Consider Licensing Your Technology to Generate Revenue for Your Business

In the five days prior to publishing this post, I unexpectedly received four requests from startup founders and small business owners as to whether they should license their technology to generate revenue. One such inquiry came from a woman in California who read my blog post about a presentation delivered by Adam Philipp, an attorney who specializes in intellectual property (IP) law firm, on defining IP and how you should protect it. Having co-founded a startup in 2016, the woman was inquiring as to whether she should continue in her attempts to commercialize her technology to enterprise customers, which was not producing the sales as she had projected, or license her technology to licensees. I was quite pleased to receive her question because I think too many business owners miss the opportunity to generate revenue and increase their business' value through the licensing of their technology. Whether it is in my capacity as an founder or business advisor, I have long advocated that if done correctly, technology licensing can bring significant benefits to a business.

Advantages of implementing a licensing model include:

1. The licensor (inventor-owner) does not have to finance the commercialization process.
2. The innovation may have a greater chance to implementing a go-to-market strategy faster because a larger, more experienced company is handling the commercialization.
3. The innovation may reach more markets if the licensee is a large, well-funded enterprise.
4. The licensor will not have to build and manage a commercialization team.
5. The licensor will not have execution risk (although if the licensing agreement is based on sharing revenue from the commercialization of the technology by the licensee, execution risk exists for the licensor).
6. The licensor should be protected from product liability issues if the licensing agreement is properly written.
7. The licensor retains ownership of the intellectual property.

Below is some criteria to consider when selecting a licensee and drafting a licensing agreement:

1. Will you offer an exclusive license or a non-exclusive license?
2. Are you or your licensee responsible for defending your patent? With the high cost of litigation, it is advised that you shift this responsibility to your licensee should your patent be challenged or infringed.
3. How will royalty payments be determined?
4. What conditions constitute grounds for early termination of the licensing agreement?
5. Will you allow for renegotiating the agreement after a period of time has passed?
6. Does the agreement guarantee a minimum or maximum royalty per contract period? Does the agreement have provisions for assessing penalties for late royalty payments?
7. What happens if the licensee goes bankrupt or is acquired? Better get that into the contract as well.

"The Pros And Cons Of Licensing Technology" by Toni Hickey, William Barrow and Charles Harris, all three of whom are attorneys, is a resource that I find useful. This paper presents viewpoints from a corporate IP owner as well as a potential licensee, the difficulty of pricing technology for licensing, and tips for companies looking to license in or license out technology such as (1) opportunity cost, (2) due diligence, (3) comprehensive valuation, (4) licensing terms, (5) monitoring of licensees, (6) litigation preparedness, and (7) enforcement terms.

In explaining how licensing can add value to a business, this website says "[l]icensing technology provides a low-risk way to capitalize on your intellectual property assets. Due to the high cost of manufacture and the comparatively small investment of a licensing program, many of the risks that a company would otherwise face in exploiting its intellectual property are transferred to the licensee. Depending upon the exclusivity of the license, there are varying degrees of risk involved for the licensee and licensor; however, an effective license strategy will minimize risk for both parties.

"Before a company considers licensing out its technology, however, it should consider whether other ways of taking advantage of its property, such as joint ventures and strategic alliances with other companies, would better compliment its economic position. Once licensing is decided upon, the nature of the company as well as the particular property it wishes to utilize should be carefully considered before deciding the architecture of the license."

Tom Kulik, a Texas-based IP attorney, authored an article for Above the Law entitled "5 Things To Think About Before Licensing Your Intellectual Property." Similar to the aforementioned paper, Mr. Kulik also recommends performing due diligence. As he explains, "This may seem like an odd point, but it is essential — you need to know your intellectual property assets as much as the potential licensee with which you are dealing. I know, I know — you are probably reading this and saying 'duh,' but you would be stunned to realize how many times a company has made assumptions regarding its intellectual property assets that are, quite simply, incorrect." He further recommends taking "the time to not only understand what is being licensed, but whether and how it can be licensed in the first place."

On the topic of exclusivity, Mr. Kulik writes:

Exclusivity in licensing should only be done after careful consideration has been paid to the potential licensee, the market and the licensor’s other intellectuals property obligations. This may come as a surprise to you, but I have personally dealt with situations where a lack of such care resulted in multiple exclusive licenses needing to be "unwound" by amendments so that the appropriate intellectual property rights were in place. Assuming any grant-back rights, as a general rule exclusivity basically hands a licensee a set of intellectual property rights that cannot be exercised by the licensor for the duration of the license. Tying the hands of the licensor under an exclusive license should be met with appropriate royalties, minimum guarantees and, in some cases, even upfront fees or advances depending upon the nature of the underlying deal. Further, additional responsibilities are placed upon the parties in exclusive licenses (i.e., joinder of the licensor in intellectual property infringement litigation). Sometimes a non-exclusive construct with specific restrictions may work equally well for the parties. In any event, when it comes to exclusivity in intellectual property licenses, always proceed with caution.

