Update on Canada

Thanks to Catherine Middleton for alerting me that the story on easing foreign ownership restrictions in Canada is premature.

The relevant Minister did indicate that change is underway but will not be unveiled till 2012.

He interestingly is reported to have said "the government expects cellphone companies to offer rural Canadians the same services as those living in cities." Canada faces the same kind of geographic issues as Australia - though less urbanised. Vast thinly populated areas are extremely hard to provide metro like mobile coverage to. The only way such an expectation can be fulfilled is to put "must build" criteria on licences (as indeed the original Australian GSM licences had).


Middleton has provided a neat summary of telecommunications in Canada in the TJA. In it she notes a wireless market structure much like Australia's and that "99% of the population has access to 2G or 3G service
(which covers only 20% of the country's geographic area)" The Australian comparison is something like 98% of the population and 25% of the land mass (when a car kit is included)though real data is hard to obtain. (The landmass figure was provided in the Glasson report at P.125 and may well have increased since.)

The comparison between Australia and Canada is otherwise interesting. We have a well developed infrastructure strategy, and at least an attempt at a Digital Economy strategy.

Novae Meridianae Demetae Dexter delenda est

The Digital Economy, Globalisation and Change

I gave this paper at CPRF 2011 last week on Competition Policy for the Digital Economy. My core thesis was that policy makers refer to "competition" as a policy goal with little understanding, and what understanding they do have needs to change.

The paper traces the evolution of "competition policy" from its anti-monopolisation US origins, through the regulatory state of the post-Depression (and post-War) eras ending with the pro-market orientation of the 80s. I note that these three phases were triggered by economic events - the rise of economies of scale and scope in the late 19th century, the depression and the oil price shock of the 70s.

I then outline a conception of the Digital Economy which regards it as the transformation that flows from a General Purpose Technology. I explain how that impacts economic organisation and indicate ways competition policy needs to change.

I found a nice connection between it and a column by Ross Gittins today which the SMH titled Change is workers' only certainty, but Chris Wallace at Breakfast Politics called linked to as Why Qantas is a warning to us all.

Gittins places his piece with this introduction;

The greatest force driving structural change is technological advance: the invention of better ways of doing things, new things to do and countless labour-saving machines. Globalisation has been driven partly by government policy, but mainly by the information and communications technology revolution, which has hugely increased the speed and reduced the cost at which information, money and people move around the world. ....

The trouble with structural change, of course, is that the benefits go to the customers - new products, wider choice, lower prices - while all the problems go to the people working in the disrupted industries.

He goes on to (correctly I think) intimate that the problem at Qantas is the need to change created by the marketplace changes. He notes that this necessarily involves changes affecting workers.

He then discusses the transition from an industrial relations system dominated by a central "arbiter" to one based on negotiation and agreed outcome. He picks up the theme that some have suggested that unions should only be concerned with pay, writing,

The goal was a new era of reduced industrial disruption as the parties recognised the great extent of their common interests and put less emphasis on their (undoubted) conflicting interests.

Right on. So I don't think banning debate about management decisions is the smart way to go. That would mean the law advantaging one side, giving managers permission to ride roughshod over the interests and even the opinions of their employees.

Half the trouble at Qantas is the employees' failure to recognise how the game has changed for their company, robbing them of their former bargaining power. The other half is the arrogance of management in their resort to ''managerial prerogative'', in their failure to explain and debate the new realities with their staff.

The subject of technological change is not a new one - maybe its time we dusted off the reports from the 1980s which dealt simply with "computers" and technological change. And at the same time be mindful of the other comments he made (which I previously posted about) that labour markets are of their very nature heavily regulated.

What we need is the ability for management to engage staff in the conversation.

Corporations too often rely upon the rules of the equities markets to argue a need for secrecy in their strategic development. I have a general feeling that management and boards use these rules as ways to deny shareholders information rather than the reverse.

The real question is, is there something in the way we model "governance" that results in secrecy and impedes the ability to constructively engage with employees.





Novae Meridianae Demetae Dexter delenda est

Cities

The Australian Government released its State of Australian Cities 2011 report today.

Despite the comment that;

Analysis shows a strong positive correlation between cities with robust information and communications technology and strong intellectual assets.

The word "broadband" seems to only appear twice in the report, both times in reference to a ranking of Sydney in a PWC report.

What hope is there for public understanding of the importance of broadband if in can receive such scant treatment in a 257 page report issued by the Department of Infrastructure?

I think this reflects the comment I made way back in May that the Government as a whole doesn't seem to get the whole Digital Economy thing.....

(Note. I'm happy to be corrected if I've misrepresented the report. I did rely on a simple search for the word "broadband").

Novae Meridianae Demetae Dexter delenda est

Digital Economy Round-Up - Issue 4

Malcolm Turnbull told the National Digital Inclusion Summit hosted by Huawei that income is the biggest barrier to bridging the digital divide.

