Photo: Getty Images
Photo: Getty Images

SocietyDecember 14, 2016

Ignore the naysayers: ultra-fast broadband is the best thing to happen to business since the arrival of electricity

Photo: Getty Images
Photo: Getty Images

Critics are seizing on a new report that says the Ultra Fast Broadband rollout has had no direct impact on business productivity. But those who dismiss the scheme as corporate welfare are missing the big picture, says telecoms commentator Paul Brislen.

I’ve had more arguments about broadband than just about anything else including (but not limited to) cars, sport, religion, politics, the need for diversity in the workplace and the correct way to make a real cup of tea.

For some reason there are a large number of people out there in the world who think that broadband is something that happens to other people.

Allow me to recap (briefly) two of these conversations.

The first was in the early 2000s with an editor of a well-known technology publication. Let’s call it Pencilworld.

Me: Broadband is cool.

Editor: I can’t see the point.

Me: (SPUTTERING) What? But you can get online faster and do more shit!

Editor: I have dial-up and I’m perfectly comfortable with that.

Me: (SPRAYING WELL-MADE TEA OVER KEYBOARD) Dial-up?! Is your computer black and white as well?

Editor: (HUFFILY) Well I don’t see anything wrong with not wanting to spend my evenings sitting in front of a computer screen when there are other things to be getting on with.

Me: (ARCHLY) Like watching TV?

Editor: Where’s that copy I asked for, hmm?

Me: …

And then there was the time around a decade ago when I interviewed the long-serving board member of a certain incumbent telecommunications company that no longer exists because it was broken in two after years of anti-competitive behavior. Let’s call it Telecom.

Me: You’ve seen a lot of changes in your time on the Board.

Him: I certainly have. Why in the years following our privatisation we reaped the reward of our hard-won fight to buy the company out from under the lazy and frankly Socialist government of the day.

Me: I seem to recall you awarded your shareholders massive dividend payouts that frankly were obscene and bordered on illegal in other jurisdictions and which lead to a decade of underinvestment. But really I meant the introduction of the internet.

Him: The internet? Oh yes, I suppose but it’s just pornography and online gambling. I never use it myself.

Me: …

However, I’m delighted to say that the rest of the world has either caught up with my worldview or died a lonely death, disconnected from the greater society that the internet has helped forge. Something like that.

Photo: Getty Images
Photo: Getty Images

Today, the need for broadband has even percolated through to the real estate industry, which is finally starting to realise that people do care about what speeds they can get at home and who are now publishing speed test information in their sale brochures. Not many of them, granted, but then it’s a technology that is rather new, having only been commercialised in the past 30 or so years. No rush.

But for some reason it’s still popular in the comments section of the National Business Review to bag broadband projects as being some kind of white elephant, some Think Big corporate welfare jag that the obviously Communist leanings of Steven Joyce have saddled the country with.

Putting aside all the nonsense around regulatory holidays, around charging people more to use copper lines in order to shore up Chorus’s ability to pay a dividend at a time when it should be investing every penny in the new network, and the rubbish around Auckland Transport forcing Chorus to pay for the rehabilitation of all the footpaths, the Ultra Fast Broadband (UFB) project and Rural Broadband Initiative (RBI) are two of the most important projects undertaken in New Zealand since we introduced clean drinking water to [almost all, no not you, Hawke’s Bay] of the country.

UFB access changes the way users can access the internet in a fundamental way. Instead of my editor sitting down at his computer (and presumably cranking the handle on the side three or four times to get it going) my kids listen to streaming music, or podcasts, or video call their friends while studying, or watching a movie, or reading a book, or writing their own script, or researching something the teachers haven’t thought about yet, or sharing their day with their grandparents all in a way that is utterly normal and without any fuss or drama.

Instead of the internet being nothing more than porn and online gambling, it is learning and education, it is marketing and public relations, it is news and current affairs, it is global and local, it is personal and intimate and thoughtful and asinine and empowering and debilitating.

