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Vox Pop

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I was involved in a highly enjoyable discussion on Twitter yesterday after someone asked what the ideal population for New Zealand would be.

This has been a bugbear of mine for several years now, so quick as a flash I came back with “Twenty million”.

I think New Zealand faces something of a dilemma. We have one city, a handful of towns and villages and lots of open space. This makes us the ideal place to film the next outdoor/wilderness epic but a poor place to meet people. Building those networks that build the future economic power houses is going to be difficult if we’re scattered around the place, as countless studies of incubators, hubs and entrepreneurialism have shown.

In addition, the cost of providing infrastructure is high because we have so few people to pay for it. I’m constantly amazed that we have two national networks covering 97% of the population with 3G service. That we’re on our way to having three is astonishing because the money sunk into providing service to four million people would equally provide service (and revenue commensurate with that service) to ten million in central London or Hong Kong or just about anywhere else.

Infrastructure costs a lot of money and for that you need a government willing to support it and a large enough tax base to provide cash to build it. We simply struggle on that score because of our population size.

Great Britain is about the same size as New Zealand geographically, yet has 60 million people. Japan, not too dissimilar in terms of useable landmass and there the population exceeds 120 million. Four million Kiwis simply doesn’t give us the country we want.

After the shock/horror of having MORE PEOPLE died down, someone quickly pointed out the inevitable problem: they’ll all move to Auckland.

He’s quite right. If we simply carry on doing what we are today, Auckland will continue to grow like topsy, creating a two-tier country of Us versus Them in everything from government spend, house prices and business location. Today you move to Auckland because you have to be in Auckland.

I’m suggesting tomorrow might be quite different.

I moved up from Hamilton nearly 20 years ago and I moved for work. I had to be in Auckland to sit at a computer and type words onto a screen. Today, that job could be done from anywhere in New Zealand or indeed the world (hello, outsourcing) but it’s still done in an expensive office block in the central city.

Twenty years from now when my children are well engaged with the workforce, I would hope they’d be able to conduct a similar role from wherever they chose to be. Hamilton, Wellington, Dunedin even. What about Clevedon? What about Warkworth or Cambridge or Coromandel?

The fundamental reason for moving to the city – to get that job and be at your desk – is gone. In fact, the pressure is building to go the other way. Why open an office in central Auckland with expensive rent, competition for staff driving up wages, mortgage rates that are insane and drive up wages even more and all the hassles of traffic and lousy public transport, when you can open the same office in Whangarei or Napier or Nelson and have a good quality of life, with good access to the world via broadband.

You’ll remember we brought Dr Tim Williams to New Zealand a couple of years ago. His white paper, Connecting Communities, remains my touchstone for such regional and rural regeneration programmes. In Tim’s world, broadband enables companies to work smarter and make the most of our greatest asset – the people of New Zealand. I think it’s high time we saw regional development given this kind of priority because we need more people, we need more infrastructure and we need those people to live throughout the country, not clustered in one city that gobbles up the resources while everyone else gets leftovers.

Twenty million might be a bit steep, but imagine a New Zealand with 10 million. Wellington, Hamilton and Dunedin each with a  population over the million mark, but carefully managed. New towns and cities springing up to serve the main centres, built on quality infrastructure lines. Intercity trains, broadband for all.

It could be your worst nightmare, but if we do it well, do it with a will to succeed, it could be the making of our future here in New Zealand.

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Election wish list for a digital economy

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Dear politicians,

You’re heading into an election cycle (actually, if I think
about it, you’re always in an election cycle) so here are some things we at
TUANZ would like to see in your policy portfolio.

They’re in no particular order and we’ve mentioned some of
them before but it’s worth getting them all in one list for you to peruse.

1: International cable made a priority

Let’s be blunt – there’s no capacity problem on the Southern
Cross cable, and as a user of international capacity New Zealand isn’t that big
a customer. But we’d like to see the next government offer a significant amount
of support for any new cable operator because more cables mean more choice and
more opportunity for the broader ICT industry.

We’d like to see New Zealand become a regional hub for
content and in order to do that we need to have more cables. NZ to Sydney, NZ
to LA, NZ to Japan, NZ to South Africa, anywhere and everywhere. That all costs
money and it’s the sort of “roads of future significance” spend that only a
government can drive.

Our potential in the digital economy can only be achieved if
we have the connections to the rest of the world and that means stepping up.
I’d be looking for at least $100m of commitment in one form or another to make
a second and third cables a reality.

2: Commerce Commission given back its role as regulator

This is essential. Stuffing about with our regulator means a
lack of investor confidence and that means we as an economy stall in the
market.

