[Digitization Insights] By Janosch Delcker | @janoschdelcker| Send tips to jdelcker@politico.eu | View in your browser _With thanks to Cat Contiguglia and Myfanwy Craigie_ WELCOME BACK to POLITICO Pro Digitization Insights. It’s Janosch Delcker, POLITICO’s AI Correspondent in Berlin and your host of this weekly newsletter in which we focus on how big data, AI and automation are changing the world as we know it. Let’s start with some of the news that caught our attention during the last few days: The technological revolution we’re experiencing will hit smaller cities much harder than big metropolises, a new study looking at U.S. cities suggests. It will also radically change farming — and the EU’s antitrust boss Margrethe Vestager warned that, in light of the upcoming takeover of Monsanto by German multinational Bayer, her agency had to “to ensure that the deal will not limit competition in digital farming and research.” One thing everyone can agree on is that Europe must boost innovation, otherwise it will fall behind in the global technology race. Any tech entrepreneur will tell you that to be innovative, you need money. And when it comes to get this funding, the U.K. remains the undefeated top dog in Europe, an analysis by Dutch venture capital database Dealroom suggests — with British investment now accounting for 37 percent of all investment in Europe. SPOTLIGHT: WAR Buried deep in Germany’s next government’s coalition agreement, on page 149, two overlooked sentences point to an imminent technological revolution that is about to change war as radically as nuclear weapons once did. “We reject autonomous weapon systems that lack human direction,” the document released last week states. “We want to ban them globally.” AI is not just revolutionizing the way we work, travel and live — it’s also about to change the way wars are fought around the globe, most prominently through the development and potential use of so-called lethal autonomous weapons or LAWs. Dubbed “killer robots” by their opponents, LAWs are systems that are technically able to hunt and attack targets on their own — and they’re far from just a sci-fi scenario. Later this week, leaders from around the world will flock to this year’s Munich Security Conference to discuss the most pressing security issues of our time — and it’s no coincidence that the first panel on Thursday afternoon, kicking off the conference’s influential side-events, is dedicated to the role AI will play in modern conflicts. (If you’ll be there, drop me a line.) The panelists include Estonia’s President Kersti Kaljulaid and former NATO former General Secretary Anders Fogh Rasmussen. It’s called “The Force Awakens.” That’s admittedly a clumsy metaphor — but you get the message. Stay tuned, we’ll have an in-depth article on the issue for you soon. BY THE NUMBERS: In an increasingly digitized world economy, access to fast internet is key. Here’s how the situation has changed across the EU: In the U.K., a former air force officer is meanwhile on a mission to bring ultra-fast internet speeds to people hundreds of kilometers away from London. Our Chief Technology Correspondent Mark Scott has more, or see below. GDPR COUNTDOWN: 101 DAYS TO GO. On May 25, Europe’s new privacy rules, the General Data Protection Regulation (GDPR), will take effect. One way or another, the rules will affect you. Here’s our financial services colleague Cat Contiguglia with the latest on a conundrum her sector faces: When it rains, it pours: As financial firms struggle to comply with the GDPR, they also have to reconcile it with the list of other new regulations coming online in 2018 that revolve around data collection — and that’s going to be far from easy, officials say. Firms face a hefty list of new regulations, including the revised Markets in Financial Instruments Directive, the revised Payment Services Directive, and the fourth Anti-Money Laundering Directive. All revolve around getting and holding more information. Late last week, regulators in the U.K. acknowledged the conundrum in a joint statement, saying, “We recognize that there are still ongoing discussions to ensure specific details of the GDPR can be implemented consistently within the wider regulatory landscape.” For example, Julian Parkin, a data protection expert leading GDPR implementation at a U.K. bank, told Cat that “there is an inherent conflict between the right to be forgotten and rules around anti-money laundering or fraud, as under those rules, you need to hold information for longer.” To deal with the conflict, the Financial Conduct Authority hosted an industry roundtable, and said it “will continue to collaborate in the coming months to address concerns firms raise.” To read more about this regulatory conflict, keep an eye out for an in-depth article coming soon to your inbox. SPEAKING OF THE U.K. AND DATA PRIVACY, “Open Banking” rules went online in January that require banks to make available client data to authorized third parties via a standard Application Program Interface or API. The point is to improve competition in banking, by, for example, allowing a customer to authorize an app to access their account details to find them the best offer on an account. But the U.K.’s Financial Conduct Authority sees a contradiction in asking clients to share more data ahead of new EU rules banning a dangerous form of data sharing go online. “Screen scraping” will be banned in the revised Payment Services Directive, but the part of the rules