Is regulation hindering the growth of AI?

Technological progress around the world is being hindered by government regulations, according to technology experts speaking at the recent Mobile World Conference in Shanghai, China.

Artificial intelligence (AI) has the potential to revolutionize industries around the world, but regulatory obstacles and protectionism are limiting its expansion, particularly in Latin America and Central Europe, experts say.

“I’m hearing a range of opinions. One of the things that comes up repeatedly is, unfortunately, in many cases, governments are not acting in the best interest of their people,” Brian Chamberlain, Huawei executive adviser, head of carrier marketing and ICT infrastructure business, said in a media roundtable.

According to Chamberlain, despite the rapid adoption of AI in Western Europe and North America, with more than half of users in those regions using AI on a daily basis, the growth of the technology has been hindered by governments failing to recognize its potential and implement supporting policies. The rollout of 5G networks, a key component of AI development, has also been hindered by regulatory barriers and high deployment costs, with many countries struggling to keep up with China’s rapid advances.

Chamberlain criticizes the government for overregulating and driving up connection costs, and praises China’s approach to spectrum allocation, which requires recipients to deploy it within three years or risk losing their licences. Fees are paid in arrears, aligning costs with revenue. China also boosted data connectivity by requiring fibre-optic connections in new buildings 15 years ago.

“If you look at the cost of laying fiber optics, 90 percent of it is civil engineering – digging and laying the road. Shovels and coal? No, literally shovels and pipes. The fiber itself and the routers on either side of it cost one-tenth as much. So the only cost you’re paying for new construction is the pipes,” he said.

China’s fiber optic regulations have reduced deployment costs by 90% and made high-speed data access universal. Unlike antiquated copper wire, fiber optics is future-proof and can be quickly upgraded without costly retrofits. He also highlighted other obstacles to innovation in countries that impose tariffs and restrictions on the import of cutting-edge technology such as Raspberry Pi and prototype boards. These affordable tools have the potential to unleash creativity and drive progress, but often prevent entry into certain markets.

“It’s a fantastic tool for startups to generate all this interest and develop all kinds of new devices. And it’s incredibly cheap, which is why it’s perplexing that some countries are banning its import,” said Sean Collins, chairman and founder of CCS Insight.

He recommends that countries prioritize lowering broadband costs, deploying high-speed networks, and opening up markets for imports of this technology. This will allow entrepreneurs to address local challenges and drive growth. Collins analyzed various markets and noted that the rapid pace of technological advances, especially in AI, has left regulators in Europe, the US, and Asia struggling to keep up. The pace of technological innovation is so fast that regulators are thought to be 12 to 18 months behind, creating a major challenge. This delay creates a vicious cycle, and by the time regulations are introduced, they are already outdated. The EU is leading the way with its Digital Markets Act, which has just come into force and will impose sanctions on major technology companies such as Google, Apple, and Amazon. Investigations into cloud services in the region have already begun. However, the next four to five years will be crucial in navigating the complexities and potential illegalities of AI regulation without stifling innovation.

“I’ve never seen anything like AI before, and to me the speed is astounding and we have to be very careful about this,” Collins argued.

Chamberlain agreed, emphasizing the important role of data access in driving AI innovation. But he noted that many countries have strict regulations around data collection that make it difficult and expensive for companies to obtain the data they need to train AI models. This poses a big challenge for regulators, who must balance the need to protect data privacy with the need to give companies the freedom to experiment and innovate.

“I really sympathize with regulators trying to balance all these factors, but it’s important to give companies the opportunity to experiment and make mistakes, because if they don’t, it will all just slow things down,” Chamberlain stressed.

Chamberlain further revealed that the US has prioritized privacy and pushed for swift regulation, including restricting access to data, which could inadvertently hinder companies’ ability to leverage data for breakthroughs in disease detection, treatment, and environmental sustainability. He said that while concerns about misuse of data are legitimate, regulators must balance progress with protection. The spread of disinformation like deepfakes is a real threat, making accountability crucial. He questioned whether global technology giants like Facebook would comply if asked to remove objectionable content. As the digital environment evolves, Chamberlain argues, it will be important to teach children the critical thinking skills to effectively navigate online content. But the task seems daunting and could inspire fear in policymakers, as some online information is so persuasive that even the most astute individuals may struggle to distinguish fact from fiction.

