The methods used to mitigate risks that may materialize in future can be separated into two essential categories. One approach involves becoming more flexible, adaptable and resilient in general, so you are better able to cope with any eventuality, even if it was not anticipated. The other approach tends to get most attention at the start of a new year: predicting what lies ahead and then constructing plans based on those predictions. Managing risk by forecasting the future is often a fool’s errand, as easily demonstrated by any objective research into the accuracy of past forecasts. I cannot stop people from wasting their time reading countless surveys and opinion pieces about what will occur in 2024, but I might persuade some of you that comms providers face a more unpredictable risk environment than any in living memory. Here are four reasons why.
Artificial Intelligence
Depending on who you listen to, artificial intelligence may provide us with an arsenal of new weapons to manage risk, may represent the greatest man-made risk to human survival, or may be both. It is not wrong to listen to expert analysis of the ways AI will improve techniques like predictive analytics, or warnings about the ways the same technology may be co-opted by bad actors. But none of those experts really know what the impact of AI will be, because there has never been a wholly reliable measure of how much technological development is required to obtain a technological breakthrough, or the consequences those breakthroughs will have on life in general. If past predictions about nuclear fusion had proven accurate then we would not be building windmills to replace fossil fuels. On the other hand, some serious commentators thought mobile phones would remain a toy for the rich instead of becoming an astonishingly powerful enabler of trade and education. Advances in AI were startling during 2023, and we would have to deal with the repercussions of recent advances even if all AI research was frozen today. But we do not really understand the pace of change that will occur because of AI and its consequences for employees, customers and businesses.
Bad Traffic and Divided Regulators
My review of 2023 had to cover plenty of stories about unwanted and scam calls and messages because of the differing strategies adopted around the world. One group of national regulators is evidently copying from each other by focusing on methods that can deliver improvements as soon as they are implemented, without needing help or cooperation from outside. They favor such basic but effective controls as blocking inbound international calls that present domestic CLIs, maintaining national Do Not Call registries, imposing registries for who is permitted to send SMS messages, and making greater effort to enforce the relevant laws that are already on the statute book. Other regulators are ploughing infertile terrain, or betting heavily on new wonder technologies to provide answers to questions that must otherwise be ignored because of moribund national politics. The USA is the prime example of the latter, which is especially problematic as they see themselves as leaders. Industry insiders suggest that even when the US adopts common sense controls like those found in other countries the execution tends to be so poor that they ultimately make no difference. This encourages increasingly desperate threats of punishments for reputable telcos to compensate for the inability to catch and punish actual criminals. And then there is China, which extradites more scammers in a day than the USA prosecutes in a year. China openly seeks international allies in their fight against crime, but will obviously reject any technology which can be used to feed data to a foreign power.
This fractured landscape is not conducive to cooperation. Even if countries wanted to cooperate, what would the goal be? Is it to punish organized crime whilst freeing victims who have been held against their will in scam compounds? Or is the goal to exchange data so that algorithms can more effectively discriminate between good and bad traffic? The lack of cohesion between these goals means telcos will come under differing kinds of pressure from different kinds of governments, and could easily find themselves facing contradictory demands.
Can the Long Arm of the Law Roll Its Sleeves Up?
Concerns about national security and the extent of fraud have encouraged greater investment in the parts of law enforcement most closely allied to the work of telcos. There has always been a tendency for governments to use networks as a source of data that helps them pursue other objectives, such as countering terrorism. Now we are seeing more evidence that governments acknowledge that protecting networks is an important goal in itself. They are telling the public that more will be done to protect the nation, whether it is from swindlers who use telephones and the internet to steal from old people, or from state-sanctioned hackers who seek opportunities to obtain intellectual property. But will the words be matched by adequate funding? And can the money be spent well anyway? Police forces have so little recent and relevant experience of dealing with networked crime that even if they intend to recruit new investigators they may not be able to train them to do competent work.
The Chinese government’s strategy and the recent INTERPOL operation to tackle human trafficking associated with cross-border scams show that there will be some aspects of police work that can change the risk profile for comms providers. But even if the police did more, politicians would need to ask themselves if they expect a crackdown on networked crimes to lead to an uncomfortable increase in prison populations. Some in the USA have begun to appreciate the need to provide guidance to boys before they get seduced by internet forums that explain how they can become millionaires using simple cons like SIM swapping. However, no country has a joined-up strategy for keeping hardened cybercrooks offline without locking them in a cell. This means it is extraordinarily difficult to forecast how much impact the revitalized efforts of law enforcement agencies will have on the infiltration and abuse of networks.
Money Talks… But Which Language?
The fall of the Soviet Union and the reforms introduced by Deng Xiaoping in China led to a few decades of relative harmony in international affairs. This was especially conducive to the rapid growth and exploitation of the internet and mobile communications. Those days are over, but some segments of the comms sector act as if the wind never changed direction. The reality is that the wind now blows in many different directions at once. This may not matter greatly to those comms providers which remain rooted in just one national market, but there are fewer of those each year. International groups will own a larger share of providers as time goes on, except when national governments interfere by blocking takeovers or feeding subsidies towards their favorites.
The rise of protectionism in communications is further confirmation that we are living in a new era, and it also means growth will be stymied because there can only be so much money milked from a single national market, and only so much that can be done to reduce costs without generating other kinds of political heat. Some countries will see very dramatic layoffs if there is the potential to replace people with automation. BT Technology Chief Harmeen Mehta illustrated how cold-blooded executives will be when she compared redundant employees to the horses which were replaced by the invention of cars. But however the economics are analyzed, it is not sustainable to keep throwing capital at network upgrades without the money coming from somewhere.
Perhaps taxpayers will be made to pay more, whether through reduced competition or more obvious subsidies. Perhaps international capital will support new investment, but this will likely occur through further cross-border consolidation of major groups. Some assets like base stations can be sold off, but that just leads to different ways of reducing competition or consolidating assets in corporations that have multinational interests. New money will be offered by some countries that need to spend now to secure their future. Saudi Arabia is planning for the time when their oil revenues enter permanent decline. China’s population has peaked, which means their demographic dividend is also in decline and they need to aggressively pursue strategic goals before their advantages are eroded by rival powers like India. The Indian government is a potential wildcard, as they have shown they are capable of choosing when they help or fight the West, but their approach to digitizing commerce suggests they may be ahead of any other large market.
Those who have the most money get the most influence, and who has influence matters in an industry that is truly global in nature. Europe exploits the wealth of its population by setting expectations on anybody who wants to sell to them, as exemplified by the constraints imposed on using personal data. Other parts of the world are trying to disrupt the current order. That was why Huawei spent so much on research and development over so many years, massively outstripping the fading capabilities of North America. The resulting strategic outlook is messy, and can be disrupted by decisions that have nothing to do with commerce or communications, as ably demonstrated by the rogue operators which emerged following the invasion of Ukraine. Anyone who still assumes the stability that characterized the noughties is either living in the past or working at the GSMA. If you are living in the past, or refusing to accept the world has changed, then you cannot be managing risk based on your projections of the future.
