Classroom Companion: Business

2.3 
 Factors Constraining Evolution
Digital services cannot exist without ICT. Innovations in computer networking and 
wireless technologies give rise to new services which, in turn, have major impacts on 
the digital economy at large. Note that some of the basic information and commu-
nication technologies still in use, including TCP/IP, HTTP (World Wide Web), 
Ethernet, and GSM, are now more than 25 years old. Several of these technologies 
have been expanded and improved several times during their lifetime. For example, 
IP exists in two versions (IPv4 and IPv6). GSM has generated a whole new family of 
mobile communication systems—3G, 4G, and 5G—all of them built on the basic 
principles first outlined in the GSM project. On the other hand, the basic connec-
tion-oriented protocol on the Internet—TCP—has been unchanged since 1974.
Despite all these improvements, the original technologies are still widely used. 
For example, IPv4 (42 years old) and GSM (30 years old) are still important 
Internet and mobile network technologies, respectively. Now, 4G and 5G technolo-
gies are rapidly replacing GSM but, still, mobile networks support GSM to back 
global roaming services. Any efforts to shut down GSM have, so far, failed except 
in a few countries (e.g., Australia, USA, and Singapore).
Communication technologies are evolving slowly. The most important reason for 
the slow adaptation of some of the new technologies is the huge investments required 
 
Chapter 2 ·
Information and Communication Technologies

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for implementing them. Even a small improvement of a technology is expensive to 
install, simply because of the vast volume of existing equipment designed to the old 
standard. Therefore, it may sometimes take more than 10 years before the technol-
ogy is taken into use after it is specified and ready for the market. For example, it 
took more than 10 years from the HTTPS specification (encrypted web access) was 
finalized until it was taken into use. IPv6 was ready for implementation in 1996. 
Nevertheless, in 2016, more than 95% of the Internet traffic was still carried on IPv4 
networks. This is because Network Address Translation (NAT) has increased the 
available address space for IPv4 and, hence, postponed the introduction of IPv6. 
Because 4G and 5G mobile networks only support IPv6 and IPv6 is implemented on 
almost all input/output devices of computers, this is now (2020) about to change. It 
is assumed that IPv6 will soon replace most of IPv4 worldwide.
On the other hand, both the development time and adaptation time for many 
app-based digital services (such as Airbnb and Uber) are very short. The reason is 
that many of them are simple software packages—easy to develop, install, and use. 
The rapid evolution of apps took place after iPhones and Android phones were 
marketed in 2008.
One important requirement for introducing a new technology is backward 
compatibility; that is, the new technology should support equipment or software 
designed to the old standard. One compatibility requirement is that new equipment 
should be capable of operating in the old environment. This objective is fulfilled for 
public mobile communication; a smartphone designed for 5G must also support 
4G, 3G, and GSM so that it can be used everywhere. This implies that the smart-
phone must support the radio interface for all mobile standards so long as these 
standards are in use. In addition, it must support Wi-Fi and Bluetooth. This back-
ward compatibility ensures that new families of mobile systems can be introduced 
smoothly without rebuilding the network completely.
The reliability of the infrastructure is also a concern that may influence the rate 
by which new technologies are implemented. ICT and electric power production 
are the two most critical infrastructures of society. If any of these infrastructures 
stops, society will soon grind to a halt since all other infrastructures depend criti-
cally on them. All activities of modern society involve computation, sharing, and 
storage of data. Therefore, these activities are vulnerable to cyberattacks where the 
purpose is to destroy, disable, or gain illegal access to computer resources and 
infrastructures. Events have also shown that most ICT systems are taken out of 
service either at the same time a power outage occurs or shortly afterward if devices 
or networks are equipped with standby power such as batteries or diesel aggregates 
(which most of them are not) (Northeast blackout of 2003, 
2020
).
Innovations in ICT will continue to have impact on the digital economy in the 
future. Technologies such as machine learning, robotics, smart factories, smart cit-
ies, and 3D printing all show great potential for disrupting existing business sectors 
and providing the foundations for upcoming digital services. Machine learning 
techniques are already utilized in several digital services. One example is algorithms 
used to recommend products to consumers based on previous customer habits. 
Another example is voice recognition systems such as Apple’s Siri. This evolution 
is considered further in 
7
Chap. 
20
.