An independent regulator, working to a set of rules that we
all know about in advance is the only way to achieve investor confidence in the
sector. You mess with that role at your peril – customers don’t like it,
investors don’t like it and the participants in the industry don’t like it at
all. It’s poor practice and should be shunned.

3: ICT training emphasis increased – ICT courses added to
schedule of those we value

We need to encourage our youth to take up the ICT skills
we’ll need to build this digital economy. At the moment there is little
emphasis placed on any of the IT or telco related disciplines and that has to
change. Government needs to signal that it wants more computer science
students, but also designers, network managers, even cable layers and jointers.
We don’t have the resources in New Zealand today to roll out the UFB
efficiently, if Chorus’s costs are anything to go by, and part of that is
because of the lack of emphasis on this sector in the education market.

Government should make it easy for the kids to pick up these
skills and to realise that ICT is a viable career choice for them.

4: : Support for Pt England/Manaiakalani Trust deployment on
broad scale

All of which starts at a much earlier point in the education
system than we have today.

One Google software engineer discovered Vietnamese primary
school children learning the basics of coding at age nine. The story of
Vietnam’s move into ICT is a compelling one and while we’d probably struggle to
reach the level they have today, we have a tremendous opportunity to learn from
both the Vietnamese example and from our own Pt England Primary School.

As you know, Pt England equips its older children with
netbooks and ensures that all classes make use of these devices as an
integrated part of the curriculum. The results are astonishing, yet we still
have not rolled out a national programme to encourage this kind of thinking.

That is the role for the Ministry of Education and I’d like
to see the next government take the Pt England model and roll it out nationwide.

Don’t forget, Pt England is a Decile 1 school – its parents
are among some of the poorest in New Zealand, yet they realise the benefits of
these devices and can see the improvement in their children’s education. It’s
time we all got on board.

5: Government as the country’s largest buyer of ICT

No other sector buys as much technology as the government,
in all its forms. Why aren’t we encouraging small New Zealand businesses to bid
for contracts? Why isn’t there a clause in every government tender that says
New Zealand companies get priority? Everyone else favours their own products,
why are we so shy about it?

One.Govt is the government project to streamline the
tendering process, yet all too often I hear horror stories of local developers
being shut out of the process.

Take the IRD computer system as an example. The figure of
$1.5bn has been bandied about – an astonishing figure – but imagine what that
spend could do to the local software industry if it was spent on New Zealand
owned and operated companies. Wouldn’t that give us a kick start like nothing
we’ve ever seen? Start talking to the NZ Rise guys to find out how to encourage their members.

6: Content inquiry

It’s high time the government of the day realise the
elephant in the UFB room isn’t the price of copper but the lack of high
bandwidth services that consumers want.

Currently we have two or three relatively small players
offering content locally and that’s not enough to drive demand. We need to see
if there are any impediments to providing content online, and we need
government to get in behind this key driver for uptake.

6: UFB review

We need to understand whether this project is working as it
should, whether the right governance structure is in place and whether the
whole project is being gamed. Currently we face cost blow-outs, low uptake,
expensive and unpleasant installation processes and a raft of other issues that
limit both consumer and retail providers’ interest in the UFB.

It’s too important a project to be allowed to glide gently
off the rails like this – we need to make sure the UFB delivers on its
potential.

7: RBI review

Similarly, we cannot allow rural New Zealand to become a
backwater. It’s high time we started talking about RBI 2.0 and what that means.

Under today’s regime fully one quarter of the population
won’t ever get fibre to the home. Of all the countries in the world –  dependent as we are on the primary sector for
our income – we need to solve this problem. Cost is a major issue, naturally,
but we can’t rest on our laurels with a two-tier internet where I can get
100Mbit/s symmetrical but the backbone of the economy has to make do with a
peak speed of 5Mbit/s.

89: Regional economic development plan off back of UFB and
RBI

We need to encourage people to move to New Zealand and we
need to encourage more New Zealanders to live anywhere but Auckland.

I say this as a JAFA and as an import. I’m here in the city
of sails (don’t mention the sailing) because that’s where the work is, but for
most of us knowledge workers we could and should be based elsewhere.

The UFB and RBI should mean we can all work from Hamilton,
Whangarei, Whanganui, Invercargil or just about anywhere else we care to name.
Coromandel springs to mind. Let us dream of what might be seen in Johnsonville
and Geraldine, because we run the risk of becoming a giant version of the
smaller Pacific Island nations – one city and a collection of under-resourced
villages.

