3 min read
May 31, 2011

The Press, May 2011

It may have got lost among the furore over the Highlanders’ new green jersey and Rachel Hunter’s appearance in Christchurch’s red zone, but the announcement of New Zealand’s ultrafast broadband (UFB) rollout last week was historic.

UFB has huge potential for business, especially for the marketing of New Zealand’s technological innovations to the world – let alone all the other benefits for Kiwis in terms of communication, learning and entertainment.

A little over a generation ago New Zealanders had to ring a telephone operator to place a very expensive international call. With UFB we will be able to video chat cheaply with someone anywhere in the world from a home computer, with the experience of them standing right next to you.

Under the UFB plan, 75 per cent of us will get an internet connection of 100 Mbps (megabytes per second), which compares to the paltry 10 Mbps you might get now, if you’re lucky. Schools, hospitals, and most businesses will be covered by 2015, and links to homes and remaining businesses completed by 2019.

A complementary initiative for rural homes and businesses will also happen, and although coverage in rural areas won’t be as good, as a nation our broadband coverage will be right up there in global terms.

It has taken its time, and seems to have a plot line more complicated than a Home and Away love triangle, but awarding the UFB rollout to Telecom and Canterbury company Enable Networks will now get things happening.

Think-tank the New Zealand Institute has made much of the country building a ‘‘weightless’’ economy, for example exporting stuff in the form of ideas and knowledge as well as the heavy stuff like dairy products, meat and logs.

They estimate that UFB could generate direct economic value of $2.7 billion-$4.4b each year, and have further benefits through enabling more innovation.

In many ways the roll-out of UFB could be as significant to our economy as refrigerated shipping in the 1880s, a development that resulted in significant economic gains and improved living standards for New Zealand – 4331 mutton, 598 lamb and 22 pig carcasses, 246 kegs of butter, as well as hare, pheasant, turkey, chicken and 2226 sheep tongues sailed on board the Dunedin in 1882. Other countries had tried refrigerated shipping, but it wasn’t until the Dunedin successfully docked and sold its cargo in an English market that it became a commercial proposition.

Of course the difference was New Zealand got first mover advantage with refrigerated shipping, helping us overcome our distance from markets to compete successfully with other agricultural producers. As others developed refrigerated shipping we managed to stay competitive by improving the efficiency of our farming.

It is different with broadband, as other nations such as South Korea are ahead and investing to stay out in front. UFB will not give New Zealand the same jump on the world as refrigerated shipping did, but it will make it easier for us to create online businesses and sell our stuff to the world.

In many ways, the UFB is a platform for the imagination of our entrepreneurs. What better access will do is bring the world closer to us, so we can understand customer problems earlier and easier, and respond with the kind of unique twist Kiwis are good at.

UFB will enhance our ability to create and grow online businesses. There are many examples already: Trade Me, accounting system Xero, online store Torpedo7, ‘‘making system’’ Ponoko, online bookstore Fishpond and so on.

Imagine what the cluster of online businesses that have grownup around Wellington’s ‘‘Silicon Welly’’ could evolve into as their access to UFB feeds more ideas and development. One day they too might get a sign on the hills near Wellington airport.

Auckland and Christchurch are the strongest centres for technology companies, and UFB will help the talented technical people in these areas develop and deliver new online businesses, as well as make the marketing and selling of technology products from the likes of Tait Electronics, Orion Health, Rakon, Endace and Jade Software easier and more efficient.

Companies, especially those selling complex products to large organisations, won’t be able to simply abandon visiting markets and do everything online, but aspects of the sales process can move to the internet.

Our technology exporters can make more use of internet-based promotional tactics to attract and track sales leads; they will be able to do product demonstration and customer site visits through video conference; product information can be delivered in the form of video and animation online. People will still need to sit down, shake hands and do deals in person, but a lot of ‘‘friction’’ could be removed from the process.

All UFB really gives us is an opportunity to compete, a slight levelling of the tough playing field we compete on as a small economy in a big global economy. We still need to understand customer needs, develop great products and be good at selling them. However fast, our internet simply won’t matter otherwise.

Subscribe to our blog