He is, of course, using this to raise fears about the cost of broadband services under the NBN. That is a different conversation.

While the correlation between income and broadband adoption is well known, this does not mean that there needs to be a specific "broadband affordability" program. Incomes policy needs to be such that the individual consumer can afford to make the choice between having broadband or not. Broadband promotion campaigns need to convince the consumer to acquire broadband instead of, say, going to the pub.

Interestingly reports of a business group preparing to lobby the Treasurer for the first time has mentioned "The delegation is expected ... to canvass the opportunities for the digital economy to boost productivity." This is a good development given that the budget papers didn't make the connection.

The group involved is called The Global Foundation, and is a relatively high powered think tank structure I've not seen before.

But it might come as no surprise that the words above were actually sourced to Telstra's David Thodey who seems to be co-chairing their work on the "future economy".

Just as well given the demise of ATUG that at least someone in business is talking about the Digital Economy.

I've previously noted the Canadians Canada 3.0 event, which is an initiative of the Canadian Digital Media Network.

Interesting things are also happening in New Zealand. The new head of Alcatel-Lucent for the country has said "With New Zealand making an aggressive digital economy push, it's showing a belief in telecoms' potential to deliver growth."

That interest is being backed up by the Commerce Commission which has commenced a High Speed Broadband Services Demand Side Study.

Meanwhile in Australia people who do "economic development" for a living will be getting together at their annual National Economic Development Conference to discuss "Digital Economy - Future Economic Development Practices for Government, Business and Regional Organisations" in early October in Adelaide.

Meanwhile the Australian Information Industries Association (the AIIA) has rebranded itself as "the voice of the digital economy".

It seems to me we hear lots of supply side voices in this discussion, we hear a lot of government voices in this discussion - but in Australia very little from the demand side. ATUG had at least been trying through its Digital Economy Stakeholder's Forum but that is now no more.

The Internet Innovation Alliance in the US I referred to earlier has a membership of community and industry groups. However this seems more like the ACCAN meets AIIA than a genuine demand side group.

All we seem to have is our banks being unable to get their MAMBO project going. (See below)


From a 2009 report on MAMBO

The Me and My Bank Online proposal was floated by Bpay several years ago as a means of building on the member banks' successful platform for electronic bill payments.

But industry backers of the Bpay spin-off will need to demonstrate solid progress in opening the internet shopper payments market to competition before the board will withdraw its threat of regulation.

It is understood Mambo would allow individuals to register for their own Bpay codes, which they could use to enable personal online payments. So far, Bpay codes have been restricted to businesses and organisations.

The Mambo project stalled late last year following an assessment and a decision to halt funding.

Novae Meridianae Demetae Dexter delenda est

Digital Economy Round-Up - Issue 3

Two simple pieces. This presentation from the launch of the Bournemouth University Digital Hub seems to equate the Digital Economy with the whole internet/social media piece more than anything else.

The speaker does come from a social media consultancy, and the ambition of the centre doesn't seem to be much more ambitious than that;

The Digital Hub is an emerging centre which brings together the skills and knowledge of BU academics that have expertise in digital media and innovative technology, providing a one-stop point of contact for research-led enterprise. The spirit of the centre is to work without barriers, in inter-departmental synergy, creating, using, and passing on knowledge for the benefit of all those we work with: students, businesses, our staff, government and many more.

Meanwhile another story from Wales tells us that;

WALES today is host to a wealth of world-class research, much of which is carried out in its top universities.

This research is innovative and relevant, spanning a wide range of disciplines. This includes the Welsh Government’s priority areas of the digital economy, low-carbon economy, health and biosciences; and advanced engineering and manufacturing.

The Welsh have appointed a Professor of Digital economy. A brief look however suggests the appointees expertise is in globalisation and the global dimensions of the Digital Economy.

This opens up an interesting question in political economy - whether the locus of study is growth (how to have more) or distribution (who has what), or if both how are they balanced. The late twentieth century obsession with "efficiency" masks the fact that this sounds like it is about growth, is really about distribution and is ultimately about distribution in an anti-equity manner (the "reference" of the person with the most money is more important than the preference of the poor).

Novae Meridianae Demetae Dexter delenda est

Digital Economy Round-Up - Issue 2

In my continual though occassional series this week we have some further global views.

In Europe a new "do tank" has been set up, the Centre for Social Responsibility in the Digital Age. The launch was attended by several EU institutions.

This reflects again the very different policy dynamic in Europe where a wide range of issues is gaining attention. Australia's only great initiative remains IBES which continues to have a very academic bias, and I would suggest a technology rather than social orientation. We have no Digital Economy related NGO outside the University space.

