Speech to Communications Day Auckland Summit

Clare Curran, Labour IT Spokesperson Tuesday 18 May 2010- Hilton Hotel Auckland

Thank you for the invitation to speak today. I’d like to acknowledge …….. This industry is critical to our country’s future socially and economically for at least the next 50 years. New Zealand is at a turning point in its history. We are poised to create a new network. A network that will deliver critical infrastructure for our nation.

What that network can deliver is transformation, social and economic. On many levels. I want to paint you a picture because I think the bigger picture hasn’t been properly articulated and therefore isn’t there to be strived for.

Can I say very clearly, ultrafast broadband is not an end in itself. It does not constitute by itself the big picture for New Zealand. It is however, a critical component. Because it’s the means to connectivity. But there’s much more to it.

Imagine how our country could be in a decade. Even less than a decade. Where pretty much all people are connected. With a fast connection, whether you live in the city or the country. Where poorer communities, both rural and urban have more options to develop and to keep families together. Where data caps are much less relevant and people can afford to be connected.

Where children bring home laptops from school and teach their parents how to use them. Where at risk adolescents who may have in the past ended up leaving school and hanging out on the streets gather together in groups and make music, games and movies. And end up in jobs.

Where schools teach creative content, ICT is an integral part of teaching and learning across the curriculum, where there are clear pathways from school in further training and a myriad of careers. Well paid jobs that are transforming the New Zealand economy.

Where the ICT industry is seen, and placed at the forefront of NZ’s economic growth. And is delivering. Where we are connected to the rest of the world at high speed with unlimited data flow. Where Government is joined up, where departmental silos have broken down and the delivery of higher quality public services via technology equitably across NZ has become the norm. And within the public service, innovation flourishes and is encouraged. And where there have been enormous cost savings as a result and more money redirected into the services that most need it.

Where creative NZ content is sought, nurtured and supported. Where the creators of NZ content can make a decent living. Where NZ music, movies and television is actively produced and made available fee to air across a variety of mediums. Where a strong, modern public media service flourishes and sets high standards for content and journalism.

Where there is vigorous competition in the commercial media and content delivery world. And where telcos are no longer called telcos because they perform a range of functions.

Where commercial monopolies no longer dominate the telecommunications and content delivery markets. They have a place, but they are no longer monopolies because there is a strong regulatory system in place which guards against it.

Where competition to deliver fair prices to consumers is the norm, except in public broadcasting, where NZers can choose free content that reflects their own culture.

Where consumers have a strong voice. Where access to the internet is a right and where our laws reflect the rights of citizens to engage freely across the internet and engage in global culture.

Where government is more open and transparent and where participation of citizens in democracy is actively encouraged and enabled.

Where government clearly sees its roles as a driver of access and equity and investor in training, education and research.

Is this what we want? I’m sure there’s more to it. But it seems to me that this is what we want and need. How do we get there? We won’t do it over night. But it’s essential to know what sort of country we want and how technology fits in and will contribute to making it happen.

It’s all very well to be saying this in Opposition. But what we do need is a vision. I have to say upfront that there is no vision under this government. Neither Steven Joyce or John key have ever really articulated what they really want broadband to do and how it can transform our country.

They have backed off from convergence of the telco and broadcasting industries and their fibre plan is bogged down. Today I want to talk about four things: broadband’s future in a strong society, the compelling economic case for digital content, smart buying, open government and the importance of the regulatory framework within which this industry operates. Which is changing fast.

There is a growing body of evidence that access to technology can transform societies and make them more equitable. A recent report from the International Telecommunication Unions (ITU) confirmed global recognition of the critical importance of ICT to ongoing economic and social development.

And a World Bank/International Finance Corporation report release late last month says that for every 10 percentage point increase in high-speed internet connections, there is an increase in economic growth of 1.3 percentage points.

In New Zealand there is little actual research on this, though advanced broadband services are widely recognised as a key enabler of economic growth and the development of a knowledge-based economy.

