Generative AI, the Digital Divide, and the Tremendous Opportunity

GenAI’s rapid advancement certainly has its drawbacks, but there is an opportunity for telecommunications companies to help mitigate the impacts while also driving financial value and building social capital.

4 Min Read
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Aleksey Funtap via Alamy Stock

Stories about the promise of generative AI are everywhere, and parts of society are adopting it at an unprecedented pace. This rapid advancement, however, does have its drawbacks, one of them being the threat GenAI poses to widening the digital divide. Telecommunications companies have an opportunity to help mitigate the impacts while also driving financial value and building social capital.  

With the next iteration of GPT expected later in 2024, the need for infrastructure improvements is arriving faster than most industry leaders recognize. The adoption implications of ChatGPT alone are staggering, with the platform reaching one million subscribers in less than one week -- faster than any other platform. It accumulated 57 million active users in its first month of availability and surpassed 100 million active users in January 2023, less than two months after it launched.  

Already, access to the internet is unevenly distributed. According to 2023 Pew Research data, 83% of White adults have access to broadband internet, while only 68% of Black adults have the same access. At this stage, further iterations of this technology require more computing power, which could triple the cost of running an AI query. This lack of access to this computing power is exacerbating underlying societal inequities and driving the demand for better infrastructure in underserved areas to close the gap. It also presents telecom companies with a significant opportunity to increase their ESG ratings and create both social capital and financial value over the long term.  

Related:ChatGPT Year One: The Drama & Disruption

New tech like GenAI may create more demand on the network than telecoms are able to supply. Telecom companies can capitalize on these new technologies driving greater demand, but it will come at a cost in terms of upgrading cellular networks and leveraging fiber networks and other infrastructure. One way for companies to reduce investment costs is to demonstrate to investors, customers and other stakeholders how they are addressing inequities like the digital divide head-on. 

Access to generative AI and tools such as ChatGPT is becoming the new table stakes for many walks of life. As businesses implement this technology, workers will need to be upskilled. Children -- the next generation of workers -- will need access at school and at home. And leaders must continually strive for an AI future that’s fair and equitable. The reality is that those who know how to use AI tools will have a significant advantage over those who don’t.  

Related:AI Needs a Human Touch for DEI Efforts

For telecoms, adopting an ESG-principled strategy to introduce or enhance broadband services in low-income areas is more than an opportunity to enhance the quality of life among people who have been historically under-connected; it can also build their brand and grow their subscriber base.  

By aligning business strategy with a clear ESG framework, companies can significantly reduce the cost of borrowing when raising capital to invest in major GenAI infrastructure projects. In the KPMG US 2023 ESG and Financial Value survey, 43% of business leaders at companies with more than 10,000 employees cited access to new capital sources as one of the top financial benefits of their ESG strategies.  

Further, the principal downside of failing to meet stakeholders’ ESG expectations is becoming increasingly apparent. In KPMG’s 2023 CEO Outlook, more than one in five US CEOs cited the higher cost of and/or difficulty in raising financing as one of the greatest risks to not making good on their ESG commitments.  

Telecom companies that prioritize ESG principles have a higher probability of accessing capital markets and financing the upgrades required to make mass adoption of GenAI a reality. Our clients are often required to submit ESG corporate due diligence reports to their lenders or rating agencies when seeking to raise capital. These due diligence reports or “ESG report cards” rate businesses on several metrics and pillar scores, including “access to telecommunications.”  For example, a low rating in providing access to underserved communities can raise borrowing costs with lenders.  

Related:Navigating the Impact of AI on Teams

Telecom companies have an opportunity to leverage government incentives, create goodwill in underserved communities, and help bridge the knowledge gap widened by GenAI. Business leaders have an opportunity to create an early-stage AI legacy that prioritizes ESG principles and creates a more inclusive and equitable society.  

AI is advancing rapidly. While its impacts are taking shape today, many of the benefits won’t be felt until long after the current slate of business leaders have either retired or moved on. The telecom companies that take a long-term approach and consistently focus on value-creation by investing in closing the digital divide will have a competitive advantage in the race to own the infrastructure GenAI will run on.  

About the Author(s)

Sean Sullivan

Principal, KPMG

Sean Sullivan is a Principal with KPMG US.

Nate Gabig

Principal, KPMG

Nate Gabig is a Principal with KPMG US.

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