e.nz Professional Engineers magazine, October 2007
Strategy shifts sought
More punch needed in the brew
The government-led strategy attempting to ferment a blend off our best
information age ingredients for a more palatable digital future is up
for a ‘refresh’. Keith Newman gives the Digital Strategy a performance
review and looks at what’s brewing ahead of the November 2007 summit.
Our digital crops, despite years of pruning and truckloads of fertiliser have not yet reaped the promised bumper harvest, although the potential is there for a potent brew to emerge if the next generation Digital Strategy gets the recipe right.
New Zealand has a small but determined bunch of entrepreneurs and highly informed industry groups who have been through the crusher and believe they know the ingredients that should go into next years vintage. They imagine a classy bouquet and a mature aftertaste that will be in demand on the world market, not some cheap chateau cardboard plonk.
As one commentator put it, the Digital Strategy has just scratched the surface and the greatest danger would be to think the job was done when it was just beginning. A bold new model with much greater buy-in from business and the public was needed to move this important process out from under Government wings where it appears to be loosing its punch.
The Digital Strategy, launched in May 2005 by the Ministry of Economic Development (MED), aimed to create the right policy and regulatory environment to target government investment so New Zealand would become "a world leader at using information and technology (and) realise its economic, social, environmental, and cultural goals, to the benefit of all its people".
One of the desired outcomes, echoing the recommendations of a 2003 ICT Taskforce Report, was that the ICT sector would contribute 10 percent of New Zealand’s GDP by 2012. Now, more than two years down the track there is a strong feeling the Digital Strategy secretariat has been hamstrung by being housed within and managed by the MED. The word is that decisions have already been made within the halls of power to remove it into an environment more conducive to the entrepreneurial leadership role it needs to play in the market.
Better growing climate
A huge amount of discussion is already underway and submissions are being received from chief executives, senior business and community leaders, industry associations and other interested parties for a strategy ‘refresh’. In other words big changes are ahead although no public decisions are likely to be announced until after the Digital Future Summit 2.0 "call to action'' in Auckland on 28-29 November. The Summit will further address the challenges of becoming a high-tech, high-value, creative economy and how New Zealand can benefit from using new technology through to 2012.
Version 1.0 of the Digital Strategy saw the Government commit around $400 million to various programmes. Within the Growth and Innovation Framework (GIF), $44.7 million in contestable seed funding was planted in our digital fields including $24 million for the urban fibre optic network Broadband Challenge and $20.7 million to the Community Partnership Fund to help build ICT skills in communities and regions, and create distinctive New Zealand content. Additional funds were made available for cultural and business portals, ICT business productivity workshops and digital initiatives across government departments including digitising our National Archives and bolstering e-education.
Certainly the past two years have been highly eventful. Hauled under
the broader Digital Strategy umbrella, although not part of its initial
ambit, were a gigabit speed science and research network, the launch of
free-to-air digital TV and regulatory reform, which opened the way for a
much more competitive telecommunications environment, particularly with
respect to broadband access.
Those fortunate enough to live in a neighbourhood close to an exchange, with high grade copper lines and low broadband use, could potentially achieve speeds of up to 7.5Mbit/sec. In most areas however, it was more likely to average 2Mbit/sec – 5Mbit/sec. Existing customers on 256kbit/sec and 2Mbit/sec monthly plans were automatically boosted to the new ‘full speed’. While costs for broadband accounts were now down and data caps extended or removed, the open slather approach showed up the frailty of Telecom’s copper network with more than 10 percent of Internet users now getting slower speeds than previously.
The Digital Strategy papers originally set a benchmark for carriers
to deliver "pervasive high speed broadband"; preferably at least
10Mbit/sec, for residential and small to medium enterprises in towns and
provincial centres, using either copper or wireless technologies.
Telecom continued to ramp up its long awaited next generation network (NGN)
with faster fibre roll out, and was shortening its copper loops and
upgrading its copper capability to handle faster DSL2+ technology.
Under broadband crush
The Digital Strategy targets were part of the government’s long stated intention to get the country into the top half of the OECD Broadband Statistics by 2007 and top quarter by 2010; since 2003 we had languished at 22nd place out of 30 nations, a dire position confirmed in an independent survey by InternetNZ. While New Zealand’s Internet access cost was considered reasonable, restrictive data caps had limited the effectiveness of high speed access. We had only saved from being the compost at the bottom of the heap by the move to free up wholesale speeds.