The kind of things that can occur in a massively connected world include this initiative to bring together both the open data concepts and cloud computing (genuine computing not storage) to better model climate associated risk. This is a nice move away from the increasing tendency to "commercialise" research. I like the idea of a "Head of Innovation and Entrepreneurship and Director of the Digital Economy Lab", and indeed a "Digital Economy Collaborative R&D progreamme" which is not the same as the Australkian megastructures called CRCs.

Meanwhile I've ranted recently in public about Australia's lack of participation in global standards setting, and our ability to practice middle-power diplomacy. So I'd be interested to hear of anyone who knows what Australia's representation at the ITU Global Symposium for Regulators and Industry which is apparently addressing "Smart Regulation for a Broadband World".

Ho hum. Here we are, we call ourselves leaders and "everyone is watching us" - but leaders in what, watching what?


Novae Meridianae Demetae Dexter delenda est

Digital Economy Strategy update

Since Senator Conroy launched the DE strategy there has been little public comment. This piece by Spandas Lui I think covers some of the main points though;

1. The goals aren't really clear - in particular why is being in the top 5 on take-up important.
2. The plan doesn't address how the country transitions to a Digital Economy, it is all vision and no plan.
3. The word "productivity" has different meanings to different people.

A useful piece.


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Me and the Secretary of the Treasury

Oh dear. No sooner have I gone out and criticised the "reform obsessed" than I find Treasury Secretary Martin Parkinson reported as saying "we need a new wave of reform".

Actually, his speech was a lot more measured than this. In reality his address was about the need to adapt and change - whereas the old "reform" agenda was pretty much a uni-directional retreat from Keynesian intervention and pseudo-socialist state ownership and an embrace of neo-liberal market ideology.

In fact he very specifically noted that one of the challenges we face is assuming that the most urgent reforms are a continuation of those of the past , saying;

We need to continue with reforms that increase the flexibility of the economy and its productive capacity in order that people and business are able to embrace change, adapt and innovate.

There has been a lot of talk about the need for a new microeconomic reform agenda. Whether one describes it as a new reform agenda or a continuation of the existing agenda, one of the challenges we face is the assumption that the most urgent reforms are a continuation of those of the past.

Microeconomic reform needs to be broader than this.

We do ourselves, and the nation, a disservice if we target reform efforts only on the same areas as we have in the past. It is in the areas we have not yet focused on that the largest gains are most likely.

Reforms to improve the productivity of the growing health and education services sectors, and make them more responsive to market signals, make sense. This is particularly important in the areas of vocational training and tertiary education.

Tax reforms that improve resource allocation and labour mobility, make sense — especially to state taxes like stamp duty and property taxation.

Appropriate policies to mitigate climate change at minimum cost also make sense.

At the same time however, it will be important to ensure that the vulnerable and disadvantaged are not left behind as the economy advances.

All of these reforms I have listed are fairly straight forward. What has proven to be difficult in the past, and will continue to be difficult in the future, is communication of the need for, and benefits of, action. This is especially so when so many Australian workers have never experienced anything other than sustained growth.

I can see much here that I embrace - especially if we recognise the importance of ICT to achieving the reforms in education, health and energy use. These all feature highly in the #au20 National Digital Economy Strategy.

I will repeat my criticism from the budget though, that nothing ostensibly about the change to a Digital Economy is embraced by Treasury as part of the way the economy needs to change.

Policy makers need to drop the word "reform" and embrace "change". In doing so they need to develop a better view of what we are changing into not just what we are trying to change from.


Novae Meridianae Demetae Dexter delenda est

Digital Economy Round-Up - Issue 1

This will be an occasional series on the blog - starting now. It should be considered a contribution under my DigEcon Research brand. It picks up the fact that Digital Economy thinking and strategising has been revived throughout the (developed) world - not just Australia.

I'm going to start with two pieces from national regulators on convergence. "Convergence" has re-entered the policy discussion in conjunction with Digital Economy thinking because the regulation of telcos, media and ICT plays an important part in how successfully these services can be (positively) deployed for economic change.

Konrad von Fickenstein, Chair of Canada's CRTC gave an address last week which could have been from here - starting as it did with digital switchover and 700MHz and 2.5 GHz auction news.

We are in a new digital world now [in which] the Commission's ability to regulate through control of access is very much reduced.

I believe we need a conceptual rethink of the whole regulatory system....to be embodied in a single comprehensive Act to govern all communications.

The aim of the new legislation would be to create a structure for optimal regulation of the transportation of bits, whether by wireline or wireless technology, and whether they are carrying voice, video or data. This structure would support the development of a flexible, competitive and innovative system providing access for all Canadians to their choice of fast and efficient digital resources.

