Where Big Tech Will And Won’t Spend In A COVID Recession

It is easy – and becoming easier by the day – to look at the business world and see trends indicating where the money isn’t flowing.

Not to businesses, depending on the verticals. Not to the stock markets (depending on the day, of course).  Not to mortgages, if things hold up.

And there’s another kind of fund flow that will take a hit — namely corporate spending, or capex, and specifically, spending on technology.

As reported by Reuters, relatively larger firms that operate on an international stage, where (of course) business is being impacted by the coronavirus, are likely to throttle back on tech spending by more than four percent, according to estimates from Enterprise Technology Research, as cited by the newswire and per estimates gleaned from more than 1,300 technology executives.

But drill down into the numbers a bit and there remains a key pocket of growth: spending on “work from home” infrastructure, where dollars funneled to those initiatives will grow by 30 percent annually, where once the growth rate was pegged at a much more sedate one percent.  Perhaps predictably, at least some of that spending will be earmarked for mobile devices, for desktops and for other hardware.  Other spending would focus on security and video conferencing.

Underpinning it all, of course, is the network, and the continued demands made on WiFi and the Internet. 5G is still finding limited rollout across companies and through the major telecom networks. The gradual rollout is likely to gather steam as home broadband networks face streaming demands that may not have been anticipated and latency becomes an impediment to getting work done.

In an interview with CNN at the end of last month, AT&T CEO Randall Stephenson said that mobile volumes were up 40 percent, and that WiFi calling volumes had surged by 100 percent.  At least some stress on the network was being seen as more individuals worked from home (and, we note, the trend toward doing business from the kitchen, from the living room or from the study have only gained momentum in recent weeks).

In at least one harbinger to a 5G future, T-Mobile and Sprint closed their merger Wednesday. CNET reported that the combined company has a significant ability to use mid-band spectrum, which can help boost speeds for devices even while indoors, and where speeds are significantly faster than 4G — by as much as 15 times, within a few years.  The mid-band spectrum also can bring faster data speeds (via 5G) to rural users in the U.S.

As noted in this space last week, the Federal Communications Commission (FCC) has said that it would pay satellite firms as much as $10 billion in incentives to offer up more wireless spectrum in a bid to boost access in rural areas. And last week, President Donald Trump signed two bills into law known as the Secure 5G and Beyond Act and the Broadband Deployment Accuracy and Technological Availability Act.

The bills dictate that 5G rollouts be based on the joint efforts of the FCC, the Department of Homeland Security and the Department of Defense to craft a plan within 180 days.  The Broadband Deployment Act mandates that the FCC create rules that govern data collection tied to broadband, and in addition, pinpoints where broadband is available and where it is not.