Venture Bytes #43 - Privacy Issue Takes Center Stage

Privacy Issue Takes Center Stage

The Facebook – Cambridge Analytica scandal has brought the issue of data governance to center stage after the social media giant failed to police illegal and unethical distribution of user data to the political consulting firm. The issue of data governance is far from simple, but the United States could learn from the European Union’s approach.

The EU recently passed legislation for the General Data Protection Regulation (GDPR), the main premise of which is to place the control of consumer data in the hands of the consumers. This means that users will have the legal right to access and correct information that firms have on them. Users can transfer their data between organizations, and those organizations have an obligation to define how exactly they keep their data secure. If companies disobey these rules, they will be subject to substantial fines by regulators.

The United States has similar privacy rules with regard to healthcare, but legislation doesn’t reach much further. The Obama administration tried to pass the Consumer Privacy Bill of Rights in late 2012 but failed to pass through Congress. Today, the US takes a self-regulatory approach, and it’s failing miserably. The entire online advertising market is premised on “targeted advertising”, in other words, using personal information to target specific customers who may be interested in a specific product or service offering. Facebook and Google make approximately 98% and 90% of their revenues from advertising. Users of these companies’ services are not the customers, but rather the product. It’s been this way for years, but the dialogue and public discomfort with this fact is just now coming to center stage.

The primary argument against harsher data regulation assumes that increased governance will stymie innovation, as data is the main input for development of artificial intelligence services. The truth appears to be quite the opposite, though.

As shown through the #deletefacebook campaign and the tech stock selloffs in Q1 2018, consumer confidence in larger companies is dissipating. As consumers worry about the privacy of their data, usage will surely decline, leading to less collectible data altogether. In turn, innovation will suffer.

On the other hand, responsible legislation that empowers users to take control of their data will lead to more app usage and, in turn, innovation. Companies will still be able to collect data but will no longer get away with nebulous phrasing such as “your data will be used to improve our services”. The GDPR mandates that “data subjects” can demand a copy of data held on them and demand rectification or even deletion under certain circumstances. There has been much debate surrounding the so-called “right to be forgotten”, as it treads on the right to free speech, a central tenet of the US Constitution. Thus, the GDPR isn’t perfect but should at least exist as a framework for the US and other countries to build on.

The GDPR legislation will go into effect on May 25th. At that time, any American firm that serves European customers will have to comply with the mandate. Naturally, there is some hesitation due to issues with restructuring various services and databases, but many technology leaders appear to be embracing the change.

Widely seen as the face of this issue is Facebook CEO Mark Zuckerberg. In response to a recent Reuters article claiming that Facebook would never adopt GDPR, Zuckerberg said, “We are going to make all the same controls and settings available everywhere, not just in Europe”. Previously, Apple CEO Tim Cook has also spoken in favor of regulation, calling privacy a “human right”. **

5G – Moving From a Dream to a Reality

As the Internet of Things revolution gains momentum, so too must the mobile networks that power it. Following the recent Mobile World Congress 5G has taken center stage. Ericsson CEO Borje Ekholm told his service provider customers that 5G has moved from a dream to a reality, and it has signed 38 memorandums of understanding with operators and expects to complete some commercial deployments by the end of 2018. This implies gigabit speeds, huge capacity and extremely low latency sooner rather than later. Qualcomm, KT and Samsung banded together in 5G NR interoperability demo. Both Verizon and AT&T engineers announced their intentions to be the first to market in 5G.

What exactly is 5G and why is it so significant? Telephone communication has come a long way since its inception in 1876. The world has moved on from wired to wireless and voice to voice and high-speed data. It all started with the development of 1G in the 1980s which was a fully analog system capable of transmitting voice. It was replaced by 2G, a digital technology for voice and text, in 1991. It took almost 10 years for 2G to be taken over by 3G, which allowed transmission of voice and reasonably good data. 4G LTE (Long Term Evolution), the current standard launched in 2008, supports voice and mobile web access at a much faster rate. It also supports gaming services, HD mobile TV, video conferencing, 3D TV and other things that demand higher speeds.

The groundwork for the use of 5G by 2020 in the US has been laid under the guidance of the FCC. Companies including AT&T, Verizon, Sprint and T-Mobile are already developing and testing 5G components. Verizon tested its 5G technology in December with speeds up to 400 Gbps and plans to launch it for commercial use in homes in Sacramento, California starting mid-2018. Sprint plans to launch mobile 5G services in late-2019.

Compared to the traditional setup of huge towers for 1G, 2G, 3G and 4G, 5G is going to be networks of small cells akin to domestic routers, closer to the user with an expanded network capacity. By juggling the size of network routers and advanced antenna technologies, 5G will effectively boost the current network capacity by almost 4 times. This will offer greater speed (more data), lower latency (more responsive), and the ability to connect more devices simultaneously (for sensors and smart devices).

The US is not alone in its pursuit of 5G, however. One of the leading countries based on internet speed, South Korea, is at the forefront in the adoption of 5G network. The country has already successfully completed trial of a system from NEC Corp using extremely high frequencies for transmitting data at up to 3.2 gigabits/second in the Taebaek Mountains.

While many countries are in pursuit of 5G, the micro state of San Marino will be the first to full upgrade its network. Telecom Italia has signed an MoU with the government of San Marino to upgrade the existing 4G network in advance of a trial of 5G services in 2018. Swedish-Finnish operator Telia Company AB will follow closely, making the network available for use in Stockholm, Sweden and Tallinn, Estonia. Other countries planning to start using 5G network for mobile communication by 2020 include Japan, China and Turkey.

So how will 5G benefit the start-up world? A spate of innovative applications of 5G will be the first off the gate. Since 5G still is not defined, startups could assume essential roles in making it a reality. Companies such as PHAZR, which has developed a solution known as Quadplex that utilizes millimeter-wave frequencies for the downlink while using sub-6-GHz frequencies for the uplink. The company believes its technology can enable “high-performance, cost-effective, and power-efficient 5G system. Other promising companies include Movandi, GenXComm and MilliLabs, to name a few. **