10: Reform of infrastructure consent process

To build this shiny future we need a shiny network and all
too often I hear about projects being delayed because of problems with the
consent process.

Roads are supposed to be utility corridors, yet all too
often the roads get dug up and re-laid without any thought given to UFB
deployment.

Cellphone towers are in desperate short supply in rural New
Zealand yet in urban centres deployment can be held up by local NIMBYs and
their unsupported science of fear.

We need to grow up, realise the benefits these technologies
bring, and make them a priority.

Ten items designed to raise our standard of living and to
ensure you get at least one more vote (mine) if not a few more besides.

What else would you like to see in a political party’s ICT
policy?

A snapshot of our ICT industry

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Originally posted over at NBR. 

 

The government’s newly released ICT sector report gives us a great snapshot of the broader ICT (information and communications technology) industry, how it’s doing and how much it’s worth.

It’s really the first time we’ve had such a comprehensive look at the sector and assuming we get an annual update (at least) it’ll be very useful in benchmarking how we’re progressing.

The report focuses on the three main segments of ICT – manufacturing, services and telecommunications itself.

First, the good news. The sector is growing and is now worth 5% of GDP. Wages are running at double the national average (you’ll be pleased to know you can expect $103,563 as your midpoint in 2011) and growing faster than the national average as well – 4.5% growth year on year instead of 3.2%.

If you want to work in ICT you’ll have to live in Auckland. One third of all ICT jobs are based in the City of Sails – not surprising given the country’s population spread, but more than half of all “computer system design jobs” are Auckland based. Interestingly, Christchurch is second with 9.6% of all ICT jobs and Wellington third with 7.3%.

You’ll probably be working for yourself – fully 75% of the industry is self-employed (zero employees) – but that’s no bad thing. It means we as an economy really need to bear in mind the cost of doing business versus the cost of being an employee as an issue.

Best of all, we’re exporting. “Computer and information services” has grown from $288 million worth of exports in 2006 to $531 million in 2012 – a compound annual growth rate of 11%. Imports, by way of contrast, are still increasing but at the lower 8% CAGR.

The day will come in the near future when our exports exceed our imports and we can rightfully take our place as one of the creators in the digital economy instead of a consumer.

Which brings us to the bad news, not that it’s going to be news to anyone in the sector. We simply aren’t turning out enough graduates to fill the roles on offer. Finding new employees with skills is still the most difficult issue raised in the report.

Today, 62,000 workers are employed in ICT roles (as opposed to working for ICT firms), and that’s up 11,000 in the past decade, but half of all ICT firms report difficulty hiring staff.

The figures can be traced back to the education sector and the lack of ICT graduates coming through the system. Although the number of graduates has increased, there were only 1200 graduates in 2011. We might get to 1900 graduates by the end of next year, but even so that’s a drop in the bucket. We could never attract a big-name ICT multinational to set up a development venture in New Zealand with that small a graduate pool.

We need to encourage our kids to consider ICT as a career option. It pays well, you can travel the world, you don’t have to dig up a national park and these skills are highly desirable, yet all too often we see good quality candidates going into accounting, law and management – three areas that have trouble placing graduates because of the oversupply of talent. The skills aren’t dissimilar – maths, logic, a flair for process – and the chances of being gainfully employed are a lot higher.

It’s great to see the government looking in this much detail at our sector. I’d hope to see more of this kind of data come through in the years ahead so we can track our progress, but that’s really only the start of it all. We shouldn’t just be tracking, we should be driving this sector forward and that means a concerted effort from both sides of the fence – industry and government alike – to make it easier for ICT to bloom.

 

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The Greens rev up the ICT sector

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The Green Party has posted a discussion document aimed to
raise the level of debate about ICT and its role as economic driver in New
Zealand. My hat is off to them, in no small part because the document reads
like it was pulled from TUANZ’s policy section.

The document is broken down into three recommendations:
increasing government support for our ICT industry; encouraging youth into the
ICT employment market and taking a cornerstone shareholding in any future
international capacity provider.

Let’s look at each one in turn.

I’ve long held the belief that New Zealand government
agencies (at all levels, local and national) should be using more
locally-developed ICT services. There seems to be a belief that unless you’ve
spent hundreds of millions of dollars on an internationally sourced product, it’s
worthless.

Yet here in New Zealand we have the same needs for our
government departments and agencies that they do in Holland or Germany or
Canada or Australia or just about any other country in the first world. Better
than that, our needs are on a much smaller scale so we shouldn’t have to pay
quite as much as we do for these things. Our datasets are smaller, our
databases more easily managed and analysed. Do we need bespoke, handmade
systems developed by IBM or the like? I’d wonder.