“If anything, our society, and especially our politicians, are afraid that we’re going to get out of control, so they want to drop anchor, stop everything for a little while, slow it down, try to catch up, and then let it go again,” Collins added.

Adoption of AI technology is on the rise, but a large skills gap is preventing it from reaching its full potential. According to Collins, many individuals and businesses are turning to AI to improve productivity, but the shortage of skilled workers is a major bottleneck. To address this, Collins called for global education programs focused on developing skills in developing and using AI. At the same time, Chamberlin noted that a traditional five-year degree may not be the most effective way to upskill, suggesting that shorter, more intensive programs on the latest technologies may be a better approach. This shift in thinking is crucial, as AI technology continues to evolve and professionals will need to learn new skills to adapt and stay relevant.

Asked about the progress of technology adoption in Latin America and the Caribbean, particularly AI, Collins acknowledged that rollouts across the world have been uneven, and so has 5G. Citing North America, China, parts of Asia and the Middle East as examples, he said part of the reason 5G is moving forward is because none of the technologies are cheap, and some are still difficult to deploy at scale.

“Latin America, perhaps parts of central Europe and even Western Europe, which is widely considered to be the relatively wealthy parts of the world, have not rolled these out with the speed that we’ve seen in other regions, which is a bit worrying, but they are making choices with their balance sheets and so on that allow them to do so,” Collins said.

When asked by the Jamaica Observer how the US ban on Huawei products could have a significant impact on global 5G development and deployment, Chamberlain revealed that companies that succumb to US pressure and remove Huawei from their networks are likely to face higher costs and worse services. Conversely, companies that resist US influence and opt for Huawei solutions will enjoy faster, more reliable networks. Chamberlain’s data paints a clear picture that it is in national networks’ best interests to adopt Huawei technology.

“The steps the US has taken have brought us an awful lot of business. When the US started to restrict Huawei’s access to US technology it caused all Chinese companies to take notice, take notice and do some soul-searching,” Chamberlain told Sunday Finance.

Huawei’s executive advisers acknowledged that the company’s fortunes are closely tied to its reliance on Oracle Software, a database management system, and that Huawei’s database software has become the industry standard for banks around the world. But the U.S. crackdown on China’s access to advanced GPU cards has drastically cut Huawei’s production capacity, leaving it struggling to meet surging demand. Ironically, the U.S. restrictions aimed at stalling China’s tech giants are having the opposite effect: encouraging business with Chinese companies, boosting their revenues and increasing their ability to invest.

“This is a very misguided approach. That being said, I’m an American citizen and this is painful to watch as I see job cuts coming,” Chamberlain said.

The consequences of the US-China tech war are becoming a harsh reality. The US ban on selling semiconductor development software to China has led to widespread layoffs, with affected companies shrinking in size by up to 20%. Meanwhile, Chinese companies in the sector have boomed, with some expanding by 30, 40 or even 50%. This stark contrast suggests that attempts to limit access to Chinese technology are simply directing investment towards domestic Chinese companies rather than stimulating global growth.

“I hope they learn their lesson and stop playing this game. It’s really not productive,” he said.

According to Collins, an independent observer of the technology industry, the ongoing tensions between the US and China over technology are due to political power struggles, not innovation. He noted that while his company was developing cutting-edge technology, the US government, citing political reasons, deemed China an unsuitable partner for certain technologies. This has led to a global divide, with some regions adopting Huawei technology and others shunning it. Collins believes the stalemate will continue for a long time, regardless of the outcome of the US elections in November.

“It certainly seems like things are being circumvented in the U.S., so it doesn’t matter who’s in power in November, I think that’s still going to continue,” he said.