Broadband debate is about strategic and economic interests

We risk losing international trade to countries such as China, Japan and even Australia, says David Skilling of the New Zealand Institute

If New Zealand does not engage in a serious public debate and produce firm policies on developing an efficient broadband infrastructure, we risk losing international trade to countries such as China, Japan and even Australia, according to David Skilling of the New Zealand Institute.

Skilling says the public has tended to see this as either an ICT industry issue, or relevant only to consumers looking for fast music downloads, rather than as a matter of strategic importance to the economy. To help change that he co-wrote the report “So Far Yet So Close Connecting New Zealand to the global economy”, published last week.

“We need to engage that broader business, public and political audience,” he says. There is also the simple argument that a message repeated often enough eventually sinks in better than a message given only once.

The report sees efficient digital communications as essential both to expand trade in “weightless” commodities such as software, creative imagery and electronically mediated services and to the more controversial strategy which would see New Zealand companies manufacturing offshore, closer to major international markets.

“Those remote operations have to be managed from New Zealand,” Skilling says, which implies fast international communication.

Local loop unbundling and other telecommunications regulatory reforms have gone part of the way to producing more and better broadband, Skilling says, but much further work is needed. Local companies with an overseas presence have told him broadband infrastructure is five to ten times better in China “which most people think of as a developing economy” than it is in New Zealand, and have pointed out that it’s much cheaper to get a document electronically from Sydney to London than it is from Auckland to London.

That should be a direct signal for our national competitive position, he says. It’s not enough to have good, average infrastructure compared with other OECD countries; we have to be noticeably better than our present and likely future competitors.

The report, co-written by Skilling and research associate Danielle Boven “deliberately steered away from debate on specific solutions”, he says. “I didn’t feel we were technically knowledgeable enough for that.” But a number of alternatives have been suggested, from Rod Drury’s government-supported fibre network to the widespread use of wi-fi and WiMax.

“All approaches will have pros and cons,” Skilling says, but the risk of not doing anything is far greater than the downside to any feasible strategy.

“We’ve got to start thinking about this.”

Skilling is puzzled that early attacks on his report came from the “Buy Kiwi Made” lobby, arguing that offshore manufacturing exported New Zealand jobs. The report says government’s support of Buy Kiwi Made sends the wrong messages, “but that was a very minor point”, Skilling says.

More considered and more constructive comment came through later in the week from firms such as Fisher & Paykel, which have retained their Kiwi identity despite some measure of overseas manufacture, he says.

There is an understandable public suspicion of governments taking a lead role in such major developments, he admits. People still remember Think Big, he says, but after all, central and local government bodies are responsible for constructing and maintaining the roads.

“We’re a small country, and small countries can move quickly when they put their mind to it. But we have to come up with a strategy, and we can’t take a year or two to do it, or we’ll be too late.”

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Tags broadbandNew Zealand InstituteDavid skillinginternational business

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