Here are some of the key points that might be included:
* A statement of objectives for the system—economic, social and cultural.
* A clear distinction between the broad policy choices to be made by the government and the powers to be assigned to an independent regulator in all areas of communication, including broadcasting, telecom and spectrum management.
Specific provisions on timelines and on regulatory tools, such as AMPs (Administrative Monetary Penalties), mandatory adoption of codes, and the power to impose arbitration.
* A coherent scheme for the support of Canadian content. This could include subsidies, or incentives in the form of regulatory exemptions and exceptions, or a mix of all of these methods.
* The responsibilities and governance of the public broadcaster, defining its special role in reflecting Canada's unique culture and values.

We should also consider a rationalization of our institutional framework. ... Should the powers of ex ante regulation be curtailed, while ex post powers of enforcement are increased? The aim should be to favour competition, with intervention limited to cases of market failure.

Should the relationship between the CRTC and the Competition Bureau be more clearly defined? What about the CRTC and the Copyright Board?

The industry must act

...

The kind of fundamental reform I'm talking about can only be realized through action by the government. The government, however, is unlikely to take action unless the industry itself is pushing for it. It is therefore up to you to organize yourselves and make sure the message gets out loud and clear.

Earlier in his speech he'd referred to an interesting initiative on "terms of trade" between increasingly large and powerful producers and broadcasters - an interesting initiative that he claims "will bring clarity and certainty to broadcasters and producers. They will also help to bring Canadians a steady supply of high-quality Canadian programming available on a variety of platforms."

The four dot points could work very well as framing points for our own Convergence Review, and the institutional question is equally valid.

On the industry point the Chair was particularly addressing the broadcasters. In Australia a similar position can be advanced about the telcos (but that is another topic).

The Chair of our own regulator, Chris Chapman, addressed CAMLA on the topic of convergence from a regulator's perspective a few weeks ago.

He noted;

Put simply, convergence is an everyday issue … the indisputable fact [is] that developments in communications technology are outpacing what was thought of as possible just five years ago, let alone what legislative frameworks considered would be required more than 10 years ago. Many of the controls on content and the provision of telecommunications services will need revision and adaptation for today’s reality and for the emerging digital economy.

He looked at the issues through separate timelines on devices, content, networks and services, usefully highlighting that "convergence" is an issue across each of these domains. Added to this he introduced the issues affecting consumers and citizens. He did not in this address highlight the important difference between the two words and the need to focus policy on the impact on individuals as both consumers and citizens.

Turning to regulation he noted;

As a result, in our view the Australian communications legislative landscape now resembles a patchwork quilt. It is fragmented and characterised by legislative ‘band-aid’ solutions that lack an overarching strategy, narrative or coordinated approach to regulating communications and media in a digital economy. Regulatory pressure has bitten into core legislative concepts and definitions, creating these strained or ‘broken concepts’. Ultimately, their ‘elasticity’ will expire at which time they will no longer function efficiently or effectively in a converged environment.

We at the ACMA have consistently documented and indicated our preparedness to grapple with the regulatory implications of convergence. ‘Broken concepts’ is a reasonably provocative phrase we have used to highlight the notion that legacy legislation, the rules for the communications sector that used to work nicely 20 years ago, now don’t entirely fit the circumstances we have to embrace now, let alone over the next 20 years.

Unfortunately he seemed good on diagnosis but limited in solutions;

The ACMA maintains an active review program to effectively and efficiently manage our response to convergence impacts on regulatory and co-regulatory arrangements for communications and media services. In this program, my staff have examined the convergence status of 40 or so key concepts in Australian communications legislation, and found that many of these are broken or straining in relevance. I will go into a little detail below on some specific examples to highlight the depth of the issue.

For convenience, will do so under the headings of the ‘four worlds’ that the ACMA regulates—telecommunications, broadcasting, radiocommunications, and the internet. Each of these ‘worlds’ had its genesis in a traditional, often physically defined analogue world, but they are all now trending towards that converging centre point. A common denominator across all of these is an evident need for much greater consistency in approach to definitions, concepts, regulatory policy, structures and approaches as well as compliance measures, available enforcement powers and actions.

What followed was a sample of his list of 40 broken concepts. He offered some further diagnosis of what is broken.

As I see it, there are actually three problems, which can be synthesised into an overarching meta-problem, which is what faces this Convergence Review:

1) Digitalisation broke the nexus between the shape of content and the container which carried it – ...This meant that regulation constructed on the premise that content could be controlled by how it is delivered has increasingly lost its force, both in logic and in practice. This problem began to be recognised as one of ‘convergence’ as far back as the end of the 1980s9; however, legislative response has been sporadic.

2) Based on digital content and carriage, IP networks have come to play an ever more important role. This has meant content has become increasingly non-linear, interlinked and ‘uncontained’ while people increasingly expect to connect and communicate seamlessly – anywhere, anyhow, anytime.

