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The Asia-Pacific’s Digital Future: 2022 Outlook

Here’s a look at the digital implications of last year’s events on the Internet and the changes that will be felt for years to come. 

By Rajnesh Singh

As we enter year three of the pandemic, the Omicron variant has impacted parts of the world, reminding us that the COVID-19 pandemic is far from over. Scientists expect more variants in the coming years, and time will tell what impact those will have.

Accelerated digitalisation across sectors and industries, driven by the pandemic, but now perhaps also a function of the changed business environment, is also expected to continue in 2022. Besides the pandemic, the climate crisis and various conflicts continue to affect the Asia-Pacific region and the world, contributing to economic hardship and increased poverty, as well as heightening inequalities and discrimination. Digital development has both fuelled these and contributed to their mitigation.

Following on from last year’s outlook, my 2022 outlook has more questions than answers.

1. The Digital Divide is becoming harder to bridge

Latest figures from the International Telecommunication Union (ITU) show that growth in Internet use between 2019 and 2021 was the largest in a decade – in Asia-Pacific, Internet use jumped by 24%, with the highest growth in mobile-broadband subscriptions among all the regions at 10.5%. However, a year-on-year analysis shows that growth spiked during the first year of the pandemic while in 2021, growth returned to pre-pandemic rates.

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With accelerated digitalisation and countries adopting “digital-first” strategies – a clear example is countries’ rollout of digital vaccination registration, certification, and verification – it is more important than ever to step up our efforts to reach the 40% of Asia-Pacific’s population that are still not using the Internet. Barriers to use include access and affordability, literacy and skills, relevance of online products and services, security and trust, and sociocultural norms. A significant part of the 40% that are not connected yet is also because they are the hardest to reach.

Those not using the Internet are disproportionately from low-income populations, rural and remote areas, and traditionally disenfranchised groups, such as women and girls, persons with disabilities, and ethnic minorities. They risk losing out on earnings and learnings and face higher health risks by not being able to access online services, including health services and vaccines. With the digitalisation of vaccine certificates, those without digital access may even be denied access to essential services.

What does it take to bridge the digital divide? I would suggest that we must first better understand the multiple layers within the divide. These need to be unpacked and brought to attention so that appropriate actions can be taken. There is a tendency to overlook the contributing factors of these layers, and this includes the type and price of connectivity available in different localities, the type and price of devices and data plan choices available to users, the operating system, and the version of the devices. As well, its age and processing power often determine what the device can access. These all impact users’ access to online content, products, and services. We need to find creative ways to finance and deploy an inclusive digital infrastructure, and at the same time, support Internet adoption – merely building the infrastructure will not ensure usage.

2. Barriers to Digital Transformation are rising

The pandemic has accelerated the need for digital transformation but barriers exist and are rising given the increased competition, the lack of availability of digital talents (see point no. 4), and the need to comply with more complex regulations (see point no. 8). Are sectors and industries in low- and lower-middle-income economies of the Asia-Pacific ready for digital transformation? What about the micro, small and medium enterprises (MSMEs) that make up the majority of businesses in the region? What are the foundations for digital transformation for them?

The various digital readiness indexes provide a good starting point for looking at the foundations for digital transformation. For instance, the Network Readiness Index focuses on the availability of digital technology infrastructure and services, digital skills and access among the population, government regulation of the digital space, and the economic and social impact of digital services. The Cisco Digital Readiness Index focuses on human capital development, ease of doing business, business and government investments, the startup environment, digital technology infrastructure, and digital technology adoption. I would add access to electricity as a foundation for digital transformation since almost one-tenth of Asia-Pacific’s population (450 million) are still without electricity. In addition to these fundamentals, a Singaporean paper proposes that the foundational digital infrastructures for inclusive digital economies must include digital identity, authorisation and consent, payments interoperability, and data exchange to enable end-to-end digital transactions.

