I retired from personal blogging in July 2008 but you can find me over at blog.xero.com
Follow @roddrury
Opinon article published in The Independent this week:
Connecting New Zealand to the world through broadband is vital to the future of our economy.
That is what drove me to write a paper recently, proposing the idea that state ownership of our national broadband infrastructure remains our best option.
The incident that converted me to becoming what some might term a “digital socialistâ€, was an experience at my last business, AfterMail, an email software company dependent on global communication links.
We subscribed to a US-based voice over Internet protocol (VOIP) telephony service, which for $US35 per handset, gave us unlimited calling through the US. But even better it meant we could choose US phone numbers. This simple service, used extensively overseas, allowed us to appear close to our customers and sales prospects. VOIP is a fairly low bandwidth application and even this was unusable from here.
We were forced to revert back to standard New Zealand phone numbers.
If we could not have reliable VOIP then what chance do we have for higher bandwidth interaction such as desktop video conferencing or multi-point global meetings? In this simple example, it showed me that New Zealand’s lack of decent connectivity was having detrimental effect on our business.
My view is that the model of a company responsibly to shareholders, but also responsible for the country’s national infrastructure, is fundamentally flawed. Only regulation can pull the disparate needs of the company and country into line. And that’s broken.
It is easy to confuse the call for a State Owned Enterprise to manage our national infrastructure as Telecom bashing, but it’s not. Telecom has probably acted as it should.
But more importantly, I believe Telecom is well placed to benefit from a state managed broadband infrastructure model.
From an investment point of view an infrastructure company is completely different from a retail marketing company. In many countries, infrastructure and retail have been successfully separated, leading to a significant jump in value in the retail company. The owners of the retail company have been big winners as well.
Internet infrastructure is different from drains and roads because it is a direct user pays model. The Internet is already a toll road and no business is expecting free access.
But changing New Zealand’s Internet from a scarce resource to an abundant resource and driving pricing to a cost plus model would significantly change the market forces, and promote investment in the services and content that runs through it.
Government backed infrastructure investments are attractive to a large segment of the investment community.
So this is not a call for significant Government funding. Rather, it’s a call for the Government to act as a coordinator to raise the funding required for this transformational change and to quickly implement it.
Setting a clear charter for the SOE and appointing a strong governance structure should allow this model to deliver.
As part of the Internet generation I take for granted the understanding of how this model could provide transformational change to vastly improve New Zealand. But this needs clear articulation. Broadband is infrastructure that benefits all business and all parts of society.
With big connections between the world and us, New Zealand businesses can communicate better with overseas customers and staff. We can participate better in global supply chains.
It is not only the information and communications technology (ICT) sector that benefits. All businesses are better positioned to export.
Within ICT there are numerous opportunities – specialised consulting, developing compelling digital content for internet-based television, outsourced development work, remote management of desktop infrastructure, to name a few.
In the home we could back up the priceless movies we make of our children. We do more away from the office and reduce the lost productivity of peak hour travel.
Real estate agents can do full screen video tours of property, school children can collaborate with kids in other countries, social workers can meet weekly with global experts, doctors can watch complex operations in real time, movie work can be sent to New Zealand for special effects and rendering.
A website link on a bottle of Syrah allows the wine lover to meet their wine maker and see where the grapes are grown. We can create the digital content to tell compelling stories and build an emotional relationship with the winery, perhaps resulting in additional tourism.
Talented workers from all over the world could base themselves here, able to connect to their employers where ever they are and maintain their networks while enjoying New Zealand lifestyle.
In a bandwidth abundant culture opportunities will open up and innovation will occur that we would never have dreamed of. Could the next YouTube come out of New Zealand?
As the most distant economy in the world, securing our digital trade routes is more important to us than another country. Our small size is our competitive advantage. We can get coordinated.
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The structural separation you advocate is a long heralded consequence of the digitisation of telecommunications networks, but appreciating the impact and opportunities (and threats to incumbent beneficiaries) has taken a long while.
These links provide some more views on an analogue to your model, called an OPLAN, this interview is a stirling example of complete misunderstanding based on historical perspective of the new by the old, and in their own words, here’s an OPLAN development company’s pitch.
Looks pretty capitalist to me, and just a pinch of public incentive, as happened a decade or so ago right here in Wellington.
(As one can never be sure without preview what will happen to html, here’re the links untagged:
http://www.telco2.net/blog/2007/04/interview_malcolm_matson_of_op.html
http://www.open-planet.net/
http://CityLink.co.nz )
I’ve been trying to champion the idea of government investment in fibre for a long time. There is a surprising number of smart people who still think building out fibre to the home is impossible, but this is turning. The big problem is the lack of understanding that I see at the Government level, I think it results from listening too much to the self-interests of Telecom, Telstra, etc. who spread misinformation about the costs of such projects. (Which in part is simply due to the fact that what costs an agile specialised company around $4,000 per home does actually cost a behemoth like Telecom over $10,000.)
Anyway, good to see you seem to be getting through a little to some heads. It would be nice to make this an election issue. I’d hate to see us wind up in 10 years time turning around and going, “Oops, we’re behind the rest of the world by 10 years”, as we have done with LLU.
Great work Rod! whilst I feel this is definitely something that is vital to the economy, at this stage it doesn’t seem to be an election issue for either National or Labour. Making it so would seem vital to securing our future.
When I first came to the UK two years ago, i was blown away by the services available in a developed and well populated country, compared to my home (New Zealand).
Without state ownership, no company working with an Economy the size of New Zealands will make enough money to make fast broadband affordable, Telstra had spent (before I left NZ) a billion NZ dollars for an infrastructure that covered Wellington, some of Auckland and some of Christchurch - that spending can never be justified with shareholders.
There are several areas of New Zealand that need serious input from government, nevermind social welfare……. Roading Infrastructure, rail Infrastructure, communciations (Broadband), I love my 8 meg broadband from my house, it means I can do what i want and an ready for what is to come (already using VOIP via BT broadband for all phone calls, calling NZ becomes very cheap without Skype!).
Government and indifference by the general population is what seriously disappoints me about my home country, the general NZ’er is not interested in paying for better service (whether that be community services like pools and stadiums) or protecting the environment (kerbside recycling) they would rather have the $5-10 for their own interests, the Auckland toll proposal - why would people vote against paying for a new / faster bypass? they don’t have to use it - they could have kept going via their already slower expensive routes - $6-7 per day is less than 2 salary hours wasted in travelling time.
A wake up call for me in the UK has been that the community does make a difference, if government play up, people complain and government back down, but also I have to recycle, I have to think about what i’m doing, but the infrastructure is amazing, that is a benefit of population….. but also investment by government.
The Government has to get behind the people, social welfare (though it must be supported) is not as important as developing a nation!
Ooops, I meant Government has to get behind business :-)
re: benefits of broadband to NZ business,
Not to mention our IT experts wouldn’t be forced to leave NZ in order to gain experience in emerging technologies, e.g: location-based mobile applications, mobile p2p. NZ is way behind even the UK who again is way behind, say, Korea, in terms of IT expertise.