The numbers at March 2007 showed relief for the first time in four
years. New Zealand had clawed back three places to attain a ranking of
19th in the OECD rankings. Alongside that Statistics New
Zealand reported in its ISP survey to 30 September 2006, a 26.6 percent
growth in broadband subscribers, taking the number to 611,600. The
survey for the following six months to 31 March, 2007 showed a further
increase in the number of broadband
subscribers by 18.5 percent to 724,600, with growth a little
slower than the two previous periods. That was still way short of the
980,000 subscribers needed to get even close to the original 2007 goal
and a fat chance away from the two million needed to hit the 2010
While content, ‘comfort and competency’ and connection; the "three ‘c’s" of the Digital Strategy, still loosely described its game plan, the last ‘c’ still attracted the most attention. What is needed, said IPENZ committee member and broadband specialist Lawrence Zwimpfer, is an integrated network infrastructure from one end of the country to the other which can easily be extended into all rural areas. What’s more, we need to upgrade our thinking of what broadband is.
"We have had a lowest common denominator approach. What can be achieved over a pair of copper wires is nothing like the broadband visions many countries now have. We need to know how we are going to achieve this beyond little bits of government money to help keep it visible. There is not enough money to tackle the size of the problem or incentive for commercial players to make the investment needed."
Zwimpfer warned existing plans weren’t sufficient to keep pace with future demands. "As soon as we decide 2Mbit/sec or even 10Mbit/sec is a good benchmark it will move on. We have to be a bit clever here; not everyone needs a 100Mbit/sec or gigabit connection but some people need all of those. We need a strategy that can migrate so different users can choose the type of connection they need."
New tariff model needed
He says the government funded multi-gigabit KAREN (Kiwi Advanced Research and Education Network) fibre optic network, serving the nation’s universities and Crown research institutes, is a good example of what can be achieved for other sectors. "These communities need access to bandwidth like they need access to a building. You need different pricing models and the telco world has been slow to recognise that."
While Project Probe (Provincial Broadband Extension) solved a lot of
problems and gave everyone opportunity to connect, the next mission
should be to scale that up 100 fold. "Many of our city schools are now
on a gigabit path where they can collaborate and share resources, run
shared server farms, and potentially connect through into KAREN and
internationally. This is happening in the city areas where we’ve got
fiber, but it’s creating the same sort of gap we had five years ago
between city schools with their 512kbit/sec connections and the rural
schools with a dial-up 24kbit/sec connection if they were lucky. We need
to run the Probe process again and we don’t want to wait another
10-years; we need the government to come in, make the decisions now and
get on with the investment," says Zwimpfer.
During his 18 month tenure Macaulay allocated the bulk of the $44 million Broadband Challenge and Community Partnership funds but the cash dried up before he could complete everything he was commissioned to do. Around 200 organisations had provided input and support. His major achievement, was translating the goals into a set of operational processes. "I had to identify the things we could do because we had limited resources; we had a number of policy people and one administration person who didn’t even report to me. I was the only operational type person."
Current Digital Strategy programme manager Janet Mazenier, found her early days stressful and her resources pressed, but by the beginning of August was surprised at the huge goodwill and offers of help coming from across government and the wider market. She says regulatory changes in telecommunications in particular have made New Zealanders more aware of the digital future, with a growing number wanting to know how to get on board.
"We haven’t been particularly effective in the past in telling people what we’re doing but an enormous amount of work has been done, and as the process of the strategy has touched a number of sectors and communities the awareness has grown virally." Currently there are 111 community partnerships and 57 other initiatives across government that have all been funded or are being funded.
Left out in the cold
He warned our poor telecommunications performance was no longer just an industry issue, but an economic one. "Our backwater status in broadband among the Asia-Pacific nations is a massive brake on our economic and social development." While the country had the right policy framework in place through the revised Telecommunications Act 2006, and had enunciated an excellent vision through the Digital Strategy, the legislation had come too late and the vision for the future lacked the necessary sense of urgency.
Newman said burying the Digital Strategy within a ministry that has "a thousand other drivers" to focus on, and engaging multiple officials who fit it in among other priorities, is not working. "The Digital Strategy in the widest sense should be given its own government agency for a period of five years, and come directly under the auspices of the Prime Minister to neutralize the vested interests, career concerns and fiefdoms that inevitably get in the way of any cross-agency initiative."