For those who are considering patenting their technology, I am often asked: "But isn't it expensive to file a patent application?" It can be a lot less costly that you may think. Mr. Phillp published a post of his firm's blog that says while "[f]iling a US patent application can cost less than $1,000 for a do-it-yourself version, or more than $16,000 for a complex application (such as for software or a complex machine) drafted by a patent lawyer, the US Patent and Trademark Office (USPTO) makes things a little easier for small businesses by providing discounts to those who qualify for small or micro entity status. For example, the basic filing fee for a utility patent application is $320. It’s $160 for a small entity and $80 for a micro entity."

When I was serving as co-founder and chief executive of ROI3, Inc., our primary product was an mobile application to allow Chinese speakers to learn specialized English terminology. One app was focused on English medical terminology (see screenshot on the left) and another app that presented English terms used in aviation settings. Rather than making our apps available for consumers to download on one of the many app stores available in China, ROI3's business model focused on licensing our technology to enterprise customers. We licensed our medical app to Chinese medical schools and research institutions and our aviation app to flight training centers in China. Items my colleagues and I had to consider included exclusivity or non-exclusivity, when license fees were to be paid, auditing mechanisms to insure that the licensee was accurately reporting revenues resulting from the use of our technology, and insuring that our technology was not be used by the licensee in ways not defined in the license agreement.

However, it is no secret that licensing foreign technology in China carries significant risks with preventing IP theft as the most significant one. And while most people think about members of the Chinese People's Liberation Army hacking into the computer systems of American firms, I advise most companies doing business in China that having their Chinese partner or licensee use their technology in ways not mutually agreed upon or explicitly prohibited in a license agreement should be their primary concern. For those readers thinking of licensing their technology in China, the following posts authored by Dan Harris, via the China Law Blog, may be a useful resource:

• "China Licensing Agreements: The Key Provisions," Oct. 16, 2010
• "China Technology Licensing," July 8, 2012
• "Eight Tips for China Licensing Agreements"
• "China Licensing Agreements: The Extreme Basics," Oct. 12, 2015
• "China Licensing Agreements: Giving Your Technology a New and Profitable Life," Mar. 31, 2016
• "China Difficulties, Netflix, and Why We Love Licensing," Apr. 26, 2017
• "China Technology Licensing: The Questions We Ask," May 12, 2017
• "China Licensing Term Sheets," July 18, 2018
• "China Licensing Deals so Horrible They are Hard to Believe," Sept. 24, 2018
• "How to do Business with China Without Having to go to China: Licensing Deals," Feb. 29, 2020
• "China IP Licensing Deals," Sept. 14, 2020
• "China Technology and Trademark Licensing Agreements," Sept. 15, 2021

What advice do you have on how to successfully license your technology?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

The EIU Presents Its Ten Risk Scenarios That Could Impact Global Growth and Inflation in 2022

"We expect the post-pandemic recovery to continue in 2022, with global GDP expanding by 4.1%," according to a paper published by The Economist Intelligence Unit (The EIU). "However, this rebound will mask great variations in the pace of recovery across different regions. In addition to this baseline outlook, we are also tracking a host of scenarios that could derail the post-pandemic recovery and have an effect on global business operations." Through this paper, The EIU aims to summarize some of these key risks that could impact global growth and inflation.

Below are The EIU's top ten global risk scenarios for 2022:

1. Worsening US-China ties force a full decoupling in the global economy;
2. An unexpectedly fast monetary tightening leads to a US stockmarket crash;
3. A property crash in China leads to a sharp economic slowdown;
4. Tighter domestic and global financial conditions derail the recovery in emerging markets;
5. New Covid-19 variants emerge that prove resistant to vaccines;
6. Widespread social unrest weighs on the global recovery;
7. Conflict erupts between China and Taiwan, forcing the US to intervene;
8. EU-China ties worsen significantly;
9. Severe droughts prompt a famine; and
10. An inter-state cyberwar cripples state infrastructure in major economies.

The EIU explains that it tracks "these risks and score them in terms of probability (how likely are they to happen?) and impact (if they happen, how great is the impact on businesses?)." Furthermore, the UK-based organization combines "these probability and impact scores to produce an intensity rating to support our clients in their ongoing risk monitoring requirements, helping them to answer the question, 'how worried should we be?'. Below is a snapshot of scores for our ten global risk scenarios."

Worsening US-China ties force a full decoupling in the global economy is a risk scenario that concerns me the most. As The EIU explains:

The US and China are vying for global influence. The US president, Joe Biden, is trying to convince "like-minded" (mostly Western) countries to collaboratively put pressure on China. This has included restrictions in the areas of trade, technology, finance and investment, along with sanctions, forcing some markets (and companies) to choose sides. Although most evident in the technology arena, there is a risk that this strategy will encompass industrial or consumer-facing sectors. In an extreme scenario, this could lead to a neutral stance becoming economically prohibitive for third countries, dividing China-supporting and US-supporting economies. Full global economic bifurcation would force companies to operate two supply chains with different technological standards. Implementation of 5G telecommunications networks could be postponed in some countries, and sanctions by China would heighten uncertainty surrounding global trade and investment.