with the ban is not going to be in force for a while. In testimony to lawmakers last week, FCA chief executive Andrew Bailey lamented the delay, saying the FCA is “working with various industry bodies” and asking them, “can you put in place sensible standards in the meantime that balance openness against security objectives?” While Open Banking intends for apps to plug directly into banks just to get the data they are authorized, in “screen scraping,” an app logs into the client’s secure account with their login details. Allowing an app to directly access the whole of a client’s account with their actual details opens creates a much greater risk of fraud than going through an API. ARTIFICIAL INTELLIGENCE, A GLOSSARY Talk about artificial intelligence is everywhere. What do all the terms thrown around actually mean? One buzzword at a time, we’ll get you up to date. Today: DEEP LEARNING. To us humans, learning comes naturally. (Well, to some more than others, but that’s not the point here.) The point is: To computers, it doesn’t. And that’s where deep learning comes in. It’s a technique that allows computers to mimic our thought patterns — and go far beyond that. In some instances, this can already help computers become better at recognizing objects, text or sound than humans ever could be. This unseen level of accuracy is the secret behind the success of deep learning; the technique has created quite a fuss during the last couple of years. Let’s say that if all AI technologies were a family, then “deep learning” would be the handsome mid-twentysomething whom everyone loves, who scored numerous global No. 1 hits during the last couple of years, and who already made billions for the family. Deep learning is, for example, the key technology behind driverless cars, the voice control in our smartphones or the software inside medical microscopes to identify cancer cells. When it comes to how most deep learning technology works, it’s crucial to understand the role of so-called neural networks — which we’ll cover in the weeks to come. Want to understand more about deep learning? A good start is Katrina Onstad’s impeccable profile of Geoffrey Hinton, the Canadian scientist who spent 30 years hammering away at deep learning while most other scientists dismissed his ideas as nonsense, in Toronto Life. (If you only have time for one longread this week, make it this one.) BOOKMARK THESE — FACIAL RECOGNITION: It’s one of the key AI technologies. But a test of software from IBM and Microsoft raises concerns about the systems being significantly less accurate when it comes to identifying black women, compared with white men: “The companies’ algorithms proved near perfect at identifying the gender of men with lighter skin, but frequently erred when analyzing images of women with dark skin.” — AI AND ETHICS: It’s a broad field — so Philosopher Paula Boddington narrowed her reading list down to the five books she believes people should read to understand the myriad ethical questions posed by artificial intelligence. — FINANCIAL CRIME: AI is also changing the way to how to rob a bank. Mark Gazit of cybersecurity company ThetaRay spoke with TechRepublic’s Dan Patterson about how AI is unleashing a new type of cybercrime. — A NEW SOCIETY, INVENTED BY BLOCKCHAIN? Meanwhile, dozens of wealthy tech entrepreneurs are heading to Puerto Rico to build a crypto utopia — a new city where the money is virtual and the contracts are all public — to show the rest of the world what a crypto future could look like, the New York Times’ Nellie Bowles reports. — PRIVACY VS. SECURITY: It’s a question as old as democracy. National Geographic asks it again. “Technology and our increasing demand for security have put us all under surveillance,” journalist Robert Draper writes. “Is privacy becoming just a memory?” — NOT PRETTY, THAT DIGITAL FUTURE: Technologies distorting what’s real by manipulating our perception and falsifying reality are evolving faster than our ability to mitigate them, technologist Aviv Ovadya warns. “We are so screwed it’s beyond what most of us can imagine,” he told BuzzFeed’s Charlie Warzel. “We were utterly screwed a year and a half ago and we’re even more screwed now. And depending how far you look into the future it just gets worse.” Tough outlook. Decide for yourself. ***POLITICO PRO ARTICLE*** HOW A BRITISH TELECOMS STARTUP IS BRIDGING UK’S RURAL DIGITAL DIVIDE — By Mark Scott KEYNSHAM, England — The rolling hills around this small market town on the outskirts of Bristol don’t exactly shout high-tech hot spot. Rural and sparsely populated, it’s the sort of place where big telecommunications operators would rarely invest to install a high-speed internet network. More often than not, local residents would be resigned to slow connections and poor mobile coverage — a digital gulf separating them from those in big cities like London. And yet, this rural community, located in southwest England, has some of the fastest internet speeds on the planet, thanks to a former British air force officer named Evan Wienburg. As chief executive of TrueSpeed, a local telecom startup, he’s behind a project that’s squarely out of place in a landscape dotted with farms, country pubs and centuries-old homes. Wienburg is building an ultra-fast fiber network across this rural English community. His mission: to debunk the belief that it’s not practical (or financially viable) to offer ultra-fast internet speeds — fast enough to download a high-definition movie