I’ve been asked to answer the question: What are you doing to get New Zealanders connected to each other and the rest of the world?

The question I pose to you is what aren’t we doing? This government hasn’t stopped since we came into office in getting our systems up to international standards – the Telecommunications Stocktake, Operational Separation of

The Digital Strategy 2.0 that I released last week provides a platform to make New Zealanders leaders in the digital world. Our connections to each other and the rest of the world are key to this vision. Three core ideas underpin the Strategy:

• Unleashing the full potential of the interactive ubiquitous web.
• Using digital technologies to drive productivity and economic growth.
• Bringing everyone on the journey

The Future of Broadband (BIF)
There is now political consensus in New Zealand that we need faster, cheaper broadband. Kiwis want it and we want it now.

I released the criteria for the Broadband Investment Fund last Tuesday. It contains $325 million operating and $15 million capital funding available over a maximum of five years. It is a key part of the Government’s Digital Strategy 2.0 package of over $500 million.

The Fund is part of our commitment to New Zealand’s digital future. Getting the best value from fast broadband requires confident, skilled users and the content and applications to drive uptake and productivity.

Our long term vision for rolling out fast broadband to all New Zealanders will see us spend more than $500 million in the next five years. This includes targeting high speed open access urban fibre networks, improved rural connectivity and improved international links.

The BIF will be used to accelerate broadband investment in three critical areas:

• facilitating high speed broadband to businesses and entities such as municipalities, universities, schools and hospitals in urban centres;
• extending the reach of broadband into underserved regions, particularly in the rural sector; and
• improving the resilience of New Zealand’s international connections.

Our broadband package promotes the best fit between the best available technology and the needs of users in the region concerned. The Broadband Fund will maximise competition, assist investor certainty and give the best possible leverage for the taxpayer's dollar

Completion of Telecom's separation undertakings, with its welcome and binding investment commitments and NGN rollout schedule, provide a good platform for future development, but is by no means the end of the road.

A general understanding has been reached that if we are to achieve the government’s long term vision of fibre to the home, a joint effort is required that cuts across all sectors, business, local and central government.

Spectrum for Wireless Broadband
One of the ways by which the government is making an important contribution to the expansion of the broadband pathway is through the allocation of a large amount of spectrum for wireless broadband.

The provision of low-cost broadband wireless spectrum has been achieved by making multiple blocks available and configuring auctions to maximise rollout and competitive intensity.

National Environmental Standards
We have also created pro-broadband national environmental standards for telecommunications facilities that will provide network operators with certainty in their engagement with multiple local authorities.

These measures will improve the processes for considering approaches from utilities to utilise motorway and rail corridors, thus reducing investment barriers.

Government Demand Aggregation
The government is also taking a demand side approach to stimulating investment through aggregating its own demand for broadband through the KAREN network and the Government Shared Network (GSN).

A Common Framework has been established that applies common principles to the purchasing and contracting for state sector broadband services.

This is an important step in achieving the benefits of demand aggregation, such as increased competition and the stimulation of new capital investment in broadband network infrastructure.

This is achieved by providing investors with access to information on current and future government telecommunications demand.

There is significant merit in greater co-ordination in the purchasing decisions of key government agencies to further stimulate investment and achieve efficiencies in government expenditure – particularly as the public sector in New Zealand is the largest national purchaser of broadband services.

Progress on the Broadband Pathway
There are encouraging signs that the 2006 reforms are already having a positive effect on telecommunications markets in New Zealand, and are likely to show further gains in 2008 with the implementation of local loop unbundling, enhanced bitstream access, and the entry of a third mobile network operator.

Competition increased in many telecommunications markets during 2007, with average retail prices falling over all sectors except for monthly line rentals. There are, however, key markets that remain limited by competition. An area of particular concern is wholesale pricing of fixed-to-mobile termination and we are monitoring this closely.

The broadband market has grown strongly over the past year and now surpasses dial-up as the most common means of connecting to the internet. Much of this growth can be attributed to Telecom’s competitors, with their share of growth in retail fixed-line broadband exceeding 70 percent in the final quarter of 2007.

Overseas commentators such as Paul Budde have noted that “New Zealand is clearly showing the way here" and suggests that a key lesson from the Kiwi experience is "get your house in order first before you start throwing your money around.”

Using digital technologies to drive productivity and economic growth
Using digital technologies to drive productivity and growth is a key focus of Digital Strategy 2.0. The digital world means a fundamental change to how we do business, and the kinds of business we do.

We need to exploit the potential of the digital world to foster entrepreneurship, creativity and innovation in our areas of strength and specialisation. We also need to seek out ideas and solutions from what the best of the world has to offer, and use them to increase productivity across our economy.

The internet generation is entering the workforce, bringing new ideas and different values. They adopt innovative digital applications in widespread fashion in record time – 18 months or less - for example the proliferation of YouTube and My Space. This new generation will be our future innovators and leaders.