Unexpectedly fast monetary tightening leads to a US stockmarket crash is another risk scenario that I am watching closely. The EIU points out that "Supply-chain disruptions, higher energy prices, ultra-loose monetary policy and a recovering real economy have all contributed to a sharp uptick in US inflation in 2021." The paper adds that "Although many of these factors are likely to ease as the US economy rebalances post-pandemic—indicating that spiking inflation will not be long-lasting—they nonetheless give cause for the Federal Reserve (Fed, the central bank) to start tightening monetary policy gradually by tapering its asset purchases. However, if slow and clearly signaled monetary tightening fails to rein in inflation in the medium term, a rise in interest rates by mid-2022 may be necessary." Moreover, "Given that US stock price/earning ratios are currently higher than before both the 1929 and the 2007-08 crashes, accelerated interest-rate increases could be enough to initiate a sharp stockmarket adjustment. The high number of retail investors means that falling stock prices would weigh heavily on consumer spending, possibly halting the US economic recovery and risking a recession."

And those who live or hold business interests in emerging markets should be mindful that tighter domestic and global financial conditions could derail the recovery in these markets. The EIU says "Inflationary pressures stemming from rebounding commodity prices have already led some emerging markets, including Brazil, Mexico, Russia, Sri Lanka and Ukraine, to raise monetary policy rates in 2021." What is more, "In a context where sovereigns have grown increasingly leveraged as a result of the pandemic, interest-rate normalization will feed into higher debt-service costs for governments. This could ratchet up pressure for aggressive pro-cyclical fiscal consolidation that ultimately sets back the recovery of emerging countries. In particular, the potential for US bond yields to rise faster than expected in the coming months could drive higher emerging-market risk premiums, leaving them vulnerable to sudden drops in capital inflows." The paper crucially notes that "[r]isks will be especially elevated in countries where indebtedness in foreign currency is particularly high, for example in Argentina and Turkey, where bond sell-offs could trigger currency and/or debt crises."

Which risk scenarios concern you the most? What strategies are you employing to make your company resilient should any of these risks materialize? 

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

GSMA Presents Recommendations to Asia Pacific Policymakers for How To Accelerate Investment and Innovation for a Digitally Inclusive Society

Following from the previous post about GSMA's 2021 report about China's mobile economy, the UK-based organization that represents the interests of mobile operators worldwide, also produced a similar report focused on Asia Pacific's mobile economy. For the purposes of Asia Pacific report, the GSMA clarifies that "industry data and analysis does not include Greater China (mainland China, Hong Kong, Macao and Taiwan), as opposed to previous editions of the report. As a result, the aggregate regional data in this report is not directly comparable with previous reports. Industry data and analysis for the Greater China region are presented in The Mobile Economy China 2021 report."

In explaining how the mobile industry responded to the Covid-19 crisis in the Asia Pacific region, the report importantly says the industry was "particularly instrumental during this period and will be even more integral to the way people live and businesses operate post pandemic." What is more, "Across Asia Pacific, [mobile] operators are using the exceptional scale and utility of mobile networks and services to facilitate innovative digital solutions for large and small enterprises in line with Industry 4.0 objectives. In particular, 5G and IoT will play key roles in the implementation of digital transformation projects across different industries."

The report also presents the following key points:

• 1.8 billion people in the Asia-Pacific region will subscribe to mobile services by 2025, representing 62% of the region's population. India will account for more than half of new subscribers.
• 14 percent of total connections will be running on 5G networks by 2025. This is marked by significant 5G-related activities in several new markets, including India, Indonesia and Malaysia.
• $860 billion economic value added generated by mobile technologies and services by 2025. Countries in the region increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services.

On the topic of policies to enable digital advancement, the GSMA correctly notes that "The pandemic has emphasized the need for connectivity and the critical role of mobile technology. As Asia Pacific continues to deal with, and ultimately emerges from, the pandemic, connectivity will be crucial to rebuilding economies and making them more resilient to future shocks." Furthermore, "5G networks, cloud services, edge computing, AI, big data and IoT will all play a key role in realizing the full potential of a post-pandemic digital economy."

I support GSMA's assertion that "Now is the time for governments to reassess the business and regulatory environment for mobile services in order to accelerate investment and innovation for a digitally inclusive society." Steps policymakers should take include:

• cultivate an enabling regulatory environment to bolster connectivity, which in turn supports digital transformation and innovation
• adopt policies that facilitate infrastructure deployment and create a sustainable investment climate
• create safe and trustworthy internet environments as more people come online
• establish an effective spectrum policy that allows for timely and transparent allocation of harmonized spectrum to meet future connectivity demand.

"Actions taken today by policymakers should be seen as an investment into future economic growth, societal development and technological innovation."

Infographic: GSMA Intelligence

Do you agree with GSMA's recommendations to policymakers for how to accelerate investment and innovation for a digitally inclusive society?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

While 5G Is Growing in China, GSMA Has Concerns About the Government's Efforts To Impose Data Localization Requirements

In its 2021 report about China's mobile economy, the GSMA, a UK-based organization representing the interests of mobile operators worldwide, notes: "One of the most remarkable contributions of mobile connectivity to mitigate the impact of Covid-19 is the use of advanced and innovative digital solutions to support various response measures. Across China, mobile networks, and 5G in particular, have supported frontline healthcare efforts to stem the rate of infections while also enabling remote business operations to comply with social distancing rules. Indeed, the pandemic has presented a test platform for a wide range of 5G-enabled solutions, further demonstrating the benefits that the technology can bring to society."

