Strawman: How to save the New Zealand economy

Put aside the idea that it’s Kim Dotcom who wants to build a
new cable connecting New Zealand with the outside world for a moment and think
about what we’re really talking about here.

Firstly, we’re talking about building a data centre. Nothing
unusual in that – we have many dotted around New Zealand, some large enough to
register on the international scale of such things. Between Orcon, Vocus
Communications and Weta FX’s donation of the New Zealand Supercomputer Centre,
we have several.

But this would be orders of magnitude larger – something that
would either power Dotcom’s new service or cope with the demands placed
on Google, for example. It needs to be robust, it needs to be multiply
redundant and it needs power. Lots of power. Green power. Fortunately we have
that and even better, the Tiwai aluminium smelter is apparently going to be
coming available soon and it requires 610MW to function. That’s 14% of the
national output, which makes for a scary conversation with government whenever
the smelter’s owners talk about packing up and leaving.

Google’s combined data centres use 260MW as best I can
which leaves us in a very good position to take over production of the whole
lot and do it entirely by green means. That’s quite important to a company like
Google, but don’t forget Facebook, Apple, Twitter (those tweets don’t weigh
much but by golly there are a lot of them) and all the rest. In fact this piece
in GigaOM nails it quite nicely  so have a look at why North Carolina is the place these guys base their mega
centres. Hint: power’s cheap there – cheap but dirty (61% of their electricity
is from coal, 31% from nuclear).

How cheap? They pay between 5c and 6c per kilowatt hour,
which is a really good price.

According to Brian Fallow in the Herald  Tiwai smelter pays 5c per kilowatt hour also, but don’t forget that’s New
Zealand money, not US money, so let’s call it 4c per kilowatt hour in American.

Clearly that’s a good price, plus it’s almost all green
which means a big gold sticker for any data centre using New Zealand.

So we’ve got electricity covered, if Kim gets his submarine fibre
built we tick off another huge problem. There’s not much we can do about the
latency between here and the US, so let’s ignore that thorny issue for now. We’re
conveniently located a long way from everyone so let’s move along.

There’s the issue of land which as we know is hideously
expensive in New Zealand. Unless it’s somewhere like Tiwai Point in which case
it’s not. I think we can tick that box off, particularly if you consider the US
pricing as your benchmark.

That leaves us with two major stumbling blocks. Firstly, the
staffing situation.

We need to produce enough graduates (or import enough
graduates) to staff this kind of monstrous facility and at the moment we’re not
doing that. We don’t have any push to get secondary school students into the
industry and we don’t have any long term plan to stop this incessant churning
out of management students and encourage kids into the world of ICT.

Without these kids coming through at all levels, we’re just
not going to get a data haven off the ground.

Because that’s what we’re talking about here – turning New
Zealand into a data haven where anyone can store data safe in the knowledge
that we treat bits as bits and that’s that. Nobody is going to trust us to look
after their data if we’re willing to send in the Armed Offenders Squad in a
chopper-fuelled moment of madness on the say so of some foreign national. It’s
just not viable.

The final problem then, is the legal situation.

We would need to become the neutral ground, the data
Switzerland if we’re to gain their trust. Publicly adhered to rules regarding
data collection and retention. Privacy built in, access only under the
strictest conditions.

But think of the upside – the PM talked about New Zealand becoming
a financial hub and while I get where he was coming from, that’s old school
stuff. Let’s become the home to all things data related instead. It turns our
long-time weaknesses (distance to market, isolation, relatively small size)
into strengths. Plus we’re New Zealand! Nobody’s going to invade us, we’re too
far away and too friendly.

Latency aside, what’s the downside of getting this done? If
we build the capacity we can attract a first mover in and if we have one, we
can attract more.

Customers from banks to insurance companies to individuals
to governments to movie studios (yes, you luddites, you) could make use of our
clean power, our isolation, our cheap land and our fantastic environment to
secure their precious bits and we would get a steady, reliable source of
revenue for the country that’s sustainable in all meanings of the word.

Have I missed anything? Why won’t this work? Is anyone
thinking about this?

Kim Dot Com or Kim Dot Come on?

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?