3) But here’s a curve-ball for you: the playing out of virtualization. maybe even then it’s not safe to go back into the water because, looking into the next decade and towards 2025 it seems plausible that we are moving towards a communications world of ‘virtualisation’, where network elements can and will be emulated in software, which will lead to an ever more intricate and subtle interconnection between networks, services and content as those very layers themselves become diffused as a consequence. So my initial provocation is this: even legislation and regulation possibly based on that radical horizontal (i.e. the layers model), and not based on the vertical, is itself likely to be challenged in a future environment.

The last point is indeed the one worth playing with - the horizontal model is one I favour but each element of the stack can emulate another raising the question of what's what.

He went on with some useful discussion about regulatory tools but these should wait for a different discussion (let me just say I disagree).

The final interesting development is an initiative in Coffs Harbour. As a second release site for the NBN they have advertised a series of workshops designed to ensure the region gets the most of its opportunity. Hopefully every LGA in a second release site will do this and not wait for the Feds "Digital Communities"and "Digital Enterprise" initiatives from the DE strategy.


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NBN Ad - misleading?

A big issue identified in the ACMA's Reconnecting the Customer draft report is that a lot of the customer service issues in the industry stem from the misleading nature of much of the industry's promotion.

the Government's expenditure on the NBN promotion clip has drawn attention today but the story doesn't analyse the content. Senator Conroy used the clip launching the Digital Economy strategy.

The news report mentions "Gen X and Y doesn't escape being targeted as "Travis" appears playing in a band with other musicians through the NBN" which happens in the clip at 4 minutes 30 seconds.

The issue is that the musicians are shown playing simultaneously using digital television - which doesn't allow for the timing delay from coding. In a video-conference the coding of voice and vision are synched. You'll get less delay if they are unsynchronised - but then you get the effect you get at a conference where the speaker is projected using digital television but the audio is analogue.

I'm quite happy to be corrected on this - but even at the NBN launch in Armidale they had to use slight of hand to co-ordinate two choirs.




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Digital Economy: Promise or problem

Ross Gittins in the SMH today shares some interesting research on why cities play an important role in the history of economic development.

He mostly quotes from a book called Triumph of the City.

The city is explained as a place that allows the social being that is man to magnify the economic benefits from working together - and from specialisation. This works to one of the strands I think is under played in the whole Digital Economy discussion - the consequence of new communication technology is to facilitate centralisation rather than decentralisation.

Gittins cites a study that compared the problem solving ability of a group meeting face-to-face versus only through electronic communication. Indeed the infamous "Silicon Valley" - home of much of the technology innovation that spurs the ongoing Digital Revolution - is cited in the book as an example of how cities facilitate knowledge development.

This is one of the themes I pick up in my recent working paper Digital Economy: Promise or problem?". As Glaeser says in his book;

Statistical evidence also suggests that electronic interactions and face-to-face interactions support one another; in the language of economics they are complements rather than substitutes. Telephone calls are disproportionately made among people who are geographically close, presumably because face-to-face relationships increase the demand for talking over the phone. And when countries become more urban, they engage in more electronic communications.

Establishing a Government policy that just assumes going on-line faster is better is an error. That was part of my comment earlier on bookstores, the sense that Government is just saying "do more" without inquiring into why or how.

(Note: This of course is one of the places where e-books do win hands down. Having read Gittens article I purchased the kindle edition of the book and had it in seconds.)

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Convergence and the Digital Economy

I managed on Friday to get a submission in to the Convergence Review Framing Paper. The submission only goes to the language of markets, competition and regulation; arguing that now is a good time to get greater clarity and accuracy into terms that have been hollowed out.

The Convergence Review comes as the Government is ramping up its "Digital Economy" rhetoric. Indeed the two pieces of work are technically housed in the same Branch of the Department. This is unsurprising as they are ultimately related.

But they also have equally long histories.

Going through some old papers yesterday (I was only moving them from place A to place B) one caught my eye, titled The convergence of technology: impact on telecommunications, broadcasting and television. The author is listed as an Australian lawyer, who starts;

In introducing this topic - the convergence of technology - one could not do better than quote another Australian [names the Chair of an Australian regulator];

"The lines between historically well defined industries have been blurring as the potential in new computing and communications technologies is exploited globally".

The consequence of this blurring on regulatory regimes ... will be addressed a little later. First I will describe what this convergence is and touch on the plethora of new services which it has brought forth.

After describing the new services he goes on;

The basic policy question which is confronting (or has recently confronted) nations is whether this current building of a more advanced communications network is most effectively done within established regulatory constraints or whether there is a need for restructuring those constraints in order to maximize benefits of the convergence of technology. Internationally, competition is the fashion and every nation will feel its effects. ...

In Australia the regulatory regimes, and the traditional regulatory regime in particular, are being re-affirmed in an effort to deal with the new technologies of telecommunications and computers, and to provide communications services to all Australians equally.

The passages quoted could well describe the current Australian situation. We have the "Convergence Review" grappling with these constructs while the telecommunications policy regime is delivering the NBN and a revamped USO framework to deliver on the goal of services to all Australians.