Authored by GSMA Intelligence, the research and consulting arm of the GSMA, the report, which is available in English and Chinese, further says the growth of 5G in the world's largest mobile market: "Due to the rapid take-up of 5G in China, the region sits among the global leaders in terms of 5G adoption. In 2020, the region added more than 200 million 5G connections, taking its share of global 5G connections to 87%. Growth in 5G adoption in the China region is supported by aggressive network rollout and a growing device ecosystem."

The GSMA points out that over 80% of the population in China will subscribe to mobile internet services in 2025 and the country is predicted to have over 800 million 5G connections. "By 2025, over 200 million people across China will start using mobile internet for the first time, reducing the unconnected to less than 20% of the population." This presents an opportunity for the mobile sector, which is the first industry to have committed fully to the UN Sustainable Development Goals (SDGs), "to have have substantial positive effects on lives and livelihoods, with tangible results."

The report adds that according to GSMA's 2020 Mobile Industry Impact Report: Sustainable Development Goals, the mobile "sector has made particularly strong contributions in mainland China in 2020 on SDGs 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy) and 4 (Quality Education). Further, the country scores highest in SDGs 9 (Industry, Innovation and Infrastructure), 6 and 7."

On the topic of data protection and cross-border data flows, the report importantly explains that "Greater intra-regional and inter-regional alignment of data protection laws and a greater variety of mechanisms to facilitate cross-border data flows can boost the benefits expected from 5G, IoT and AI. Conversely, data localization or data sovereignty requirements to keep certain data in-country or to use local facilities can significantly hamper any such gains. This is particularly true for the proliferation of innovative IoT and industrial solutions that are critical to industrial digital transformation, which is being expedited by the pandemic."

Over the past several months, the Chinese government has imposed restrictions on sources of data in the name of protecting consumers. While I agree that companies should implement the most advanced tools to protect consumers' data, such restrictions could harm the benefits AI and IoT is trying to achieve through diverse data sources. Therefore, I support GSMA's assertion that:

Mobile operators and other players in the IoT ecosystem need common business models and technologies that can work anywhere in the world and regulatory frameworks that allow data to flow across borders to enable greater efficiencies and economies of scale. While the application of IoT business models, such as using data from sensors to provide new solutions and services, can lead to further gains for local businesses, these domestic gains can be improved by enhanced trade and investment across borders. Similarly, big data analytics and AI implementations depend heavily on the availability of data. While these may work within a country, particularly one the size of China, restricting the available sources of data may reduce diversity in the data and the value of insights learned from the data for greater regional economic growth.

Given the seriousness of this issue, I am including the report's concluding section in its entirety:

The GSMA has conducted evidence-based research that suggests that over half of the benefits from IoT would be lost if a country decided to implement localization restrictions. Specifically, data localization requirements can:

• increase business costs through the need to duplicate expensive IT infrastructure, such as data centers
• cut business efficiencies and competitive advantages by imposing restrictions on cross‑border data flows that hamper ICT companies and mobile operators, especially multinational operators, as they introduce new and better services across their footprint
• reduce choice for businesses, communities and individuals, who will have access to more limited and lower-quality apps and services delivered from a smaller pool of domestic providers.

In effect, data localization requirements can weaken the business case for adopting IoT, even for the most profitable multinationals. Furthermore, increased costs from data localization requirements can result in suppressed economic activity across the entire economy, with negative impacts not just in GDP growth, but also trade flows, employment and investment. 

Infographic: GSMA Intelligence

Do you agree with the report's findings? Do you have concerns about the Chinese government's actions to restrict the available sources of data?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Entrepreneurs From Austria Pitch Their Startup in Silicon Valley

While startup formation has increased since the coronavirus pandemic gripped the world, my interactions with founders was confined to video chats over the past 17 months. Communicating online is sufficient when gathering information about a new venture including its product or service, business model, and management team, but there is no replacement of gathering in a room to engage in a meaningful face-to-face conversation. It was therefore a pleasure to attend an event in Sunnyvale, Calif. organized by the Silicon Valley Forum, a nonprofit organization, that featured six startups based in Austria. Each company is listed below followed by the description they provided for the event program:

1. Druckster is a free on-demand printing platform for university students, powered by a highly targeted employer branding algorithm. We print the right internships and job offers directly into the students’ study material, to connect them with the best career opportunities earlier than ever before.
2. goUrban offers the globally leading operating system for shared transportation empowering fleet operators to design the mobility of tomorrow. We are driving the transition from ownership to a demand based service, by supporting all transportation use cases within cities. This enables fleet operators to create one shared fleet being available for B2B fleets, personal use and last-mile logistic companies.
   
