Virtual race to cross digital divide

There are signs this may be about to change.

The latest annual World Economic Forum (WEF) survey, released in April 2008, ranked New Zealand 22nd out of the 127 countries surveyed.

That’s the same as last year.

That means we’re also behind the US (in 4th place), Singapore (5th), South Korea (9th) and Australia (14th).

The WEF took a number of factors into account.

It considered each country’s business and regulatory environment: New Zealand scored reasonably well there.

It analysed actual usage of the latest ICT: we scored second only to the Netherlands in internet penetration.

And the WEF also checked out the readiness of individuals, business and government to exploit opportunities.

New Zealand scored particularly poorly for competition among internet service providers.

This situation has historically dogged efforts to improve the country’s digital connectivity, with a dominant player inhibiting market growth.

There are some positives. Over the past year, in particular, we have made some progress towards turning the situation around.

New Zealand is increasingly recognising the need for urgent action and is starting to build a consensus around what it could do.

Ernie Newman, chief executive of the Telecommunications Users Association of New Zealand (TUANZ), says New Zealand has allowed itself to fall well behind in the copper age.

“But, to some extent, the fact that we’ve fallen so far behind gives us an opportunity to leapfrog the rest of the world and – if we make good decisions – we could move ahead quickly.”

TUANZ has an ambitious goal. It wants us to join the top 10 OECD countries for communications technology.

In Newman’s view, New Zealand has a real chance of reaching that goal.

The development of a fibre optic network infrastructure brings high-speed connectivity to the front door.

“There is emerging political consensus around public sector participation in funding,” says Newman.

“The two major parties [are] converging on a view that it is right and proper for public funding to be used in some sort of private/public partnership.

Newman rates as one of the best things in the past few years, the passing through Parliament of the Telecommunications Act Amendment Bill, with 119 votes for and only two against.

The Bill covered the separation of Telecom and local loop unbundling.

“That Parliamentary support was very heartening,” says Newman.

TUANZ wants New Zealand to set up a nationally-coordinated and partly privately-owned infrastructure network.

Newman believes fibre optics is the way of the future.

“We must define what constitutes an open access network.

“This is a paradigm shift from telcos owning the network and leveraging dominance in the market.

“We have to think about infrastructure as a common use asset and look for competition in the area of services.”

ICT as enabler

Independent think tank The New Zealand Institute has published a number of papers on how New Zealand can improve its position in a weightless economy.

It believes a massive improvement in ICT will be the key enabler, describing it as “the critical infrastructure of the 21st century”.

The institute’s chief executive Dr David Skilling says his starting point is that high-speed broadband is an economic, not a technical, issue.

“New Zealand faces economic challenges that must involve more New Zealand firms engaging in overseas markets.

“Because these are physically distant, the weightless economy offers real potential.

“But to make good on that, we need the infrastructure.”

The institute estimates high-speed broadband will add between $2.7 billion and $4.4 billion a year to our economy through extra productivity and efficiency.

“On top of that is a number we haven’t quantified,” he says.

“It’s the potential to grow new industries that don’t now exist in significant measure.

“There is really significant potential there.”

The institute envisages a new investment pathway.

The funding and regulatory model would include the creation of FibreCo.

This would be a price-regulated monopoly investor in a fibre access network that would grant equal and open access to the network at a regulated price.