A World Economic Forum survey conducted in South-East Asia found that 74% of owners of MSMEs have digitalised over half of their business tasks in 2021. Business owners with an online presence were less likely to report declines in income compared to those without one. However, some believe that the biggest barrier in Asia-Pacific’s digital transformation is changing mindsets to look beyond the technology and focus more on impactful and transformative strategies. Most of these MSMEs in the region still look at digital transformation in terms of using technology to enhance operational efficiency, improve workforce collaboration and reduce operational costs. Less attention is paid on creating new services, business models and revenue streams through digital transformation, for example by leveraging data and analytics capabilities to better understand and serve customers, or building partnerships with other industries, governments, academia and startups to promote innovation and collaboration. The lack of resources and talent are key barriers. For example, less than half of the workforce in South-East Asia consider themselves proficient in the skills they deemed important to succeed in the post-pandemic world – technology use, creativity and innovation top the chart as the most important skills. Other barriers include the high cost of adopting new technologies and cybersecurity concerns. MSMEs will need more digital skills building and increased access to financing for digital transformation.

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3. The use of frontier technologies is accelerating

The ‘tech’ suffix is increasingly being bolted to most things these days – agritech, climate tech, ed tech, fintech, biotech, health tech, etc. Companies and startups are increasingly using frontier technologies like artificial intelligence (AI), big data, and more recently blockchain, to rollout (or promise the rollout of) new products and services. I must also say that some look to be more hype than substance. There is also some integration emerging between frontier technologies. However, this trend still begs the question – what changes will this bring to infrastructure requirements? Naturally, they require extensive, reliable and resilient national infrastructures that provide access to electricity, broadband connectivity and affordable devices, discussed in point no. 2. A clear example of this deficiency is school closures during the pandemic that forced 1.6 billion students out of classrooms worldwide with schools turning to ed tech for remote learning. Yet, ed tech had limited reach, particularly to those in low-resource settings and most likely to fall further behind. This issue was prevalent in both, developing and advanced economies.

Another example is in India where its National Strategy for AI, National Digital Health Blueprint and National Health Stack all aim to digitalise the health system and promote AI in healthcare. The narrative focuses on their potential to reach underserved populations, particularly in rural areas lacking road infrastructure and sufficient doctors. In reality, however, AI adoption in healthcare has so far been limited to large private hospitals and clinics due to the poor quality of the digital infrastructure and lack of adoption capacity in rural India. AI solutions are more likely to serve populations who already have access to high-quality services, typically in cities with well-developed digital (and electricity) infrastructure. This could result in new inequalities in access to quality healthcare. How can we ensure that frontier technologies prioritise those furthest behind first?

As tech is developing much faster than regulations can keep up, the piecemeal approach that tends to be used by policymakers and regulators could be problematic; more often than not, regulations could become poorly defined, overly broad, unduly restrictive or simply unworkable.

 

Besides the issue of equitable access, developing, operating and sustaining frontier technologies require specialised skills and significant investments. There is also a need to address issues such as bias in data and algorithms in AI-based systems that could lead to discrimination and harm. Industry-led best practice has been useful and though there are some concerns, increasingly we are seeing regulators stepping in. Regulations, specifically light-touch regulation that helps create an enabling environment, can be helpful when they protect consumers, promote fair competition, foster innovation and interoperability, and build trust, contributing to bridging the digital divide and socioeconomic growth. However, in a fast-moving space like the digital economy with rapid changes in technology, business models, consumer expectations and even societal values, government agencies and ministries are often forced to quickly develop policies and regulations.

4. The Digital Talent Gap is widening

As industries across Asia-Pacific embrace digital transformation, there is a rise in demand for digital talents. The global number of digital jobs is set to grow from 51 million in 2021 to 190 million in 2025.10 In India, only 12% of the workforce has digital skills, and demand for skilled digital workers is expected to increase nine-fold by 2025. Another study estimates that the Asia-Pacific will face a shortage of 47 million digital talents by 2030. How do we close this digital talent gap?

