Are Regulations Preventing AI Growth?

TECHNOLOGICAL advancement across the globe is being hindered by government restrictions, according to tech experts speaking at the recent Mobile World Conference in Shanghai, China.

While artificial intelligence (AI) has the potential to revolutionize industries worldwide, regulatory hurdles and protectionism are limiting its expansion, particularly in Latin America and Central Europe, the experts say.

“I hear all kinds of different perspectives. One of the things that keeps coming up, and I hate to break it to you, but many times your government is not working in your best interest,” said Brian Chamberlin, executive advisor within Huawei, representing the carrier marketing and the ICT infrastructure business, during a media discussion.

According to Chamberlin, despite the rapid adoption of AI in Western Europe and North America, with over half of users in these regions utilising AI daily, the technology’s growth is being stifled by various governments’ failure to recognise its potential and implement supportive policies. The roll-out of 5G networks, a crucial component of AI development, is also being impeded by regulatory barriers and high deployment costs, with many countries struggling to keep pace with China’s rapid progress.

Chamberlin is critical of governments for imposing excessive regulations, driving up connectivity costs, and praising China’s approach in allocating spectrum with conditions requiring recipients to deploy within three years or lose the licence. Fees were delayed, aligning costs with revenue. China also mandated fibre connections in new buildings 15 years ago, promoting data connectivity.

“If you look at the cost of deploying a fibre network, 90 per cent of the cost is civil engineering, digging up the road and laying in contact. The shovel and coal? No, just literally shovels and pipes. The fibre itself and the routers that go on each side of it [are] one-tenth of the cost. So during new construction, that cost is just the cost of that pipe,” he said.

China’s fibre-optic regulation drives down deployment costs by 90 per cent, paving the way for universal high-speed data access. Unlike outdated copper cables, fibre is future-proof, supporting rapid upgrades without costly renovations. He also highlighted other hindrances to innovation in countries that are imposing tariffs and limitations on importing cutting-edge technology, such as Raspberry Pi and prototype boards. These affordable tools have the potential to unlock creativity and drive progress but are often blocked from entering certain markets.

“They are amazing tools for start-ups to be able to build this kind of interest, build all kinds of new devices. And they’re incredibly cheap. And so it just baffles me that some countries bar them from being imported,” shared Shaun Collins, executive chairman and founder of CCS Insight.

He recommends that countries prioritise reducing broadband costs, deploying high-speed networks, and opening up their markets to import this technology. By doing so, they’ll empower entrepreneurs to tackle local challenges and drive growth. In analysing the various markets, Collins pointed out that the rapid pace of technological advancements, particularly in AI, has left regulators in Europe, the US, and Asia struggling to keep up. The sheer speed of innovation has created a significant challenge, with regulators estimated to be 12-18 months behind. This lag creates a vicious cycle, whereby the time regulations are put in place, but they’re already outdated. The EU is leading the charge with the Digital Markets Act, which has just come into force and is set to impose sanctions on big tech players like Google, Apple, and Amazon. Investigations into regional cloud services are already underway. However, the next four to five years will be crucial in navigating the complexities of regulating AI and potential illegality without stifling innovation.

“We’ve never seen a technology like AI before. The speed of it is astonishing, even to me, and we’re going to have to be very careful with this,” Collins argued.

Chamberlin concurred, highlighting the crucial role of data access in driving AI innovation. However, he noted that many countries have stringent regulations governing data collection, making it difficult and expensive for companies to obtain the data needed to train AI models. This poses a significant challenge for regulators, who must balance the need to protect data privacy with the need to allow companies the freedom to experiment and innovate.

“I feel for regulators who have to try to balance all these factors. But it’s important that we give the companies the ability to experiment, to make mistakes, because otherwise, we’re just going to hold everything back,” Chamberlin stressed.