Instead I’d much rather see our local developers given a
ready supply of local opportunities. All too often they’re told they’re too
small to bid for any particular tender – that attitude has to stop. Government
buys a lot of ICT related services – let’s give some of that money to local
developers.

Getting kids into the industry is a passion of mine and goes
back to my time at Computerworld. It’s vital we have the right staff at all
levels of the industry, from layer 1 (actually from layer zero I suspect) all
the way up the stack. The Greens are talking about including ICT in our
apprenticeship schemes and that’s already begun, albeit in a small way. But I’d
like to see more flesh on the bones of this proposal – tax breaks,
encouragement into training, course credits and so on. There’s a lot we can do
to encourage our young people to take up ICT related employment over and above other
areas in which we suffer a surfeit.

Which brings us to the most controversial part of the
discussion document – the $100m cornerstone shareholding in a second
international cable.

Already the naysayers are out in force. We don’t need one,
it’s totally redundant, it’s a white elephant.

Sorry, but I disagree. We don’t need one if we carry on
pottering along at today’s rate, but I want to see a step change in terms of
our economic use of the internet. I want to see data centres built in New
Zealand using our clean, green power supply. I want to see IT firms basing
their R&D labs here, growing their developer bases here and generally using
New Zealand as a hub to take on the digital world.  I want to see ICT grow from being worth 6% of
our GDP to being 25% – I want to see it match the primary sector in so far as
revenue goes, because then I’ll know we’ve done what we could to take our place
in the digital economy.

So full credit to the Greens for raising the bar and I’m
hoping we’ll see more of this kind of thinking from all the parties. Currently
we seem to have a “yes yes, ICT is important too” attitude that frankly won’t
change the world at all. I’d like to see us try and who knows where we might
end up.

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Kim Dot Com or Kim Dot Come on?

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If nothing else, Kim Dotcom’s tweet has reignited debated
about whether we need a competitive international cable market for New Zealand.

The short answer is yes, because we don’t have a competitive
international cable market. We have Southern Cross Cables and its network, but
we don’t have competition, and this concerns me. It also concerns most of the
telcos and ISPs I talk to and it should concern anyone who is supportive of New
Zealand building an internationally competitive digital economy.

In the old days we talked about the internet as the “freezer
ship” of the future. The internet could deliver the same increase in
productivity to the New Zealand economy that the introduction of freezer ships
did way back when.

It seems so quaint now, to think of the internet in terms of
commerce, when these days we use it to organise revolutions both social and
political, but there it is, the internet’s dirty little secret: it can be used
to make money.

I’ve said it before, repeatedly, and I’ll keep on saying it.
New Zealand stands to gain the most from the move to a digital economy. We can
export teaching instead of teachers, we can export intellectual property
instead of goods, we can export talent without losing those people. We can
export our business savvy, our capability, our cost effectiveness and our
willingness to get the job done. These things are all in short supply around
the world – we can fill that need and we can do it from here, without having to
go overseas unless we want to.

For that to work we need something that’s also in short
supply. Leadership. We don’t need more management, we need leaders with a
vision. We need someone to say “this is the plan, this is what we’re going to
do because it needs doing”, not “my staff didn’t inform me” or “of course I’m
worth my million dollar salary”.

If nothing else, Kim Dotcom is good at cutting through the
red tape and getting on with it. Love him or hate him, you have to give him
that. Want to share files? Build a file-sharing site. Want to play Modern Warfare
2? Lay fibre to the mansion and hook up your Xbox. Want to run an international
business from New Zealand but the infrastructure is lacking? Build the
infrastructure yourself and get on with it.

We need four things to get this digital economy off the
ground: international connectivity, cheap green power, an environment that will
attract talent and more students coming through the system keen to work in the digital
economy. Let’s focus on that for a while and see how we get on.

And if it takes an odd German with an odd name and a penchant
for the wrong German cars (get a Porsche) then so be it. We’re in no position
to be picky – let’s just get it build and then discuss the niceties.

I’ve heard from a number of TUANZ members who are keen to see something get off the ground. They see the need for competition on the international leg and were disappointed to see Pacific Fibre fall by the wayside.

Suggestions have ranged from a TUANZ tax on every telco bill to fund a build through to setting up a trust similar to the model used to build electricity lines around New Zealand. I’d be keen to see whether such a thing would fly – it would need the buy-in of some major telcos so we could add the  pennies per call or dollars per month to the bill, but that’s not insurmountable. 

What do you think? Would a publicly-funded project get off the ground?