There needs to be an integrated and holistic approach to promoting digital literacy and skills through curricula, teacher training and workforce upskilling, with targeted digital literacy and skills programmes for marginalised groups such as women and girls, and those out of school and working in the informal economy. Digital skills programmes should target different ages, stages of career, and digital skillsets.

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5. The Gig Economy is growing

Is the gig economy the future of work? Greater attention has been paid to the gig economy and non-traditional work patterns that have increased in recent years, driven by the pandemic and rising unemployment rates. According to the International Labour Organization, the number of platform-based gig workers tripled during the past decade, while the number of delivery-related gig workers increased by more than 10 times. In Taiwan, for example, there are about 90,000 delivery drivers working for companies like Foodpanda and Uber Eats, an increase of around 12% from 2019. At the same time, in 2020, Taiwan recorded its highest level of unemployment in four years. In the Republic of Korea, about 8.5% of the workforce now work as a provider of some type of service for clients through online platforms, and about a third of them are working in the category of delivery, shipment, and driving. India has 15 million gig workers.

Gig workers are typically not considered employees and often do not have access to employment benefits, insurance and training, which impacts gig workers’ health, safety, and professional development. Gig workers have been fighting back against unsafe working conditions, as well as unfair pay and decreasing income due to changes that platforms make to their opaque algorithms. Some regulators are looking at protecting gig workers’ rights and safety and ensuring decent work and wages.

6. We are becoming more digitally dependent

The last quarter of 2021 saw two major outages that highlighted the dominance of a handful of companies in the digital sphere and the vulnerabilities of digital platforms as more companies undertake their digital transformation journey.

In October, all of Facebook/Meta’s platforms were down for about six hours, which affected billions of people and millions of businesses that rely on the platforms for commerce, information, communication, and logging in to apps (including services provided by other companies which use the Facebook account to log in). For some people, Meta platforms have become the primary or only means of interacting with the Internet – which in itself raises questions on consolidation as well a single point of failure.

Then in December, Amazon’s cloud services — that supply nearly a third of all cloud computing services used by companies online — were disrupted, temporarily knocking out major streaming platforms, a wide range of apps and Amazon.com.
For a number of years now, there have been concerns raised around the increasing consolidation in the Internet economy The outages raise questions about our dependence on a handful of players that dominate cloud and communication services. How do we mitigate such risks and prevent this loss of access when one platform’s system going down has a domino effect on other services? It’s often said that a single point of failure is a bad thing. More competition and more diverse players would reduce the reliance on a limited number of players, but is this still possible in the way the digital space is evolving, and the way in which some companies dominate that space?

7. The future of interoperability is uncertain

Standards and interoperability are backend issues that are not easily recognised and appreciated but they ease digital transformation and bring significant benefits to innovation and users’ experience. Importantly, they empower users with increased choice. The lack of interoperability means if you leave a social media platform, you are no longer able to connect with your contacts on that platform, or if you switch mobile platforms, you cannot take all your apps with you. In the past year, we have seen the United States Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act requiring large platforms to open up the application programming interfaces (APIs) to their rivals, the European Union Digital Markets Act mandating interoperability to promote competition, and China’s Cyberspace Regulations banning Chinese tech giants from blocking interoperability. The interoperability of digital payment systems and digital health platforms is also gaining momentum. More regulations and cooperation to promote software interoperability is likely in 2022.

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However, it’s not only an issue with software systems. On the hardware front, vendors are increasingly designing their own chips for their equipment. Large tech companies such as Amazon, Apple, Meta, Google, Microsoft, and Tesla, as well as those from China such as Alibaba and Baidu, smartphone brands Huawei, Xiaomi, and Oppo, and home appliance brands Gree, Midea, TCL, and Haier, are all bringing certain aspects of chip development in-house to custom-make chips that fit their applications’ specific requirements. The ongoing global chip shortage due to the pandemic has accelerated this trend to develop chips in-house. In China, this rise in chipmaking is also fuelled by US sanctions, as well as the rapid uptake of Internet of Things technologies. On the one hand, this is good for choice, innovation, and competition. On the other hand, it raises questions about the future interoperability of systems and the ability of users to move from one system to another as well as issues around lifecycle and future updates. Are we heading back to the time of proprietary self-developed systems of decades past that allow limited interoperability? 

