The Covid-19 crisis has tested the UK’s reliance on technology to an unprecedented degree, highlighting the need for increased investment in the country’s digital future. Analysis from NS Media Group shows the UK’s tech readiness lags behind other developed countries, which begs the question: how prepared is the UK’s IT infrastructure for the demands of a post-Covid world?
NS Media Group’s 2020 Tech Preparedness Index – which examined the top 100 foreign direct investment (FDI) locations on data points including IT investment, digital access and skills – ranked the UK twelfth: behind many of its European counterparts, with South Korea, Singapore and Sweden topping the list.
Not a Tech Problem?
The UK does not have a technology problem, according to US tech giant Cisco’s UK and Ireland CEO David Meads: “Whether it’s Cisco or any other large service provider such as Vodafone or BT, we can build a world-class national broadband infrastructure very quickly [in the UK],” he adds.
Private sector investment will drive ICT infrastructure improvements, but the UK Government must overcome competing bureaucracy and funding challenges to facilitate a transformation to faster and more modern network infrastructure, according to Meads.
Prime Minister Boris Johnson’s election pledge to deliver full national broadband coverage by 2025 is a timeline that Meads says needs revising in light of the pandemic, with a renewed focus on digital equality.
“The stark fact is that for service providers it is not necessarily commercially attractive to bring connectivity to some rural areas,” he adds.
Furthermore, Meads stresses that digital equality in the UK will become increasingly important as businesses explore the benefits of working from home after social distancing restrictions are eased.
While the pandemic has decimated investment in many sectors in the UK, Gartner analyst David Groombridge expects more businesses in the country to invest in remote working, cloud-based technologies and automation post Covid.
Gartner research found that more than three-quarters of chief financial officers suggest they will have more staff working remotely in the future, and another Gartner survey of business leaders’ investment priorities post-Covid-19 suggests a net overall increase in technology investment.
“From that point of view, we could probably do with all network roll-outs being faster than they already are,” says Groombridge.
A 5G Force?
The UK Government must also address issues such as IT skills and a comprehensive digital policy framework, but ultimately the UK’s digital transformation depends on the timely deployment of a 5G network, the super-fast fifth-generation mobile internet, says Groombridge. South Korea topped NS Media Group’s Tech Preparedness Index and it is no coincidence that the country is on track to become the global leader in 5G penetration by 2025, according to mobile industry analysis firm GSMA Intelligence.
However, Groombridge urges caution on security issues when using what the National Cyber Security Centre (NCSC) has deemed high-risk vendors such as Chinese telecoms giant Huawei.
“The argument over whether Huawei should be allowed to invest in the UK’s 5G network is more than a political issue because you are not going to get inward investment from large digital providers if they don’t believe their data and intellectual property is safe,” he says
After issuing advice in January to telecoms operators that high-risk vendors should supply a maximum of 35% of the network’s equipment within non-critical areas, the NCSC announced yet another review in May to assess the potential national security threat posed by Huawei’s involvement in the UK’s 5G networks.
An annual report by HCSEC, the entity to set up by the NCSC to monitor Huawei’s code and hardware security posture is widely reported to be with senior ministers now; it remains unclear whether it will be used to promote a harder line or even outright ban on Huawei in the UK, in a volte face amid pressure from cabinet ministers and the US who are taking an increasingly hard line on the company.
Huawei entered the European market about a decade ago and has established itself as a reliable vendor in the roll-out of 4G, according to GlobalData analyst John Byrne. Most large country operator networks usually rely on two major vendors, which narrows down the playing field to a list including Ericsson, Nokia and Huawei, Byrne adds.
“The fact that the UK is going out of its way to remove one of the viable vendors from the equation is certainly a factor in slowing down roll-out of 5G – it stifles innovation and makes the pricing less competitive,” he says.
“Lines of demarcation roughly speaking have formed, with the UK, US and Australia on the side of most stringent measures whereas continental European countries such as Germany are concerned but are not taking those same security measures,” says Byrne, who considers the potential security concerns identified by the NCSC to be overblown. “The findings are not sinister but simply addressable issues which arise from any large-scale IT infrastructure roll-out,” he adds.
Mind the Tech Gap
NS Media Group’s Tech Preparedness Index ranked six European countries above the UK, a gap which the UK Government’s decision to exclude Huawei may impact further.
“In the case of BT, it will have to spend money dismantling its core to remove Huawei over the next couple of years, money that could potentially have been invested in 5G roll-out,” says Byrne.
BT has estimated a cost of £500m simply to comply with the NCSC’s recommendation that Huawei’s network presence should constitute no more than 35%.
The UK Government’s move is consistent with a more general shift towards trade protectionism and, in particular, a Western anti-Sino investment sentiment, in response to perceived failures of the rise of global trade. Huawei’s presence in Europe has been welcomed thus far, but in early June the EU’s executive branch, the European Commission, outlined plans to make it harder for government-backed foreign investors to acquire distressed European strategic assets in a move that is seen as largely directed towards China.
Another factor slowing deployment of 5G in the UK is the availability of a telecommunications spectrum that is owned and auctioned off by the government in phases.
“If the government was serious about prioritising 5G over potential revenue from a spectrum auction, that would certainly free up capital for operators, money which could be spent on deploying 5G,” says Byrne.
New Zealand delayed its spectrum auction scheduled for March when the Covid-19 pandemic hit, but rather than holding up roll-out of its 5G infrastructure the government offered it at no cost to operators.
“The government did not delay in getting that spectrum into the hands of the operators,” says Byrne.
The UK is legislatively required to offer its own spectrum at auction, as in most countries, which would require the government to structure an agreement in line with its regulatory body to enable something similar, says Byrne. A bold move, but one which would evince an undeniable level of commitment to the future of the UK’s global digital competitiveness.