Today’s managers must take time to understand and plan for this new way of working and social networking – where masses of information is available at your finger tips on sites such as Google and Wikipedia and lines between business and social life are blurred through social applications such as Linked In and Facebook.

Example: Nemertes - MIT reserchers have already developed devices that allow users to set up a variety of ‘always on’ video connections between family and friends. These can be displayed on wall-mounted high definition displays, or carried as low definition keychain-sized trinkets with wireless internet access. They enable users to set up sustained interactive connections between remote parties.

There are some great examples of New Zealand business taking advantage of and creating digital technologies resulting in better productivity – more revenue and fewer hours worked.

I encourage you to engage with new technologies and interactive web applications.

Advertising revenues from online content world-wide is expected to amount to US $45 billion within five years and the games industry is predicted to eclipse Hollywood box office within the same time period. At the OECD Ministerial Meeting, we (New Zealand and Korea) expressed the view that we have complementary strengths which position us to take advantage of this expanding market.

There is huge potential for New Zealand to create innovative digital solutions to increase productivity, efficiency and environmental sustainability in these sectors. These solutions can then be shared with and adapted by other sectors of the New Zealand economy, as well as sold internationally.

Content and creativity are therefore at the heart of New Zealand's future knowledge economy.

Digital Strategy 2.0

Last week I launched Digital Strategy 2.0 – the outline of the next stage towards New Zealand’s digital future. The Strategy contains shared aspirations and challenges, and lays out the government’s plan to meet these challenges.

This Strategy provides a bold vision and concrete actions to help New Zealanders become leaders in the digital world.

Revolutionary change has occurred since the 2005 Digital Strategy. Robust competition is driving a wave of investment to build super fast broadband networks.

No country has more to gain from this digital revolution than New Zealand. Through it we overcome our remoteness, leverage our inventiveness and show off our uniqueness.

The building blocks of the Digital Strategy remain relevant: super fast connection, enhanced user confidence and cool content. DS 2.0 sets out targets and actions that take these to the next level and emphasises the importance of collaboration to get there.

DS 2.0 challenges us to go further to secure outcomes from this technology: new digital productivity; reduced environmental footprints, and communities that are locally networked and globally connected.

To do this we are introducing a number of exciting new projects such as Connected New Zealand and the Digital Content Innovation Cluster. We’re also expanding successful initiatives, such as videoconferencing and teleworking, the Aotearoa People’s Network and the Community Partnership Fund.

A major initiative of the Strategy is the $340 million for the Broadband Investment Fund over three years from Budget 2008 to enable affordable broadband roll-out based on competitive open-access principles. This is part of the $500 million the government has committed to investing in broadband infrastructure over the next five years. DS2 sets updated targets for connection speed and super fast broadband rollout.

The Digital Strategy is about people and their ability to connect to the world. It’s about bringing all New Zealanders on the journey by breaking down the digital divide, and building their capability and confidence in using ICT.

The now familiar three ‘Cs’ of connection, confidence and content – are still relevant, but we have split confidence in two and now have a fourth ‘C’ – capability – to reflect the differing way we must operate to achieve our end goals for both security of services, and skills and education.

• Connecting more people, businesses and communities with broadband will stimulate innovation, increase productivity and help New Zealand in the global community.
• Digital innovation, and world-class ICT skills and capabilities are vital to achieving our digital potential. Management capability to exploit ICT for business productivity gains is crucial to improving our quality of life.
• Confidence in the security of our ICT infrastructure and networks, improving protections for personal information held online and improving the knowledge of users to keep themselves safe and secure online is vital to achieving our digital potential.
• By improving our creation, discovery and use of New Zealand-grown digital content, we will be better placed to value and protect our heritage and our sense of identity.

These enablers are crucial to increasing business productivity in New Zealand. The challenge is to harness the power of the new digital world to create an innovative, high-income, knowledge-based economy that will generate prosperity for all New Zealanders into the 21st century.

Nine of the top 10 U.S. Aerospace and Defence companies and nine of the Global 100 use Right Hemisphere to:

• Accelerate global time to get to markets
• Increase productivity and leverage the global talent pool; and
• Reduce product development, launch and support costs.

Why is Right Hemisphere (or something like that) not being aggressively exploited by our businesses? Why in spite of knowing that we have to reach out to the world in innovative ways and avoid commoditisation we are not using digital technologies to enhance our value proposition to the world?

Exploiting digital technologies for productivity and global reach is not about the technology but about thinking differently, reaching out to the long tail of the global customer base – as has been proven by OBO Goalie Gear out of Palmerston North.

These examples remind us that the Digital Strategy 2.0 is not just about accelerating broadband rollout – broadband is not an end in itself, but a means to broader economic and social outcomes.
We want New Zealand to be a leader in the digital world. We want New Zealanders to live in a sustainable, prosperous and vibrant society.

The past 12 months have seen momentous change in New Zealand’s ICT sector.
I am eager to gain your perspectives on promoting broadband availability and take-up and how broadband and digital technologies can best be utilised to achieve our economic, environmental and social goals.

Thank you for your attention and my best wishes for a highly successful conference.