He further revealed that the US is pushing for rapid regulation, prioritising privacy and limiting data access, which could inadvertently hinder companies’ ability to harness data for groundbreaking advancements in disease detection, treatment, and environmental sustainability. While concerns about data misuse are valid, he said regulators must strike a balance between progress and protection. The spread of disinformation, like deep fakes, is a real threat, and accountability is crucial. He questioned whether global tech giants like Facebook will comply when asked to remove offensive content. As the digital landscape evolves, Chamberlin asserts that teaching children critical thinking skills to navigate online content effectively will be crucial. However, this task appears daunting, as some online information may be so convincing that even the most discerning individuals may struggle to distinguish fact from fiction, which could also drive fear in policymakers.

“If anything, our societies and particularly our politicians fear is getting out of control. So what they’ll do is they’ll slam the anchors on, try and stop it all for a little, slow it down, try to catch up, and then release it back out,” added Collins.

While the adoption of AI technology is on the rise, a significant skill gap is hindering its full potential. According to Collins, many individuals and businesses are leveraging AI to enhance productivity, but the lack of skilled workers is a major bottleneck. To address this, Collins called for a global education programme that focuses on developing skills in AI development and usage. Simultaneously, Chamberlin notes that the traditional five-year degree may not be the most effective way to upskill, suggesting that shorter, more focused programmes on the latest technologies may be a better approach. This shift in thinking is crucial as AI technology continues to evolve, requiring professionals to adapt and learn new skills to remain relevant.

When asked about the advancements in the deployment of technology, specifically AI, in Latin America and the Caribbean, Collins admitted that the roll-out across the globe is patchy, and so too is the roll-out of 5G. Citing North America, China, some of greater Asia, and the Middle East as examples that have been charging at it, some of that is because none of the technology is cheap, and as such some are going to be challenging still to deploy at scale.

“Latin America, some parts of Central Europe perhaps, but even in Western Europe, which is largely considered a relatively rich region in the world, they’re not deploying any of this at quite the speed you’re seeing in other regions, and that’s a bit worrying, but they’re choosing balance sheets and so forth to be able to do that,” said Collins.

When questioned by the Jamaica Observer on how the US ban on Huawei products could have significant implications for global 5G development and deployment, Chamberlin revealed that companies that succumb to US pressure and exclude Huawei from their networks are likely to face higher costs and inferior services. Conversely, those who resist US influence and opt for Huawei’s solutions enjoy faster and more reliable networks. According to Chamberlin’s data, it paints a clear picture: embracing Huawei’s technology is in the best interest of national networks.

“The action the US has taken has driven an awful lot of business to us. When they started restricting Huawei’s access to American technologies, every Chinese company paid attention and took notice; [they] did some soul searching,” Chamberlin told the Sunday Finance.

Huawei’s executive advisor admitted that the company’s fate is inextricably tied to its reliance on Oracle software, a database management system, and Huawei’s database software has become the industry standard for banks globally. However, the US crackdown on China’s access to advanced GPU cards has severely curtailed Huawei’s production capacity, leaving them struggling to meet surging demand. Ironically, the US restrictions aimed at hobbling Chinese tech giants are having the opposite effect: driving more business to Chinese companies, boosting their revenue, and enhancing their investment capabilities.

“It’s a very misguided approach. And that said, I’m an American citizen. This just pains me to watch, because I can see the job cuts that are coming,” said Chamberlin.

The consequences of the US-China tech war are manifesting in stark reality. The US ban on semiconductor development software sales to China has led to widespread job cuts, with affected companies downsizing by up to 20 per cent. Meanwhile, Chinese companies in the sector are experiencing rapid growth, with some expanding by 30, 40, or even 50 per cent. This stark contrast suggests that attempts to limit China’s access to technology are merely diverting investment towards domestic Chinese companies rather than promoting global growth.

“I hope they learn the lesson and stop this game. This is not productive,” he said.

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

“I think in the United States it certainly seems to be a bypass of things, so it doesn’t matter who’s in office in November; I think it still carries on,” he said.