It is understandable why at the onset of the industrial revolution Smith’s focus for a nation’s growth was on these three critical resources. While recognizing the importance of Smith’s revolutionary concept “the division of labor” and emphasis on “free trade”, which are still very relevant today, I want to place the focus somewhere else. As an economist I argue that in today’s age of digitalization, we should acknowledge a new essential resource without which the wealth of nations is in real danger. This critical resource is connectivity.
Businesses, governmental organizations and private people alike need connectivity – and lots of it. Talk of 5G, IoT, widespread automation and smart houses/cities is in everyone’s mouth. Unlimited data and always being connected have become basic needs for all.
Lately, the COVID-19 pandemic has sparked a boost in capacity demand with surging digitalization in all areas of our lives. Online schooling, academic studies and professional training now take place virtually. Due to pressures on the medical sector, with more patients needing treatment with too little available human resources, the rising use of telemedicine can be seen; this includes areas which before COVID-19 were thought impossible, such as emotional and mental welfare.
In recent years governments have started to move more and more services online. Due to the pandemic, state leaders quickly adopted a wide range of technological solutions to ensure the safety and health of their nations. All these critical services call for higher, reliable, fast and secure capacity.
More people work from home, meaning business meetings, exhibitions and showrooms are moving to the virtual space, with more businesses increasingly offering online shopping platforms and web training. Recruitment processes, with the need for interviews and professional assessment centers, are being carried out in the virtual arena as well. And even before the Coronavirus businesses shifted towards automation across their entire supply chains, which again calls for more capacity.
Some industries, such as agriculture, aquaculture and oil drilling, rely on real-time mission-critical data to improve productivity, reduce costs and increase yields, irrespective of any pandemic. Certain sectors will, in fact, only survive if they increase their efficiency by adopting digital solutions. Those of us working from home know very well how the quality of our internet connection impacts our productivity – and frustration – levels. And while stuck at home, even when we are not working, we still use a lot of capacity for entertainment purposes, including a surge in online sporting products and services, besides gaming and video streaming.
And then there is the broad consensus regarding the need to close the digital divide and connect the unconnected, which has become a far more pressing matter since COVID-19. The unconnected are deprived of adequate schooling, which has a direct impact on their future employment chances and contribution to the economy. Where there are connectivity gaps, the provision of suitable medical treatment cannot be guaranteed. This again has severe secondary effects in terms of higher medical costs due to a worsening in a patient’s condition, potential comorbidities, and the disablement of someone who could have been an effective contributor to their country’s GDP.
Organizations will not go where they cannot operate efficiently and grow. Connectivity gaps are a real barrier to entry for businesses and eliminate employment opportunities in underserved areas before they have a chance of being created. The virtual world also enables more competition, following Adam Smith’s notion of free trade to enhance a nation’s well-being, irrespective of where a business is physically located.
Given the above, it is clear what a critical part a capacity provider, such as a telco or a carrier of carriers, plays in ensuring the economic well-being of any country. Many connectivity suppliers follow the “fiber everywhere” approach, aware that once optical fibers are in the ground there is basically no limit to the capacity they can transmit reliably. However, optical fiber is not feasible in all cases. The costs of rolling out fiber are huge, placing immense CAPEX pressures on providers. It takes a long time to obtain digging permits and to put the fiber in the ground. In urban areas, setting up yet another building site is often simply not possible, and rural areas require very costly investments to reach a relatively low number of paying customers.
Here microwave technology comes to the rescue. Microwave equipment sits on towers, roof tops or street poles that often already exist. In cases where site acquisition is necessary, it usually takes less time than obtaining digging permits. But besides these bureaucratic advantages, more important is that today’s advanced microwave technology is reliable, flexible and delivers high capacity while taking up little space. With as little as two small radios that can easily be mounted on any existing tower, up to 8Gbps can be provided in the 6-42GHz range with five-nines reliability, given we have a bandwidth of 224MHz and use 4x4 LoS MIMO technology. The limiting factor is bandwidth. A typical radio can transmit 1Gbps at a 56Mhz bandwidth channel. The maximum that most countries allow today is channel bandwidth of 112MHz, so practically a maximum of 2Gbps can be transmitted under the current regulatory restrictions.
The case for wider bandwidth, such as the 224Mhz channels, is strong and simple. Wideband channels enables the transmission of more capacity without the need for more equipment. It means operators can provide double the capacity without investing more CAPEX or OPEX, losing any valuable time, or risking network downtime. Moreover, wider bandwidth lowers the barrier of entry for connectivity providers, who will then have a real business case for entering the market in areas previously not economically viable for them. This will increase competition, meaning lower prices and better services for consumers. A wider channel means mission-critical data can be transferred reliably, and businesses can ensure their long-term growth and compete in the global marketplace. With wider bandwidth, high capacity can be carried at relatively low costs to even the farthest and hardest-to-reach regions, enabling higher growth, reduced unemployment levels, and higher levels of national health. Wider bandwidth expands educational opportunities, shaping tomorrows workforce and ensuring future GDP growth. Subscribers can receive the additional capacity they need for their wide range of applications at the quality they expect, and 5G can happen even in the most remote areas – fast.
In short, wider bandwidth allows for more and faster provision of the critical resource connectivity, and therefore is a catalyst for the wealth of nations. Regulators hold the key to success. In order to unlock the opportunity for increased economic growth and social welfare, wideband channels need to be approved.
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