3. Kern Tec has developed several technologies to turn fruit pits from apricot, plum and cherry into new ingredients for the food, beverage and cosmetic industry. These raw materials have been a side product in the fruit industry and are now getting processed into delicious, upcycled food oils, protein powders and dairy alternatives. Over the last years Kern Tec has been able to build a production facility in Austria, process over 1.000 tons and gain +50 B2B customers.
4. Naboto is an AI powered software that helps (medical) service providers to optimize and automate their scheduling processes (e.g. by predicting individual no-shows). This leads to increased revenue, better quality of care and higher patient satisfaction.
5. TeamClimate is a climate subscription which helps users to measure, reduce and offset unavoidable CO2 emissions.
6. Trees was founded by two brothers in Austria in 2019 to explore cannabinoids and help improve people's lives. They are bootstrapped and had their first big success in German teleshopping. The founders think tailored cannabinoid products are the future and should be in the arsenal of every athlete, especially when it comes to gamers. That is why we developed our brand-new CBD e-sports products.
   

Each presenter did a good job presenting their company's product and business model. However, I found Luca Fichtinger's presentation about Kern Tec particularly insightful. Mr. Fichtinger, Kern Tec's co-founder, explained how his company processes apricot, plum and cherry pits into natural oils, protein powders, and shell granulate. He said that "after the careful cleaning of the fruit pits, the oils are gently cold-pressed at a maximum temperature of 40 degrees Celsius. Guaranteed without additives such as aromas, flavor enhancers, preservatives or artificial colorings." In addition to baking, Kern Tec's products may be used for other applications including cosmetics and industrial products. The oils were made available for sampling at the event.

As co-founder of TeamClimate, Karim Abdel Baky explained that his company built a tool to calculate an individual's carbon footprint, and to offset their emissions and reduce the footprint to zero. According to Mr. Baky, "A subscription through TeamClimate funds three projects that makes you a climate-neutral human." Importantly, these projects are certified by independent parties.

Austrian entrepreneurs visiting
Silicon Valley

This event was a culmination of a trip the Austrian entrepreneurs made to the Bay Area to meet with serial entrepreneurs, venture capitalists, startup attorneys and advisors, and marketing experts.

Have you resumed attending in-person events? If so, please share your experiences in the comments.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Recommendations to Increase Access to E-Commerce Services in Central Africa

According to a report jointly produced by the UN Economic Commission for Africa (ECA) and the GSMA, the digital economy in the Economic Community of Central African States (ECCAS), which is comprised of the nations of Angola, Burundi, Cameroon, Central African Republic, Chad, Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Rwanda, Sao Tome & Principe, "is expanding rapidly, driven by strong adoption of mobile services. Overall mobile subscriber penetration in the sub-region grew from just 18% at the start of the last decade to 42% by the end of 2019, while the number of mobile internet users had reached 46 million by the same date."

Titled Enabling e-commerce in Central Africa: the role of mobile services and policy implications, the report adds: "E-commerce is a key component of the digital economy, allowing buyers and sellers to interact and transact online regardless of time and location. This has the potential to generate significant social and economic benefits, particularly in emerging countries. It can create jobs and stimulate economic activity by encouraging investment and opening up new markets to otherwise isolated rural communities. Women and young entrepreneurs in particular are increasingly using e-commerce platforms to grow their businesses, reducing inequalities and helping local value creation."

The ESA and GSMA note that governments in the sub-region have a significant role to play in implementing policies to support and stimulate investment in e-commerce services. And as such, they identify key areas where action is required to increase access to digital services in general and e-commerce services in particular: enhancing digital and financial inclusion; taking the right approach to data regulation; addressing key challenges in the business environment; and leveraging stakeholder collaboration.

I support the recommendation for Central Africa's eleven governments to adopt policies to accelerate e-commerce, including better access to digital services and public-private collaboration. Yet, the report says "ECCAS member states are still a long way from maximizing the e-commerce opportunity due to a combination of infrastructure, macro-structural and regulatory constraints. As governments in the sub-region increasingly recognize the potential for e-commerce to drive economic growth and sustainable development, they must now move to address the key challenges to e-commerce adoption, working together with other stakeholders in the e-commerce ecosystem."

"A first step is to get more people online, by addressing the access and affordability barriers to connectivity for unconnected citizens, and create an enabling environment for e-commerce services to scale and reach new customers."

What are your recommendations for how Central African governments can support the growth of its e-commerce sector?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Telemedicine Consultations Could Be Key to Addressing Growing Economic Cost of Treating Diabetes in the Gulf Region

"Saudi Arabia and the United Arab Emirates (UAE) are two Gulf nations witnessing an explosive growth in the prevalence and incidence of diabetes, having some of the highest rates in the world," The Economist Intelligence Unit (The EIU) explains in a briefing paper. In addition, "According to 2019 reports, prevalence is as high as nearly one in five adults (18.3%) in Saudi Arabia and about one in six adults (15.4%) in the UAE. Telemedicine has been an important part of care in these countries' evolving healthcare services to keep affected patients healthy and costs down."

Supported by Abbot Laboratories, an American company that produces health care products, Telemedicine and diabetes care in Saudi Arabia and the United Arab Emirates explores how healthcare systems in these two countries have used telemedicine to remotely monitor people living with diabetes during the pandemic. The paper suggests that the "experience and lessons may serve as a helpful guide for other countries in the Gulf."