within seconds — to people who live hundreds of kilometers from urban centers like Paris, Madrid or Berlin. “When you explain to people what we can offer them, it’s an easy sell,” said Wienburg, who secured £75 million last summer from Aviva, a British insurer, to roll out his network to roughly 75,000 mostly rural households in the southwest of England by 2022. “We don’t want to take government money,” Wienburg added, as he scrolled through an online map showing where his three-year-old telecom startup was digging ditches and erecting 8-meter poles to run fiber-optic cables — whose speeds can top out at more than one gigabit per second (that’s very fast, in non-geeky language) — directly to people’s homes in these rural communities. “We have a working business model that stands on its own.” It’s easy to dismiss TrueSpeed as a tiny operation — the startup has so far connected less than 2,000 households. But Wienburg and other rural telecom entrepreneurs from Sweden to Greece are accomplishing something that national telecoms monopolies and billions of euros of government subsidies have failed to achieve: connecting Europe’s rural communities to the internet and reducing the Continent’s widening digital divide. The need is certainly there. Only 40 percent of people living in the EU countryside have access to high-speed broadband, according to European statistics. That digital divide in speed and internet connectivity is one of many factors that contribute to rural isolation, economic sluggishness and even resentment of urban elites, which — in turn — can foster populist politics. But these European mom-and-pop telecoms providers are pushing back, by giving Europe’s rural citizens the type of internet coverage that big city dwellers take for granted. For Wienburg, TrueSpeed’s chief executive, the journey to becoming a rural broadbrand whiz started — as is often the case in the U.K. — at the pub. Soon after returning to Britain from years in the United States, he found himself at a community meeting at his local watering hole, complaining about how bad the connectivity was compared to his time in Virginia. “I couldn’t even make a phone call,” Wienburg recalled. “I moved back from the U.S. where internet connectivity wasn’t even an issue.” Most of us would just grumble about the poor internet speed, and move on. But the British entrepreneur decided to put his money where his mouth was, dipping into a pool of local investors and signing an agreement with a local energy provider to use its electricity poles to run fiber-optic cables across the countryside to connect individual homes to the internet. TrueSpeed also got lucky after it bought a 77-kilometer stretch of a high-speed cable network that connected London and New York, which — completely by chance — ran directly through the company’s rural patch in southwest England. The company’s pitch to local communities, many of which have little or no internet connectivity, is simple. If roughly a third of residents are willing to sign up for an 18-month contract, then the British telecom startup will wire the entire area with high-speed fiber, guaranteeing speeds that would make even the most tech-savvy city dweller envious. The company’s average speeds are currently 200 megabits per second, but they can be ramped up to 1 gigabit per second — fast enough to download a full-length movie in seconds — with no extra investment. The currently speeds are more than ten times faster than the U.K. average, and the startup’s monthly subscriptions start at under £50. As its fiber is rolled out (including asking farmers for permission to dig through their arable land), TrueSpeed expects to sign up more customers — and pocket more monthly subscriptions — as word spreads about its network. In Priston, the company’s first test village of roughly 80 homes that was connected in early 2016, TrueSpeed’s coverage, for instance, now reaches almost 70 percent of households, according to Matthew Bush, one of the company’s project managers. Currently, Wienburg says his 49-person team is adding roughly 1,600 homes a month, with the goal of 15,000 properties tied to his local network by the end of the year (with roughly one-third of those households signed up for internet packages). If everything goes to plan, the British entrepreneur said he would also look to lease out his network to other telecoms operators, providing locals with even more choice when it comes to surfing the web. That expansion mimics similar bottom-up projects in Sweden, Greece and Italy, where a combination of mobile and fiber investments also has brought high-speed internet access to communities far off the beaten path. Such grassroots projects (either run by nonprofit organizations or private companies like TrueSpeed) fill a much-needed gap in Europe’s efforts to keep pace with the likes of the U.S. and China when it comes to all things digital. Many of the region’s largest telecoms operators already have multibillion euro investment plans in place to upgrade their networks to offer high-speed access to their region-wide (mostly urban) customers. But by focusing on Europe’s rural communities — many of which still cannot access much of the region’s digital single market plans — these internet programs do something even more valuable: extending those same benefits to parts of the EU that would otherwise be left behind. _Mark Scott is chief technology correspondent at _POLITICO.
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