Equitable access to technology isn’t going to solve all our social problems. It’s not going to stop domestic violence, alcohol and drug abuse. It wont stop kids ending up at school without breakfast and shoes. It wont stop gangs and the drug trade. And it wont stop people get diabetes, obesity and cancer.

But it could help make us more equal and if it boosts the economy, there’s more jobs and less poverty. There are very good reasons for governments to invest in broadband, and not necessarily to expect a direct return on that investment.

Greater investment in rural broadband and targeted connectivity in poorer urban areas could deliver greater benefits to the NZ economy and provide enormous social benefits.

Put simply, access to the internet either provides a bridge to people who are connected or creates a divide with those who aren’t.

Whether it’s the struggling family in the South Auckland suburbs who can’t afford dial up, let alone broadband, or a farmer in South Otago who can’t afford the massive cost of connectivity to satellite, let alone fibre.

A major OECD report from late last year clearly concluded there was a strong economic case for countries to invest in competitive, open-access, fibre to the home network based on potential spillovers into four key sectors of the economy, electricity, health, transportation and education.

OECD economist Taylor Reynolds told the Telco Day conference last month that a cost saving of between 0.5% and 1.5% in each of those four sectors over ten years resulting directly from the new broadband network would justify the cost of building a national home network. Which justified the cost of a fibre network priced between $2100 and $3500 a connection.

This is a clear reason for governments to invest. His research also said that while the social returns of broadband connectivity are potentially much larger than the costs of actually building the network, private operators don’t invest because their returns don’t justify the investment.

The big questions for NZ in advancing our connectivity right now is who is going to roll out broadband, what will the new network structure look like and what impact will it have on this industry and NZ for the next 50 years?

There’s a big decision to be made, pretty soon about this. And it doesn’t seem to be getting any easier for those making the decisions.

Up until a week ago it seemed it was pretty much a two horse race. The electricity lines companies (Regional Fibre Group) vs Telecom. Now there’s another horse on the track with Vodafone and Axia teaming up.

There’s pros and cons for each approach. I’d like to make some comments about the underlying principles that I believe should inform the decision.

Firstly, the key driver for the decision must be about investment in NZ infrastructure, rather than a commercial return on investment.

This is NZ taxpayers money, it’s an investment in our future. We must not sink public money into a project that could ultimately about delivering profit to shareholders. Especially if those shareholders aren’t NZ-based.

Secondly, fibre is the future, copper is the past. We must not be making a decision that takes us backwards and is ultimately about buying into the past.

Investment in fibre will allow a new generation of providers to develop. We must allow that to happen. Thirdly, just as has been the case with mobile termination rates, market behaviour, posturing and stand offs should not influence the ultimate decision. A deal that requires the Crown Fibre Holdings Company to effectively buy out Chorus is questionable. And what about its actual capability? Does it even have the inhouse capability any more?

Should a company that has demonstrated its failure to properly design and build a 3G network be handed more than a $1b of taxpayer money? Telecom must not be propped up to save its bacon. It must be a decision based purely on merit and what’s best for NZ.

And finally, this will be NZ’s broadband network. It could represent a whole new industry, a converged industry. There’s a huge opportunity here to look ahead.

Crown Fibre Holdings will no doubt be looking for a solution that works, and that delivers on the govt’s objectives. I’m not sure the two are totally compatible but they know they’re under pressure to come up with it soon.

There are some big issues of concern with the current broadband plan and I’ll briefly touch on them. One of them is the potential for overbuild in our urban areas and the lack of attention paid to this and what it might mean. Where is the existing fibre now? Why go through a process of handing out taxpayer money to a new network which will lay new fibre alongside existing fibre?

There should be a fibre stock take undertaken and an independent assessment should be made of where are the best places to lay it.

And why is it taking so long? For goodness sake, it’s been 18 months. Not one strand of publicly funded fibre in the ground, instead a huge amount of time and money coming up with a scheme which is still very uncertain. Why did you cancel the Broadband Investment Fund Steven Joyce when you had nothing to replace it with? And when will fibre be laid?