The paper presents four "reasons why the rollout and adoption of telehealth for diabetes in Saudi Arabia and the UAE have been particularly noteworthy, and why these successes are worth continued examination:

"Diabetes care has been in dire need of enhancement: it is well known that Saudi Arabia and the UAE have a high prevalence and projected increase in diabetes among their populations. The resulting healthcare costs are significant. It has become imperative to national health, as well as healthcare budgets, that better, more innovative and sustainable management and prevention tools are explored to their fullest.

"The legal framework is expanding possibilities: telemedicine has long been on the radar as a cost-effective option, but only recently—and just prior to the covid-19 pandemic—have regulation and legal

frameworks allowed it to take shape. Leading up to the pandemic, adoption was already picking up.

"Cost models are shifting: in many ways, telemedicine has reduced costs for patients and doctors and supported social distancing during covid-19. For patients, less travel to clinics has added convenience as well. Better adherence to health recommendations can also lead to fewer costly co-morbidities and complications like stroke and amputation. For doctors, the experience has also been positive. However, some concerns have been raised regarding the increased influx of data from these apps, which requires additional time and effort for analysis, followed by explanations and tailored recommendations to patients which is more intensive, and may require updates to how providers are compensated. Going forward, advances in predictive modelling may improve the efficiency and quality of care. Clinics will also have to determine the safest and most cost-effective hybrid model of in-person and virtual clinic interactions.

"No going back: according to those interviewed and studies published, the rapid rollout and adoption of telemedicine for diabetes have been largely welcomed and deemed successful by many patients, doctors and the wider health system. Emerging evidence suggests telehealth is helping this population to achieve better self-care. More long-term studies will be needed to judge its true safety and efficacy, as well as cost-effectiveness, but doctors and patient groups we spoke to are keen to progress this care pathway based on the experience during covid-19."

The paper concludes that "The covid-19 pandemic and its lockdowns have meant a sudden change in the delivery of healthcare, with telehealth and digital solutions becoming the go-to options. In Saudi Arabia and the UAE, the transition of care to telehealth and remote services for people living with diabetes has been supported by patients and doctors alike."

"The experience has meant that patients are now more comfortable sitting in front of a screen and streaming data in real time to their doctors. In return, they have become familiar with continuous monitoring and virtually received advice on better self-care."

Importantly, "Telehealth diabetes care has been given a boost by covid-19, and it is vital that Saudi Arabia and the UAE seize it to its fullest in order to mitigate the worrying trajectory of their national diabetes trends. But indications suggest that new hybrid models of care will emerge in future involving in-person care, remote care and predictive modelling supporting real-time care."

My colleagues and I have followed the growing telemedicine sector in the Gulf region (see "Tackling Diabetes and Obesity in an Age of Digital Acceleration in the Gulf Cooperation Council," "An Analysis of 'Diagnosing Health Care in the GCC'," and "Report Explores How Digital Technologies Are Shaping the Middle East's Healthcare Ecosystems"). This paper by The EIU presents the latest evidence that telemedicine consultations could be key to addressing growing economic cost of treating diabetes and other non-communicable diseases.

What are your thoughts about the paper's findings? Do the experience and lessons serve as a helpful guide for other countries in the Gulf?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Lessons Learned in Scaling Digital Solutions in the Water Sector

"Digitalization is transforming how utilities function and how water services are delivered," the GSM Association (GSMA) asserts in a report focusing on scaling digital solutions in the water sector. The report adds: "New technologies not only enable existing systems to operate more efficiently, but also make new service delivery models possible. Some innovations are already available in the water sector, with some solutions scaling, while newer ones are developing."

GSMA's Mobile for Development (M4D) Utilities program works to unlock business models that leverage mobile technology to deliver better and more affordable energy, water and sanitation services in emerging markets. The UK-based organization, which represents the interests of mobile operators worldwide, points out that "Through our Innovation Fund we have provided catalytic support to start-ups, non-governmental organizations, and utilities across Asia and Africa to trial and scale new models." What is more, "This support has helped validate and launch a variety of digital solutions to expand and improve water services." The report examines the experiences of two past Innovation Fund grantees, Wonderkid and CityTaps whose journeys to scale hold lessons for all seeking to accelerate digitalization.

"Both companies are business-to-business (B2B) service providers," the report explains. "Wonderkid provides bespoke software solutions to 40 water utilities in Kenya and other African markets. CityTaps provides pay-as-you-go (PAYG) digital metering solutions to utilities. Currently operating in West Africa and Central America, CityTaps is looking to expand in the Kenyan market. Based on the experiences of these two grantees, we identify some critical considerations for innovators at different stages, from ideation to validation, iteration, refinement, scaling and widespread adoption. Their experiences also highlight some of the strategies and critical stages at which different actors can support innovators to scale, such as funders and the public sector."

The GSMA presents the following supporting actions for key stakeholder groups segmented into five categories:

Funders and Donors

• Invest in developing digital ecosystems as well as specific solutions and businesses;
• Support the development of digital skills within utilities and among their users; and
• Structure support to innovators such that capital is available both at the ideation and scaling stages.

