Opinion: Low score for NZ on Connectivity Scorecard

Consumer infrastructure the country's weak point, says study

A “lacklustre” broadband infrastructure has led New Zealand to once again rate well below average in another global survey of our digital proficiency.

This time around the country was compared to other similar economies in a report with the catchy name of the Connectivity Scorecard.

To say New Zealand achieved a “connectivity score” of 4.85 in itself appears meaningless, without an understanding of how this score was calculated and how it relates to the scores of other countries.

What is pertinent is New Zealand ranked 16th out of 25 “innovation driven” economies on the scorecard.

The US topped the list with a connectivity score 7.71, while Australia came eighth with a score of 6.14. By comparison Poland was last with a score of 2.49.

What is more telling than the actual scores, however, are some of the insights the report’s writers provide that explain New Zealand’s performance.

But first, a little bit more about the Connectivity Scorecard.

It was created by Professor Leonard Waverman of the London Business School and US-based economic consulting firm LECG, and was commissioned by Nokia Siemens Networks.

The researches claim the Connectivity Scorecard is the first index to examine quality and quantity of ICT usage and infrastructure, and to link it to a country’s social and economic prosperity.

The study looked at 25 ‘Resource and Efficiency Driven’ economies – largely developing nations, and 25 “Innovation Driven” or developed economies.

The first step in the study was to divide each economy into three pillars – business, consumer and government and to assign weights to these pillars. The business pillar was given the greatest weighting since this was regarded as a key contributor to productivity growth.

For each component of the scorecard, countries were benchmarked against the best-in-class in their tier. Low scores reflect gaps in a country’s infrastructure, usage or both.

And it is on the infrastructure component where New Zealand seems to have faltered.

The study found consumer infrastructure was the country’s weak point and reinforced “popular perceptions of a lacklustre broadband infrastructure in the country”.

As a result the study found broadband penetration is “average at best”, while 3G penetration lags behind other nations in the study – most notably Asian countries and Australia. The lack of any next-generation access deployment in New Zealand also undermined its performance on the scorecard.

The country scored positive points for consumer usage with “fairly strong” internet usage levels, and fixed-line usage that is well above average – higher than the US even.

“Thus the country scores well on a measure of total voice minutes per capita,” the study authors found.

But, estimates of consumer spending on software came in at the low end of the scale.

Meanwhile, business connectivity was found to feature average PC penetration, but with a relatively good distribution of secure servers.

This, combined with a good percentage of businesses buying and selling online, showed New Zealand had a strong e-commerce infrastructure, according to the study.

However, this was in contrast to lower levels of spending on IT resources and a limited proportion of jobs requiring ICT skills: “Mysteriously, New Zealand does not have a high share of employment in ICT-related or ICT-specialist occupations, which is a surprise given the good record of business use of electronic commerce”.

Another area where New Zealand underperforms is in the government’s use of IT.

The researches wrote: “New Zealand’s e-government rating is also mediocre, because of average levels of online service usage and limited government investment in hardware, software and other connectivity services.”

The researchers do give New Zealand credit for being a regulatory pioneer in the 1990s. But they state the “bold decision” to deregulate the telecommunications industry and rely exclusively on competition law to discipline Telecom’s market power was a failure with entrant operators claiming that interconnection agreements were hard to secure.

New Zealand’s ranking of 16th on the Connectivity Scorecard is in line with its ranking on other ICT indicies.

The report also says the findings are supported by evidence from the OECD, which confirms the difference between Australia and New Zealand in terms of investment in knowledge and general innovativeness.

This once again reinforces a major concern that TUANZ has long highlighted.

New Zealand’s current broadband infrastructure is lacklustre and this is indeed impeding our productivity as a nation, as well as holding up the development of our digital economy that is essential to compete in a modern global economy.

The report’s authors conclude the overall results of their study indicate there is a real opportunity to add “hundreds of billions of dollars in economic benefit by rethinking how countries measure and enable connectivity”. They go as far as saying: “Not even the world’s richest economies can afford to be complacent.”

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