He said the Strategy needed to engage the brightest and best of those who understand the vision and have the technical skills and energy to make rapid progress. "They must have an environment that empowers them and demands they turn the Digital Strategy vision into a reality."
He suggested a dedicated Ministry for the Digital Future could put some clout behind indications that the broadcasting and ICT ministries are looking at convergence issues, including future policy for the broadcasting and telecommunications. Such a ministry would be the ideal repository for the execution of the Digital Strategy.
New era for business
Business managers and leaders needed to lift their own skills to take advantage of the possibilities increased use of ICT gave them. That included a stronger focus on training and gaining access to ICT professionals and "the doers who can actually make it happen at company level", as well as the programmers and people who can build infrastructures.
That might be about sharing content, elements of a film for example, across the country or with partners in California. "New Zealand is facing some of the best opportunities alongside some of the biggest dangers, because we are so isolated. Traditionally we need to put our stuff on a container ship to send it offshore or fly people in on a Boeing 747 as tourists. If the Digital Strategy is going to be seen to work it needs to remove the tyranny of distance so we can overcome some of those disadvantages in the new world."
His slant on the Digital Strategy would be for businesses to build on what they already do well, leveraging advantages and opportunities that arise from the digital age, and effective and efficient world-class infrastructure. "For example we might be working on pharmaceuticals associated with milk and able to share the resulting information with medical researchers all around the world, using the modeling that ICT has enabled. Then we might go to the market with a product or a medicine that’s just not carbon-intensive at all."
O’Reilly said we would still capture the really valuable work, whether it’s manufacturing or service jobs. While we might design the best bridges or buildings but that doesn’t mean we have to ship all the components, they can be built elsewhere, based on design work done in New Zealand. "We’re great at growing grass and putting sheep and cattle and cows on it. So how do we turbo-charge the value or put new value out of what we already do well?" This he says, is what the new business model is about. "There is a great opportunity for government to talk about this, not lecture, but actually engage people about new ways of doing things."
Common goals unite
ICT-New Zealand (ICT-NZ), which wants to present a single face to government on a range of issues that need to be resolved in order for it to achieve the long term ICT growth goals, had its first meeting in 2004. Despite battling with several industry bodies over conditions of membership, it continued to see itself as that umbrella body that could help lift the game of the communications and technology industries.
ICT-NZ supplanted the Information Technology Association (ITANZ) and the Software Association and the Canterbury ICT Cluster, Health IT Cluster, HiGrowth Project, the New Zealand Wireless Forum and Canterbury Software Inc were early members. InternetNZ and the Computer Society were still debating the extent of their involvement three years later.
Garth Biggs, acting director of ICT-NZ, which claimed to represent the allegedly $15 billion industry, believes Digital Strategy has been too government focused and needed to be opened up and owned by a broader base. Its goals should include encouraging industry to upskill and work smarter and ensure ICT success stories were being heard by the right people.
Many companies were using technology well, some were using it defensively or simply as a tool to run their business rather than to make their businesses smarter. "It’s not just about computerising and making things work faster but how you can change your business. ICT is the best solution we have to our productivity problems and is about changing the way we work. It has been well applied by the banking and airline industries in changing the way they do business and that’s what all industries need to be looking at."
The way forward was about connecting companies to customers and suppliers in effective ways and about productivity and efficiency gains. "I believe the tools are there now." The Digital Strategy needs to take more examples to the business community about how ICT can not only transform business but have an impact on the whole country." He said there was now a wealth of information available about the impact of investment in ICT on productivity and per capital income.
Biggs, was appointed executive director of the ICT industry’s
HiGrowth Project in June 2005, tasked with helping achieve the target of
100 ICT companies doing $100 million of business each by 2012. He sought
greater flexibility, dropping targets for some sectors to $500m or $10m
but still focused on the overall goal of 10 percent growth in gross
domestic product by 2012. Another early goal was to increase
productivity in local government, where there were clearly problems and
tasks in common where similar solutions could be used.