Innovators

• Be conscious of the capital costs faced by utilities, and structure product offerings to account for these; Maintain a lean approach to the iteration process and develop an adaptable business model; and
• Focus on building trust and awareness to drive service adoption.

Utilities

• Mark out a pathway and take steps towards progressive adoption;
• Make investments in digital readiness;
• Demonstrate leadership in digital adoption; and
• Invest in customer education and promotional campaigns to drive adoption.

Mobile Network Operators (MNOs)

• Pursue partnerships to enhance customer base, product offering and brand image;
• Create partnerships with utility service providers to encourage service uptake in new markets; and
• Focus on creating a more accessible environment for third parties.

Government and Regulators

• Put in place strong performance management systems. This is what creates some incentives for performance improvements; and
• Ensure that policy allows for utility service providers to form partnerships with innovators and improve their service offering.

Having watched the rapid digitalization in low- and middle-income countries (LMICs) over the past few years, I concur with the report's conclusion:

No single actor can scale digitalization without working with others. Governments, utilities, innovators, MNOs and donors all have unique capabilities and capacity, and it is only by working together that the full benefits of digitalization can be realized. While new innovations are always emerging, there are already many viable technologies in the water sector that have yet to see widespread adoption. These technologies provide the opportunity to tackle long-standing and intractable challenges in the water sector, and benefit hundreds of millions of people who still lack access to a safe, affordable and reliable water source.

Do you agree with the recommended supporting actions for key stakeholder groups? What are your recommendations for transforming how utilities function through digitalization?

If interested in learning more about PAYG as a business model in delivering utilities to people in LMICs, I recommend reading "GSMA Report Explores the Value of Pay-as-You-Go Solar for Mobile Operators in Africa" previously published on this blog.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

WHO's First Global Report on AI in Health and Six Guiding Principles for Its Design and Use

According to a report published by the World Health Organization (WHO), "Digital technologies and artificial intelligence (AI), particularly machine learning, are transforming medicine, medical research and public health. Technologies based on AI are now used in health services in countries of the Organization for Economic Co-operation and Development (OECD), and its utility is being assessed in low- and middle-income countries (LMIC)."

The report, Ethics & Governance of Artificial Intelligence for Health, which is the result of two years of consultations held by a panel of international experts appointed by WHO, further says: Whether AI can advance the interests of patients and communities depends on a collective effort to design and implement ethically defensible laws and policies and ethically designed AI technologies. There are also potential serious negative consequences if ethical principles and human rights obligations are not prioritized by those who fund, design, regulate or use AI technologies for health. AI's opportunities and challenges are thus inextricably linked."

To limit the risks and maximize the opportunities intrinsic to the use of AI for health, the WHO provides the following six principles as the basis for AI regulation and governance:

Protecting human autonomy: In the context of health care, this means that humans should remain in control of health-care systems and medical decisions; privacy and confidentiality should be protected, and patients must give valid informed consent through appropriate legal frameworks for data protection.

Promoting human well-being and safety and the public interest. The designers of AI technologies should satisfy regulatory requirements for safety, accuracy and efficacy for well-defined use cases or indications. Measures of quality control in practice and quality improvement in the use of AI must be available.

Ensuring transparency, explainability and intelligibility. Transparency requires that sufficient information be published or documented before the design or deployment of an AI technology. Such information must be easily accessible and facilitate meaningful public consultation and debate on how the technology is designed and how it should or should not be used.

Fostering responsibility and accountability. Although AI technologies perform specific tasks, it is the responsibility of stakeholders to ensure that they are used under appropriate conditions and by appropriately trained people. Effective mechanisms should be available for questioning and for redress for individuals and groups that are adversely affected by decisions based on algorithms.

Ensuring inclusiveness and equity. Inclusiveness requires that AI for health be designed to encourage the widest possible equitable use and access, irrespective of age, sex, gender, income, race, ethnicity, sexual orientation, ability or other characteristics protected under human rights codes.

Promoting AI that is responsive and sustainable. Designers, developers and users should continuously and transparently assess AI applications during actual use to determine whether AI responds adequately and appropriately to expectations and requirements. AI systems should also be designed to minimize their environmental consequences and increase energy efficiency. Governments and companies should address anticipated disruptions in the workplace, including training for health-care workers to adapt to the use of AI systems, and potential job losses due to use of automated systems.

As the WHO notes: "AI for health has been affected by the COVID-19 pandemic. Although the pandemic is not a focus of this report, it has illustrated the opportunities and challenges associated with AI for health. Numerous new applications have emerged for responding to the pandemic, while other applications have been found to be ineffective. Several applications have raised ethical concerns in relation to surveillance, infringement on the rights of privacy and autonomy, health and social inequity and the conditions necessary for trust and legitimate uses of data-intensive applications."

"While the primary readership of this guidance document is ministries of health, it is also intended for other government agencies, ministries that will regulate AI, those who use AI technologies for health and entities that design and finance AI technologies for health."