Yet the author was J. Kench addressing the 1985 World Telecommunications Forum, the regulator was David Jones from the Australian Broadcasting Tribunal who uttered his words addressing the same forum in 1983. The new services catalogued were things like teletext and e-mail (X.400 based), the converging telecommunications technology was the ISDN. The article was really a peon to competition in telecommunications - coming as it did post Davidson and pre the 1988, 1991 and 1997 telco reforms.

The interesting thing is that all the major legislation under consideration by the "Convergence Review" was created after the article. It poses the first question for the review - given that convergence is an ongoing process how do you craft the regulatory structure to sustain the further challenges that will occur over the next twenty-five to thirty years?

The second question is really what do we mean by "convergence". A very good paper by Jonas Lind, Convergence: History of term usage and lessons for firm strategists, from 2004 tracks the use of the word "convergence". He first finds that the usage matches the Gartner group concept of A Hype Cycle, reaching its first peak in 1994 (the Peak of Inflated Expectations) before crashing to the Trough of Disillusionment in about 1997 before going to a Plateau of Productivity since. The second finding is that the term is very indistinct in meaning. Lind's focus is on the use of the term as a motivator of corporate strategy. However the statement is just as true for public policy.

One other service Lind does is trace the history of the term - he credits it to a fascinating article "The Convergence of Computing and Telecommunications Systems" by Farber and Baran from an "Electronics Issue" of Science in March 1977. The issue as a whole is worth a read nearly thirty-five years later.

(Note: Kench's speech was published in the Telecommunications Journal Vol 53 No 8 1986. Interestingly it doesn't appear to exist in an electronic resource. That Journal was published by the ITU, starting as the Telegraph Journal in 1869, becoming the Telecommunications Journal in 1934 and now published as ITU News since 1999.)

(As a complete aside Lind has blogged about telco customer support issues in Sewden. Sounds just the same as Oz - then again the case is a global brand that is present here).


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I hate to do global comparisons but ....

In the context of the National Digital Economy Strategy it is interesting to compare the work done in different places.

In the US the FCC has just released its Seventh broadband progress report. This report finds that "too many Americans remain unable to fully participate in our economy and society because they lack broadband". The FCC is charged by Statute to "take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market."

The bad news I have for the Americans are that the two goals of removing barriers to investment and promoting competition are actually at odds with each other when the investment has such large economies of scale that it is "sub-additive". That's why Australia's HFC deployment stopped when it did - the US has wider fibre deployment because of cable franchises - a solution proposed in Australia by Kerry Packer and rightly rejected by Paul Keating on the basis of who was proposing it. I noted here the problem with cable franchises as a competitive model.

Meanwhile in Europe they have just published a scoreboard on progress of the Digital Agenda for Europe.

The contrast I want to draw here is between the information rich reports in these two regions when compared with the paucity of data available in Australia.

In management there is an old adage that "what gets measured gets done". In my longer comments on the DE Strategy I will eventually get to this.





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Malcolm on the Digital Economy Strategy

Malcolm Turnbull is without doubt a skilled debater. One of the great tricks of debating is to define the territory of the debate.

In the case of his critique he does just this. He asserts that "Senator Conroy’s National Digital Economy Strategy is simply a thinly-veiled spruiking of the NBN."

He makes this assertion after carefully detailing how none of the individual objectives specified in the plan actually depend on a 100 Mbps connection to 93% of households. What he doesn't do though is demonstrate that the goals can be achieved with existing infrastructure.

The case need not be made for 100 Mbps, just for more than most people have today. That includes more than they have in upload and in download. The upload is the killer - because that's why thinks like two-way videoconferencing don't work. And saying that an application only needs 1.5 Mbps or 10 Mbps ignores the fact we want to enable MULTIPLE applications.

The question is then whether alternatives work. The FTTN strategy sucks because you still eventually have to do FTTP to get to 1 Gbps. And I don't have to make the case for higher future speed requirements - it is others who need to make the case for the exponential growth in demanded speed to stop.

Turnbull ran much of this in what delimiter called a "major speech in Parliament" yesterday. But the reality as tagged by the Member for Ballarat is that the "Matter of Public Importance" was shuffled into the last five minutes before the adjournment. It is unclear whether that was more because Mr Abbott has no interest in the topic or fears Mr Turnbull being given too much space to promote himself.

Turnbull has still not explained how he, as Minister, would have achieved a structurally separated industry. He now needs to add to this an explanation of how an FTTN network could have been constructed without handing control of the industry back to Telstra.

And finally can we get over his monstrous assertions that we are abandoning infrastructure based competition. We never had it. All the ADSL services are on Telstra's copper, Optus never opened its HFC to service providers, Optus stopped building HFC about 8 years ago.