Geospatial data view
The ability to zero in on a town or street on a web-based digital map
of New Zealand and access historical, community, ecological and other
data could be of enormous value in literally mapping our digital past,
present and future. Detailed public domain maps of cities, regions,
towns, lakes, rivers, forests, coastal areas, roads, streets and
resources, including environmental data, could be an invaluable tool for
geographically locating a wide range of information.
The GIS is part of the eGoverment strategy which itself has hooks into the Digital Strategy. It’s designed "to improve knowledge about and access to assets owned, maintained and used the government". It sets out to co-ordinate and direct the way geospatial resources are developed and managed, ensure compatibility and reduce duplication and fragmentation of effort. It recognises government's increasing reliance on such data for a wide range of activities from emergency services and national defence to utilities, resource management, biosecurity, and economic development.
The GIS will help ensure information provided to the public by government agencies and private sector; including maps, land records, geographical information systems and related information, are authoritative and up to date. A Geospatial Office hosted by Land Information New Zealand is to be established this year.
Simpson says submissions are also being made on the Digital Strategy, based around the fact New Zealand has been officially charged with building the Digital Earth ‘sustainability’ model for the rest of the world. He wants to see a requirement for government and private sector holders of critical ‘non-sensitive’ map-based data, to place this in the public domain so it can form part of Digital New Zealand and the sustainability model.
Land Information New Zealand (LINZ) has been tasked with building and co-ordinating the model of public domain data with the Digital Earth Society acting as a kind of watch dog to ensure it’s being done in an open way that enables new stewardship models. Simpson says there’s ongoing dialogue to get different government agencies on board.
There was also a clear need to engage with private enterprise and have "community collaboration" rather than just focus on government as the source of all data. Many larger nations were strongly engaged and often had huge financial commitment, from large corporations. "That makes it even more important for New Zealand to be seen to be getting on with the job and showing it can take the lead."
Simpson says the Geospatial strategy is a step forward but it’s still very much under the umbrella of LINZ which is looking at it in the old way rather than with the new approach. The silo mentality about ownership and control of data inherent in the old analogue culture is still one of the deterrents to success. The old top down model is no longer the way to work, says Simpson.
"Having bureaucracies structured to be stewards for data about the sustainability of places is ridiculous when you consider the sort of technology that is now bringing universities together and opening up data and expertise for peer review by people who may be world authorities in other places and can make suggestions on how to improve or change things."
Simpson is convinced the only real way to meaningfully manage data is to index it through a place, geospatially. "It’s about getting access to information pertaining to sustainability of places and if you ever want to be a knowledge economy or an information society this is a fundamental thing. We’re not there until we can get to this stage," He doesn’t believe the MED is the place to locate such an important vision as the Digital Strategy if it is to move forward quickly.
Joining the dots
The biggest news in the government sector since the announcement of the Digital Strategy has been the creation of a common approach to all-o-government communications through the Government Shared Network (GSN) which will remove a huge amount of duplication of energy and resources, including the cost of networking.
If the government can pull together enough momentum and resources to launch a gigabit speed shared network for its departments and agencies (GSN) and an advanced science and education network (KAREN) there must be hope for other projects. Health and education for example could certainly learn a lesson from this kind of rationalising and removal of duplication.
Extending Probe beyond 512kbit/sec maximum speeds and reaching out to fill the rural and remote gaps will no doubt be a priority for Digital Strategy V2.0, as will extending the reach of the urban fibre networks. With the right investment environment and seed funding we might get closer to closing the gaps. Entrepreneur Peter Macaulay, who’s most recently been working with the Department of Health to try and aggregate broadband demand, believes there’s room for a ‘Broadband bank’ to encourage investors to build open fibre networks to join the dots.
He says there’s a shift in the wind, with Telecom and other commercial carriers realising the future is not based around operating in a walled garden. If you connect everything up there’s room for everyone to have a share of the traffic. "The thinking is changing, the Government has said it will break up Telecom and that’s begun to change the thinking of a number of other players who see the potential for what we’re trying to do."
Macaulay is evangelical about the wider impact of his model which he called the "Lilly pad effect", which with the right funding could connect open fibre networks across the country. "If you build back haul capacity in all the cities and towns the next thing you know its only 10km to join them together and suddenly the whole of New Zealand joins up. We don’t have to have a huge amount more back haul fibre to do that."