The report importantly adds:

Implementation of this guidance will require collective action. Companies and governments should introduce AI technologies only to improve the human condition and not for objectives such as unwarranted surveillance or to increase the sale of unrelated commercial goods and services. Providers should demand appropriate technologies and use them to maximize both the promise of AI and clinicians' expertise. Patients, community organizations and civil society should be able to hold governments and companies to account, to participate in the design of technologies and rules, to develop new standards and approaches and to demand and seek transparency to meet their own needs as well as those of their communities and health systems.

Do you agree with the six principles as the basis for AI regulation and governance? What are you recommendations for how AI can be used for health?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Bridging the Digital Divide through Aerial Connectivity

"Access to the internet will no longer be a problem in a few years." This was a claim I made during a during a recent conversation with a representative from Re+connect, a social venture developing a civic technology solution that closes the last-mile disaster relief gaps and builds long-term resilience for underserved communities, and a manager at the Puerto Rico Science, Technology & Research Trust, an organization whose mission is to invest, facilitate and build capacity to continually advance Puerto Rico's economy and its citizens' well-being through innovation-driven enterprises, science and technology and its industrial base. The success of the mobile application Ms. Qin and her colleagues are developing for people living in Puerto Rico's rural and remote areas depends on having uninterrupted access to wireless internet.

Whether designed to help people living in the United States, Afghanistan or somewhere in between, having regular access to the internet is crucial to delivering valuable technology-based services. However, there are large swaths of areas globally where internet service is not available. But recent and continuing advances in satellite broadband will greatly reduce (and hopefully eliminate) the digital divide, which is the gulf between those who have ready access to the internet and those who do not.

According to a report written by Tim Hatt, Head of Research and Consulting at GSMA, a UK-based organization representing the interests of mobile operators worldwide, with support by OneWeb, Intellian and SoftBank, "Satellite broadband continues to undergo a period of reinvention through the low Earth orbit (LEO) constellation model that re-emerged five years ago from OneWeb, SpaceX and a range of other participants. Momentum and industry traction have been underpinned by a reduced cost structure and higher performance capability relative to legacy geostationary satellites that operate at much higher altitudes." The report notes that a "separate mode of aerial connectivity called high-altitude platform stations (HAPS) is also in development, albeit at an earlier stage and further away from commercial deployment."

Segmented into four chapters beginning with "Bridging a large and persistent internet divide," the report explains that "[w]hat is driving the push for satellite and broader aerial connectivity has not changed: the size and persistence of the internet divide and the consequential – but less appreciated – connectivity barriers for businesses in rural areas." Moreover, "Given that internet access is near ubiquitous in most western countries, it can be easy to forget that on a global scale, penetration is only 50%. This leaves around 3.7 billion people (or 3 billion adults) offline; we forecast that continued network expansion and smartphone price declines will help bring this down over the next five years but only to 3 billion, leaving 40% of the world still offline. The vast majority of unconnected individuals live in India, Africa and a handful of populous, lower-income Asian countries such as Pakistan and Indonesia (see Figure 2)."

In the chapter entitled "Connectivity from space: under the hood," the report explains that the "basic model for LEO constellations is to integrate with mobile operator networks: 3G, LTE and eventually 5G. The major change with LEO constellations compared to traditional GEO architectures, which primarily connect to slower-speed 2G and 3G networks, is a lower deployment altitude to drive higher data throughput and lower latencies."

"Providing network coverage and backhaul links to rural areas is foremost a challenge of economics rather than anything to do with technology," the third chapter points out. "Large distances, uneven topography and the presence of impediments such as forests all make rural coverage more difficult than in urban or suburban areas. Low population densities also mean that usage and revenue per mobile cell site (or broadband exchange point) are much lower than in a city or suburban environment."

Outlining the differences between wholesale versus retail business models with satellite and HAPS connectivity is the focus of the report's final chapter. "The first and most common is connectivity provided on a wholesale basis to mobile operators, which continue to own the end-customer relationship. The second is to sell access directly to consumers or enterprise customers."

Addressing the future outlook, I appreciate the report's concluding paragraph:

We expect current market momentum for LEO connectivity to continue as established constellations increase towards their target size. Forming commercial partnerships with operators will be key over the next 2–3 years to test and deploy aerial solutions in practice, providing feedback loops to inform tech and business model iterations. To a certain extent, regulatory issues surrounding spectrum licensing will persist, albeit to a lesser extent given progress over the last five years. Operators will also need to focus on infrastructure deployment logistics in rural areas as part of a wider package of educational support for such communities. Coverage is, after all, one of several barriers to mobile internet and broadband access along with costs, digital literacy and relevance. Tying these together through joined-up efforts is most likely to result in success rather than tackling each in isolation.

Accessing the internet through aerial connectivity is not a new concept. Such connectivity has historically been cost-prohibitive for most enterprises and individuals. Encouragingly, recent reductions in research and development costs leading to advances in satellite – low Earth orbit and geostationary orbit – and the newer high-altitude platform station technology is altering business models that will allow operators to provide reliable low-cost internet service to those living in unconnected or poorly-connected areas. The end result is delivering mobile solutions like those created by Re+connect that closes the last-mile disaster relief gap.

What recommendations do you have for improving internet connectivity to close the digital divide?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.