8. Regulatory control is increasing and undermining rights

As you may have noticed, a number of the points above included references to regulation. Global norms have shifted dramatically towards greater government regulations in the digital sphere, especially around online content, personal data and anti-competitive market practices of big tech. Unfortunately, some of these regulations also have an impact on people’s rights to privacy, freedom of expression, and access to information and services. For instance, some of the regulations are designed to suppress content that is critical of the government, rather than protect users from harmful material. Also, a growing number of regulations facilitate government surveillance by undermining encryption and mandating that platforms store user data on servers based within the country. Many of these regulations also contain extraterritoriality provisions that enable a government to exercise authority beyond its national boundaries.

The Indian Government introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021. One of the primary aims of the Rules is to regulate social media intermediaries, but it also imposes various compliance requirements, including removing access to content and mandating traceability of end-to-end encrypted messages. In Pakistan, the Draft Personal Data Protection Bill contains extraterritoriality provisions and data localisation requirements, forcing companies to store data on servers based within its borders, surrender personal data to law enforcement agencies with limited oversight and circumvent the encryption of private communications. In Myanmar, a Draft Cybersecurity Bill allows the government to order Internet shutdowns, block online services, ban service providers, intercept user accounts, access personal data of users, force the removal of any content, and imprison critics and officials at non-complying companies. In Cambodia, the government issued a sub-decree establishing the National Internet Gateway to route all domestic and international Internet traffic, enabling the government to monitor and restrict access to the Internet at will. Even Australia’s Online Safety Act empowers the eSafety Commissioner to order companies to remove “harmful” content risks affecting the legitimate speech of marginalised groups, including sex workers and educators, and the lesbian, gay, bisexual, transgender, and related communities. The act lacks accountability for how the commissioner makes decisions and provides little opportunity for users to respond to complaints about their content.

Besides violation of fundamental human rights, these strict regulatory controls could impact the growth of the digital economy and society by further heightening barriers of entry for new players and startups as they need to invest in additional technologies and personnel to comply with the increasingly complex regulatory requirements. For MSMEs, these costs could prove prohibitive, limiting their ability to expand into new markets. Moreover, these regulations could affect the diversity of players in the digital economy, further leading to its consolidation in which a handful of large, well-established, and well-funded tech companies dominate the online world, and shape its functionality and future evolution. Sometimes, restrictions are aimed at blocking foreign companies’ access to the market or encouraging the growth of domestic digital providers. The net result, however, could be quite damaging to local companies as the rules could reduce their access to outside digital services and products, such as innovative technologies and cloud services in the global market. The other obvious point here is that if more countries began to take this approach, it would limit the ability of a company from one country to sell its services in another country. In other words, the company could largely be restricted to markets within its home country.

All these raise a set of questions. Are we headed for a future where digital platforms will need to comply with the different regulatory requirements of countries, and what are the long-term consequences of this approach? What happens when the quality of national legal frameworks and due process varies across different countries? What happens when national laws do not comply with international human rights standards? How sustainable are extraterritorial laws?

9. The climate crisis and device sustainability is a growing concern

The United Nations climate conference, COP26, that took place a few months ago grabbed global attention. Climate change is said to be playing an increasingly central role in many of today’s conflicts. As world leaders negotiate plans to reduce greenhouse gas emissions globally, digital transformation strategies have garnered renewed attention as a way to step up rapid and effective climate actions.

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At the same time, the significant increase in the use of digital technologies has greatly expanded the sector’s carbon footprint. Developing hardware and software fuels the climate crisis and related water crisis. Some commentators suggest that your laptop or desktop has been responsible for producing about 300kg of carbon dioxide during manufacture, with 1,200kg of stones, gravel, tailings, and slag being extracted in the process. It takes about 40 litres of water to make a single computer chip, and about 200,000 litres of water to make a laptop. The way we use technologies also affects our carbon footprint. Online searches, sending messages, creating and viewing websites, storing emails and photos all consume electricity and emit the accompanying greenhouse gases.