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Ideas and Innovation

In the tail of the Government's National Digital Economy Strategy launch comes an ad for an Economist conference Information: Making sense of the deluge.

This is part of their series on the Ideas Economy. The conference is described as;

The world now contains unimaginably vast amounts of digital information, which is growing exponentially. The era of big data presents incredible opportunities—smarter cities, stronger companies, faster medicine—but just as many challenges. Storage is scarce, systems overloaded and governments and businesses know too much.

Managed well, data can be used to unlock new sources of economic value, provide fresh insights into science and hold governments to account. Managed poorly, it can cause great harm.

Ideas Economy: Information will tackle these issues and more. It will examine the data revolution from a range of perspectives, seeking solutions to big problems. The event will bring together theorists, strategists, and innovators who understand how to harness data to create value and advance individual, corporate, and social good.

There are two aspects of this conference that I particularly like.

The first is focussing on the Digital Economy as a problem not a promise....there are choices to be made here, not just a nirvana to be reached by peddling faster (I plan to write more on this shortly).

The second is that the conference looks like it is structured to have speakers and discussants - that is, there is real engagement with the ideas not just a blurting forth of positions. The Communications Alliance Broadband and Beyond series could benefit from this approach.

Anyhow, I'd like to know if ANY Australian is proposing to attend the conference in the US. If not, is anyone in my wider circle able to provide feedback.





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Conroy's DE strategy

Senator Conroy released his much awaited National Digital Economy Strategy today.

The first interesting fact is the strategy #au20 is available on the nbn.gov.au website. On the belief that all acts are political I read this as the NBN is a Government strength so talking about the NBN is good.

There are three ways to talk about the strategy itself. The first is whether it is about the right thing, the second is how good it is as a strategy, and the third is the level of genuine commitment to it.

But it is bridge night - so you will just have to wait.

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The excitement builds ...

I was I think justifiably critical of the way the Budget papers dealt with Australia's future. After discussing an economy in transition the most it could find to say was a throw-away line on the NBN.

As a number of papers in a special issue of the Telecommunications Journal of Australia have noted the NBN needs to be accompanied by other strategy elements.

Tomorrow we get to hear the details. As advised via Twitter;

Remember – Min. Conroy #CeBitAUS address webcast live from via http://bit.ly/mvITcH tomorrow morning 9am 31 May #nbn #digitaleconomy (see note below)

As a foretaste of what we should hope to hear, The Economist this week ran a special on Australia. It had a excellent summary of the numbers. This was added to with a little admonition, drawing on comparisons with California, about the opportunity we face;

Australians must now decide what sort of country they want their children to live in. They can enjoy their prosperity, squander what they do not consume and wait to see what the future brings; or they can actively set about creating the sort of society that other nations envy and want to emulate. California, for many people still the state of the future, may hold some lessons. Its history also includes a gold rush, an energy boom and the development of a thriving farm sector. It went on to reap the economic benefits of an excellent higher-education system and the knowledge industries this spawned. If Australia is to fulfil its promise, it too will have to unlock the full potential of its citizens’ brain power.

Australia cannot, of course, do exactly what California did (eg, create an aerospace industry and send the bill to the Pentagon). Nor would it want to: thanks to its addiction to ballot initiatives, Californian politics is a mess. But it could do more to develop the sort of open, dynamic and creative society that California has epitomised, drawing waves of energetic immigrants not just from other parts of America but from all over the world. Such societies, the ones in which young and enterprising people want to live, cannot be conjured up overnight by a single agent, least of all by government. They are created by the alchemy of artists, entrepreneurs, philanthropists, civic institutions and governments coming together in the right combination at the right moment. And for Australia, economically strong as never before, this is surely such a moment.

That really does sum up the challenge - and much of that can be rolled into the rubric of "the Digital Economy" if by that term we mean an entire economy transformed by the digital revolution, not a subset of it (as the current Government definition has it).

The challenge for Government is real. Even those with an excessive faith in markets see a requirement for Government action - if only to further de-regulate. The economist puts it differently saying;

...government should not seek to direct the chemistry, it should create the conditions for it. That means ensuring that the economy remains open, flexible and resilient, capable ...

And while critical of the relative torpor of our Government, they also understand it, writing;

Some politicians win power and do not know what to do with it. Others come to office determined to change everything and end up doing nothing. A respectable case can be made, in certain places at certain times, for concentrating on good management and making only a few big changes, but making them well. In Australia, this case rests not just on the thoroughness of the 1983-2003 reforms but on the fact that the economy has recently passed a stress test that all other rich countries’ economies to some degree failed. The global financial crisis did not pass Australia by, but neither did it drive it into recession.

The special has a cute 3 minute video that concludes with the same line as one of the articles;

The tyranny of distance, so long Australia’s enduring curse, has been turned on its head. It is now the Antipodean advantage of adjacency.