He’s lobbying for around an initial $250 million to kick of what he hopes could become a $1.75 billion investment repository. Funding would come from banks and other financial institutions. Anyone could apply for funds to build a network as long as it was open for anyone to use, even Telecom. The goal is to roll out fibre to 85 percent of the population enabling up to 20Mbit/sec access. The above ground component the routers, switches, software, and operational stuff, is normal commercial risk equipment with a 3 - 5 year life. Where the big investment is needed he says, is in "long life, low latency, low risk underground community-owned infrastructure". The MED distanced itself from the proposal in 2006 as did Communications Minister, David Cunliffe but knowing Macaulay’s determination and his lobbying influence it could be back on the agenda for the Digital Future Summit .
Digital champions arise
Ernie Newman from TUANZ is convinced much more needs to be done to pull the country back from its current state of telecommunications crisis. "The real opportunities of the digital age are gigabitting past while we dither along at dial-up pace. Never before has our country fallen so far behind the rest of the developed world in our embracing of a new, life-changing technology."
Greater investment was necessary from both the government and the private sector, but before people were prepared to put their money in the ground so to speak, they needed to be confident their investments wouldn’t remain buried. Business New Zealand’s Phil O’Reilly was looking for the Digital Strategy revision to include a more stable framework that was better suited to safer investment in infrastructure.
Pouring more government money into the Broadband Challenge wasn’t his idea of a solution. "Hopefully that would be a last resort, and they would try every alternative before they start billing the taxpayer for that. We have to look at ways of getting the private sector to do this. It’s certainly likely to be done more efficiently, at lower cost, and fit the purpose better than if the government does it."
He says government should be removing regulatory and business obstacles. "You don’t want anything that has people wasting money on ineffective regulatory processes, resource consents, taxes that are too high and too much heavy-handed regulation that changes all the time. An investment-friendly environment, particularly in the broadband space, would leak into all sorts of other things such as the creation of alternative mobile phone networks, and individual businesses investing in ICT."
Digital Strategy programme manager Janet Mazenier agrees the perception has been that this is ‘for government by government’ but says the November Summit will look at ways business and communities can be supported by government. So would the coffers be refreshed for another round of Broadband Challenge and Probe funding? Would the Digital Strategy secretariat adopt a new structure? Mazenier wouldn’t pre-empt any decisions only to say all options were up for consideration.
The Summit would be a checkpoint , a call to action, looking at changing the way government engages with the market, how to bring the digital future forward and what it means to link this to economic transformation. "Nothing is being taken lightly. We don’t want to consult with groups and have the answers in our pockets. We want to consult with sector groups every way we can and synthesise this into strategic initiatives. I don’t think anyone knows what we’re going to get from the market."
A draft document outlining the contents of a potential Digital Strategy V2.0 will be released for discussion in March 2008 which will go toward finalising a workplan to narrows things down to specific outcomes that are current and relevant through to 2010.
Time to back winners
Keith Davidson executive director of lobby group InternetNZ which is running the technical day of the Digital Strategy Summit believed the approach so far had been too cautious and needed much greater private-public partnership. The Digital Strategy should be "outsourced to a bunch of people who can make it happen without the constraints of government every step of the way". While it has provided a useful roadmap he was skeptical about the ongoing commitment to fulfill its goals. "I think it’s a wrong answer to just have someone employed within MED and reporting through MED, who is hardly resourced at all and expect them create a total social change."
We needed to tell out stories better and leverage existing successes. "Wellington’s CityLink is just a brilliant story, it’s the envy of many cities in the world and was one of the first true low cost city fibre optic networks. Nobody in New Zealand has bothered to emulate that. We need people to champion this kind of approach."
Government needs to lift its game, particularly in the areas where it has the logical and democratic mandate to move things forward; health, education, social welfare and essential infrastructure. It must also remove the obstacles and provide incentives for businesses to do what they do best, innovate, employ, improve the skill base, lift GDP and export our intellectual property.
The bureaucratic mindset that launches visionary projects of huge national importance then micromanages them into policy frameworks, underfunds implementation and becomes smugly satisfied with reports of potential outcomes is old school thinking. The new mindset is to empower the visionaries rather than hijacking and sanitizing their ideas.
As the good book says old wineskins crack under the fermenting pressure of new wine. A new brew needs a new skin, so many who will be attending the Digital Future Summit in November will be hoping those who are so eagerly bubbling under and full of ideas will be empowered with a better framework to make a difference.
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