E-waste needs to be tackled to ensure a sustainable global digital transformation. The digital industry produces over 50 million tons of e-waste every year. That is the equivalent of dumping 1,000 laptops every second. The problem is getting worse, particularly with the shorter and shorter release cycle of new models of phones and gadgets by vendors and the encouragement to upgrade to the latest and greatest. The total quantity of e-waste is doubling roughly every 15 years. Much of the e-waste is exported illegally from high-income to low-income countries or is mixed up with other waste. It ends up improperly disposed of in landfills where toxins common in electronics like lead, mercury, and cadmium can leach out and contaminate surrounding soils and groundwater. With the green tech movement gaining momentum – electric vehicles are one example – there is also the question of what happens to all the batteries. We know batteries have a finite lifetime, and it begs the question as to whether as much attention has been paid to the long-term sustainability of the bits and pieces that power – and are essential to – green tech.

Consumers and environmental organisations have been demanding that manufacturers improve hardware sustainability and provide a right to repair devices, and some companies such as Apple and Microsoft have started to revise their policies, offering more flexibility to repairs. There is also a growing movement to ensure software sustainability with demands for long-term software support, including security and functionality updates. Research conducted in 2020 revealed that two in five Android users worldwide are no longer receiving security updates from Google, and are therefore at risk of data theft, ransom demands, and malware attacks. In today’s age, personal security and safety and protecting the environment need to go hand in hand, and consumers should not be forced to sacrifice the latter to achieve the former.

On the topic of software updates, iPhone updates are responsible for almost 5 billion gigabytes of data being transferred annually, which is estimated to emit at least half a million tonnes of carbon dioxide. To deal with this sort of pollution, you would need to plant at least 50 million trees every year. There are, on average, 10 iPhone updates a year. Do we need that many? Recognising that security updates are important, whatever happened to incremental updates? And how about more efficient software code that does not rely on bloatware? In addition to the environmental costs, can low-income populations afford these data-intensive updates? This brings us back to my first point on the digital divide – they are all interrelated. 

10. Interest in the Metaverse is spreading

With Facebook rebranding itself as Meta, there is a growing interest in the ‘metaverse’ – the idea of integrating real and digital worlds ever more seamlessly, using technologies such as virtual reality and augmented reality. Big tech companies have benefited the most from the digitalisation spurred by the pandemic, but are seeing increasingly fierce competition with each other across markets, as well as a crackdown from regulators. Is the metaverse their new avenue for growth, allowing the tech giants to build new products and services without much regulatory scrutiny as regulators try to catch up with new trends? But then again, is the metaverse just a new marketing term that is being exploited for profit? And perhaps a new wild west away from regulatory oversight (in the short-term at least)? Will the metaverse resemble the term’s literary origins, coined in Neal Stephenson’s 1992 novel Snow Crash to describe an exploitative, corporatised, hierarchical virtual space, or will it be based on the original vision of the Internet that is open, collaborative, and consensus-driven?

A couple of years ago I suggested that we need three C’s to make things work – Collaboration between players and actors, Coordination between them, and Cooperation to reach our goals. Last year, I suggested a fourth “C” – Common Understanding – so that we all know what it is we need to achieve together. This year, I would like to suggest a fifth “C” – Creativity. More than ever, we need creativity to solve the complex and interrelated challenges we face today with openness and innovation, and to inspire inclusive and sustainable solutions through collaboration, coordination, cooperation, and a common understanding.

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Rajnesh Singh is a retired serial entrepreneur. He is Chair of the Asia-Pacific Regional Internet Governance Forum and Regional Vice President for Asia-Pacific at the Internet Society. Views expressed are personal and do not necessarily represent the views of MediaNama.

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