I wonder if "the Antipodean advantage of adjacency" will catch on ... Googling however only turned up regurgitations and this piece which says;

The behavioural economics/finance guy in me has to ask the question whether the Economist magazine did indeed set out to do a hatchet job on Australia but found the story so compelling they ended up pulping their initial intent. Seems like it has to be a chance, doesn’t it?

Anyhow, let's see how the Australian Government handles it when it does address those issues about being an "open, dynamic and creative society? We can but hope.

Note: Interestingly the mini-link in the DBCDE tweet takes you to the Government's NBN site (www.nbn.gov.au) which even has an Australian Government logo (in the mode mandated by John Howard - coat of arms, Australian Government {over} National Broadband Network)

Novae Meridianae Demetae Dexter delenda est

DE - The Excitement Builds

Only a week to go till Stephen Conroy is due to unveil his Digital Economy strategy - at CeBIT is the expectation. While I said some unkind things about how poorly the Budget papers dealt with the DE agenda, I'm led to believe that the strategy will be substantive.

I am currently writing a piece that talks about the narrative of the "Digital Economy" more generally though. Hopefully it will be ready to appear just after the strategy.

But Australia is not alone in ruminating on DE issues.

In France President Sarkosy is hosting a two-day forum which will bring opposing views of the need to regulate the internet economy. In canada the former Government CIO has said all three levels of government will have to be more collaborative and focused if they want to realize their goals around improving service delivery.

Meanwhile closer to home Malaysia is reportedly "embarking on an innovative digital economy framework that will culminate in the development of a Digital Malaysia Masterplan". In the USA though the latest call is for skilling minorities for digital entrepreneurship (which I think means something other than giving authority the finger in novel ways).

The Digital Economy is definitely "in vogue".

What does Senator Conroy have in store for us?





Novae Meridianae Demetae Dexter delenda est

The economic value of broadband

Is it worth investing in the NBN? What are the benefits? These big questions are largely impenetrable. But so is any decision about the future that has to be made. We employ a number of techniques to do so. Anticipating the "wisdom of crowds" we use a thing called "democracy" to try to reflect the communal will or opinion) of the people.

But there are other more scientific tools one can use. One of these is an econometric model, whereby the correlation between certain past events is measured, and controlled for other factors, and a relationship established.

A new paper in The Economic Journal by researchers at the University of Munich (partially funded by Deutsche Telecom) provides a convincing case that higher broadband penetration indeed raises economic growth rates.

The paper "Broadband Infrastructure and Economic Growth" uses OECD Broadband penetration data and a number of models to determine a 10 percentage point increase in broadband penetration raises annual per capita growth by 0.9 to 1.5 percent.

The study is incredibly robust and controls for workforce size, workforce capability and rate of capital formation. They discuss a favourite topic of mine, that is broadband as a General Purpose Technology (or GPT). They summarise this nicely;

High-speed internet via broadband infrastructure facilitates the spatial distribution of large batches of information that previously had to be collocated, which in turn allows new business models, entrepreneurial activities and collaboration of firms producing specialised inputs. This can lead to lower entry barriers and higher market transparency, increasing both labour productivity (also through better job matching) and market competition and ultimately economic growth.

They note that their first simple association between growth and penetration could be due to reverse causation (growing economies can spend more on broadband through higher disposable income or investment by the state0) and omitted variables (the diffusion of broadband has occurred at the same time as other diffusions).

In their modelling to overcome these issues the researchers provide the first model I've seen that matches the individual country broadband diffusion curves with a predicted (logistic) diffusion curve. The paper is worth looking at for this (Figure 1) alone.

Of course, for the NBN the case needs to be made that even faster broadband means even faster growth. There are two ways to think of this. The first is that "even faster broadband" is a new GPT that should be expected to have similar benefits - after all Broadband penetration growth is slowing and so therefore is its contribution to growth.

Another way would be to add the OECD's data series on speeds as another variable to the model. Unfortunately that data set doesn't go back quite so far.

This is, however, an important paper. It is worth reading and building on.

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Digital Economy and P2P

To recap, my central thesis about the Digital Economy is that there is not a single technologically determined outcome, but that the outcome will depend upon choices made by the various "actors". To put it another way, people matter.

Stilgherrian in his Patch Monday podcast today interviews Michael Bauwens who is described on Wikipedia as a "Belgian peer-to-peer theorist".

One of his on-line contributions The Political Economy of Peer Production gives a good insight into what his theories are and what the policy "issues" are.

Against this mindset I would position the view of traditional telcos who see their role in life as to mediate the comms necessary. The other position remains that of firms that still believe in integration models.

The policy frontiers to maximise the value of 'peer production" include recognising the importance of IPv6 and why large telcos think it isn't a problem, and competition policy where we need to revise our view of the size of firms and number of participants in markets (smaller firms, bigger number of players) and write aggressive law to match.



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