And why are there two broadband plans? One for rural and one for urban? And why has the government chosen to focus primarily on urban and create a digital divide through promising different connectivity speeds and less investment in NZ’s most productive sector? Because their election promise was to urban NZ and because of money.

I believe it’s a great pity and an enormously wasted opportunity to give our rural sector a tremendous boost. While overbuild is happening in the cities, the rural community gets 1-5 mgs.

Why not change the mandate of Crown Fibre Holdings to prioritise its focus on investment in technology, digital development and uptake issues across NZ, rather than just to take account of what the market is offering. In other words get Crown Fibre Holdings to tell us what’s best for the country in terms of broadband rollout, rather than relying on the market, which of course, has a vested interest.

Why not make a promise to NZ to have the most advanced rural broadband in the world and make that a competitive edge? It might take longer, and of course we have to be able to afford it but instead of promising 1-5 mg, why not aim for1 gigabyte for everyone; urban and rural?

We must invest in science and technology in our primary sector. It seems to me to be a no brainer to see rural broadband as a strategic priority for NZ.

Pie in the sky I hear the Minister say. Well going back to Taylor Reynold’s OECD calculation, you don’t need to save much from key sectors such as health, education and energy in order to more than justify the investment.

That requires forward thinking in those sectors. And leadership. The Minister has started to talk about stimulating demand, and I’m pleased about that, but I have to say what I’ve heard so far isn’t exactly riveting. And while I’m pleased to hear that there is a bit of work happening in the education sector, with the National Education Network, we’re not hearing much about health and nothing about energy.

There is little thinking about what broadband will be used for, how it can drive demand and help transform our society to deliver better education, health and energy services through new technologies

In Australia, that thinking is going on. Led from the top. Smart thinking. The Rudd government has made the connection between smart metres, new technology, energy efficiency and the importance of government driving change for the good of all society.

By mid-2010 the outlines of Australia's first smart grid project should become visible, starting in Victoria. The major players are mostly large energy retailers and producers supported by IT and telecommunications firms. The Australians are grasping that smart meters should only be considered in the broader context of the modernisation of electricity networks introducing sensing, communications and information technology into the grid.

Reputable Australian telecommunications analyst Paul Budde talks about Trans-sector thinking, how the Australian govt is leading on all infrastructure projects the potential synergies between the building of roads, sewerage systems, water and gas pipe networks as well as telecoms and electricity networks.

And the concept of smart communities, based on intelligent infrastructure such as broadband and smart grids. In Australia, ICT is at the top of the political agenda because it’s recognised as being a key driver of the economy.

I’m concerned that we’re not doing enough in this area. I understand there was a smart grid summit held in NZ in February and I’m pleased there are some discussions happening, but I know they’re not being driven by the state owned electricity industry because I’ve asked them all that question before the Commerce select committee.

There’s a growing number of innovations around the world in e-health and telemedicine which can reduce the loads on hospitals, saving time and money, and provide enormous gains in primary health care.

The most important thing is leadership, and while I see here that there are committees being established to discuss some of these things, I don’t get a sense from the current government that it’s top of mind.

We have a commitment to UFB, but it doesn’t get much more than that. It’s important to have vision and goals, but you have to be able to afford it. Just a word about government procurement. I’ve been doing quite a lot of thinking about that, not the least because in another industry, train building, there’s a debate raging about whether kiwi capability, skills and innovation should be taken into account when there’s a large piece of work being offered for tender funded by taxpayers.

I say it should, and that should flow into the ICT industry as well. And there’s enormous potential for cost savings in ICT procurement, whether it’s in proprietary software licensing, hardware purchases etc…

Making sure that government is a smart purchaser of ICT must be a priority. In Australia, an independent review was undertaken of the government’s use and management of information and communication technology. As a result there’s been savings which have been channelled into an innovation dividend, providing project funding for innovative solutions which save taxpayers money and also can have a transformative effect on the way govt services are delivered. That’s what I’d like to see happening here. And providing a boost to the local ICT sector.

Every industry needs a strong market structure underpinned by a strong regulatory environment that stimulates vigorous competition and innovation as well as fairness for the consumer.