So why am I telling you all this (using the internet as my medium, naturally)? The research team at Motu (an independent economic and public policy research unit) has looked at UFB and its impact on productivity and concluded that there’s no real benefit to business in having fast internet access.

Motu has looked at companies signing up for UFB between 2010 and 2014 during which time usage more than doubled to 22% of all private sector firms with more than six employees.

During that time, productivity didn’t budge at all. It didn’t matter how big the company, whether the company thought high speed connectivity was important, or whether the company used computers more often or not. No change. Nothing. Perhaps they were all watching cat videos.

This is, I’m sure, very similar to the reports that no doubt circulated when electricity was first introduced to New Zealand way back in 1984. Sorry, that should read 1894. Gore got it first and if you replace “broadband” with the word “electricity” in the Motu report I’m sure you’d get very similar results.

“Oh yes, the streets are well lit but it hasn’t changed my business at all. No, I still close the doors at 3pm and we don’t open on weekends. No, I don’t bother with refrigeration because I still order everything in each morning. No, I don’t see the point to paying just so my sign lights up out front.” And so on.

Broadband alone, much like electricity alone, isn’t going to make a blind bit of difference. Where it does matter is when broadband enables the company to do something it previously couldn’t. Can I employ more staff without having to buy a new building downtown to put them in? Yes, you can. They can work from home and connect to your network via broadband. Can I outsource product manufacture to another city or country and keep my intellectual property and R&D teams in New Zealand? Yes, you connect via broadband. Can the engineering field team take high resolution images of the problem the client has and send them back to the lab for analysis? Yes, via mobile broadband.

The problem, which the Motu report does point out, is that broadband alone isn’t enough. It’s got to be part of a bigger picture and when broadband is used by businesses to enable other things (complementary investments) then those companies do become more productive. The move to automate those tedious and costly jobs (at blue collar level, like sorting fruit, but also in the office, like accounting) means companies can focus on the creative bit and that tends to be where the real profit lies.

I’d like to see the study done again in 2020 when the UFB has been completed, and again in 2030 when we’re fully used to conducting business online. For me, the real problem with the UFB has been that it was conceived and delivered entirely in isolation from any other policy. The UFB and RBI don’t line up with a regional economic development story or with a national transport policy or with a “let’s solve the housing problem in Auckland” policy at all. It’s a separate beast, lumbering along in the background with little chance to really shine.

Whangarei completed its UFB build years before I got UFB in my inner-city Auckland suburb. So did Hamilton and Tokoroa and Christchurch and Hanmer Springs and many others. Where was the push to encourage business out of Auckland and into the regions? Where was the incentive package to set up call centres or R&D labs or anything outside the city? Why didn’t we encourage businesses to migrate away from Auckland when other centres had the advantage and so take the staff with them? Sell your Auckland house, move to the beach, keep your Auckland job and salary.

This has happened elsewhere in the world. Cornwall in the UK was in decline for decades but in the past ten it has turned itself around. How? By introducing high speed rail and high speed broadband. Suddenly people in London can move to the regions, buy a much better lifestyle and keep their London jobs. The effect that has had on what was a largely tourism-based economy has been tremendous and can easily be replicated here.

Many years ago I helped bring Dr Tim Williams, a London-based social scientist, to New Zealand to discuss just this kind of regional rejuvenation. It all comes down to willingness and planning, he told me. Tim is from South Wales and saw his hometown fall apart after coal mining died while the neighbouring town did not. The difference – attitude. For a more empowering report, check out Connecting Communities [PDF].

Broadband will help with our economic growth, our regional development and at a business level yes, with our productivity issue. But it will also help deliver social cohesion to the regions and education (the silver bullet for so many problems) to the masses throughout their lives. We just have to integrate it into our policy and our society and not pretend that it is an answer in and of itself.

Paul Brislen runs Brislen Communications. He used to be the chief executive of the Telecommunications Users Association of NZ, editor of Computerworld and a reporter for the NZ Herald, but not all at the same time.

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