Both the Telco industry and the ICT industry and the content creation industry (ie broadcasting) have been characterised by the presence of commercial monopolies.

In the telco industry that has to some extent been addressed. In ICT there are big companies that overshadow others and can exert unfair market dominance. But in broadcasting, or content creation as I’m starting to call it there’s a lot of work to be done.

We are out of step on this issue. It’s interesting that the UN now sees digital development as the real issue and yet one of the first things Steven Joyce did as Minister was shut down the Digital Development Council.

And then last year the digital broadcasting review initiated by the previous Labour Govt was canned. So now there is no regulation on broadcasting.

I was interested to hear that Telecommunications Commissioner Dr Ross Patterson intimate in a speech a few weeks ago that he would be taking a closer look at the video on demand market especially where in Europe, uptake of fast broadband services by consumers has been driven by demand for HDTV products delivered by telecommunications companies.

Similar offerings are not available to NZ consumers, he said. Which may be one of the reasons for lack of demand or lack of willingness to pay for high speed services. I’m glad that the Commission will look into this.

The Financial Times also reported recently that UK watchdog Ofcom is attempting to regulate BSkyB in Britain to force the pay TV channel to wholesale premium sports content.

Big companies with established monopolies are so largely because they’ve had no real opposition in the market. Their position dominates and stifles real competition which means the consumer is not getting what they could or perhaps should be.

It’s something we take seriously and given the importance of content creation to stimulate demand for broadband in the coming years, let alone boost our local creative industry and sense of identity, a more competitive marketplace is a desirable outcome.

Convergence is important. Content creation and consumer access to the platforms that can deliver it are important.

Finally I want to talk briefly about government open-ness and transparency. Government must take a leading role in driving an agenda where technology and access to it leads to a re-examination of the relationship between government and citizens. Seeing people not as passive recipients, but rather active consumers, able to choose their own content, collaborate with each other and be innovative about what they do with their content.

Which is why there is a strong argument for universal access to the internet being a cornerstone of any ICT policy going forward.

In Labour’s eyes, true participation and engagement with citizens in the digital age is essential going forward. Which means those citizens able to be connected and skilled in using technology.

Which requires strong education and training policies being at the centre, in schools, for students, for teachers and especially for teacher support and in curriculum content. At the moment ICT is not part of the NZ curriculum. It should be integrated more into all parts of the curriculum. And there is no industry training framework for ICT. The private sector is doing its best ably driven by NZICT and the Computer Society, but the private sector cannot deliver a strong industry training framework.

There is in many countries an emerging and new focus on transparency in government driven by the availability of data in the digital environment.

One initiative that Labour is trying is a new way of developing policy that uses new techniques and methods that actually engages with the community and seeks their input

We are calling it OpenLabourNZ . Our first policy initiative is on open and transparent government - how government, parliament and the public sector can constructively interact with citizens to be more democratic and effective

Springboarding off the Labour Party blog Red Alert, OpenLabourNZ will take a couple of months to build awareness and input from the public into its first new policy process, then hold a public event, attracting, hopefully some prestigious open govt advocates, then creating a wiki with a draft policy for people to have input into.

To wrap up, I haven’t covered everything. Such as the importance of our interconnectivity to the world and the need for more competition in international bandwidth drive down prices to the consumer and actually allow for real fast broadband speeds.

As someone said to me the other day can we get real about what people will be wanting and needing to do via broadband if they don’t already now. The iPad hasn’t quite made it to NZ yet. Though there’s a few trickling in. I heard about someone who was given one, took it home, discovered all this amazing stuff he could do and within a few hours had blown his datacap.

People will use data, which is the bloody point of the exercise. But they need to be able to have access to decent content, afford to and to have decent speeds to do it.

We have to make the most of the opportunities before us. Government has to be able to understand the issues and debates and acknowledge that old ways are being replaced by new ones.

The role of government? Courage and vision and a willingness to take on the dinosaurs and the behemoths in the industry, to reshape it, stimulate demand and have some faith in kiwi ingenuity.

ENDS

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