Address the TUANZ National Conference – Broadband Reloaded

e nga reo, e nga mana, e nga maha
tena koutou, tena koutou, tena koutou katoa

It is a great pleasure to be here at this conference. I’d like to thank TUANZ for organising this opportunity to come together in the beautiful Hawke's Bay to discuss a key driver of our future economic prosperity: broadband and our ability to use it.

I like the title too – Reloaded. It has hint of the ‘Wild West’ about it and it’s true that we are in frontier territory with broadband. We know that it is going to open up the country - that fresh pastures will offer us new opportunities, just as we’ll be challenged by risks that we haven’t had to confront before.

As a West Auckland MP – a 'Westie' if you like – that's a territory I am comfortable with.

And that’s why this conference comes at an opportune time. We’ve had our first “recce’. We’re over the first phase of implementation. We have dealt with the regulatory problems we inherited. We have a much better handle on what barriers there are to the smart use of ICT in New Zealand; and we have in place a policy framework in the Digital Strategy, which sets the direction in which we want to go.

Now is the time to take stock, reload and ride into the future armed with the experience, expertise and cooperative attitude needed turn a sometimes wild frontier into a prosperous new territory.

This conference is an ideal opportunity to share ideas about how to keep the ball rolling in terms of broadband. We want New Zealand to be a world leader in using ICT to realise its economic, social and cultural goals. To drive that vision we need to:

• create demand for broadband
• build the right skills to enable all kiwis to use ICT
• provide opportunity to develop ICT solutions and
• deliver affordable access to a high quality, high speed and reliable network throughout the whole country.

Together we can build a vibrant, democratic, and prosperous information-enabled society. We can get New Zealand on line.

I know that each of the speakers following me will have their own ideas about how we can best achieve this.

I would like to take this opportunity to recap on the state of play for ICT policy, report back on submissions and feedback we’ve received on the draft Digital Strategy, and foreshadow some government actions around what we see as a flagship area for development.

Looking back
Since the first TUANZ Broadband conference we have worked to:

• establish a regulatory environment that is flexible enough to accommodate and take advantage of new technologies, and robust enough to ensure stability and fairness
• build capability, for example by funding initiatives aimed at increasing availability/affordability of key services
• and work towards being a model user through the New Zealand E-Government initiative.

Regulation
Let’s look first at the regulatory environment.

When we came into office five years ago, we inherited an open entry market - but one that was marked by confrontation and impasse over such issues as fixed network interconnection, where competition was confined to a few areas, and where Commerce Act processes were clearly inadequate.

Lack of real competitive pressure was standing in the way of the innovative technologies and services that lead to higher productivity and lower costs. It was clear the government would need to play a more active role. This did not mean a return to the early-eighties regulation-plus regime, but rather establishing a regulatory environment that intervened only where necessary. What we were looking for was a balanced approach: as much market as possible and appropriate regulation when necessary.

We acted immediately with a Ministerial inquiry. In 2001 we passed the Telecommunications Act, the cornerstone of our telecommunications policy. It establishes a comprehensive test that promotes the long-term benefits of users not only now, but in the future. It puts in place clear rules to resolve access disputes, an independent ‘referee’ - the Telecommunications Commissioner - with powers to act quickly, and a mechanism to regulate further services where such action is necessary.

We've worked to ensure that potential suppliers have timely access to suitable radio spectrum and maximum choice over timing of rollout and technology used. Radio spectrum for commercial use is usually allocated on an open competitive basis and is subject to the oversight of the Commerce Commission.

Building Capability
Early on this government decided to be proactive about creating the conditions for an economy that would support the social and economic aspirations of our multicultural society. We established the Growth and Innovation Framework and singled out three areas for special attention; Biotechnology, the Creative Industries and ICT. They each have high growth potential and can have significant flow-on benefits across sectors.

The ICT taskforce, made up of prominent entrepreneurs, reported to government on:

• the critical success factors for growing New Zealand based ICT businesses, and
• potential barriers to growth in New Zealand that needed to be addressed.

The taskforce recommendations, which the government supported with a wide range of initiatives, focused on developing the skills and talent necessary for an information-rich industry.

It led directly to the formation, with NZTE support, of the Higrowth Project. This important industry based group is working with the sector alongside NZTE to growing emerging New Zealand ICT companies into success stories.

An Electronic Commerce Action Team (ECAT) was set up to advance the government's e-commerce strategy and was instrumental in promoting both an understanding of the competitive advantages of e-commerce and information about how it could be achieved.

Legal barriers to e-commerce such as uncertainty around the legitimacy of electronic information and transactions provided the impetus for the Electronic Transactions Act. The Act puts electronic transactions on the same legal footing as paper-based transactions.

The critical importance of nationwide access to broadband was recognised. Market forces alone would not drive the investment in infrastructure needed. Project PROBE has delivered infrastructure into areas previously deemed uneconomic, improved competition and mitigated the risk of a rural/urban digital divide. PROBE has also contributed significantly to reduced prices for broadband (by $50.00 per month for those receiving wireless broadband).

Government as a model user
Our third goal is to be a model user of ICTs.

Government application often leads to private ones. The E-Government strategy was released in June 2001. It recognises the Internet will be the dominant way people will access government information and services. We have given business, the community and individuals more choice in how they choose to interact with government.

A wide range of other initiatives have been implemented, some in partnership with the industry, the ICT sector, and community and voluntary agencies, all predicated upon the importance of ICT as a driver for New Zealand’s economic and social future.

State of Play
So where do we stand now?

The new telecommunications regime is now well bedded in. Much progress has been made in realising an environment which is increasingly competitive. With three years behind us we are undertaking an implementation review of the Telecommunications Act to see what fine-tuning is needed.

New Zealand has good levels of broadband to over 92 per cent of dwellings. That figure is projected to increase to ~ 95 per cent by the end of the year and, with the satellite coverage we’re currently negotiating with ICONZ, coverage will be virtually 100 per cent by June next year.

However broadband uptake in New Zealand has been lower than other OECD countries. Increasing uptake is a key objective of the digital strategy, as I will discuss later.

Progress is already being made on pricing. Already increased competition in broadband infrastructure has seen the price of residential broadband drop significantly. We now rank at about 15th out of 30 OECD countries and will continue to monitor the situation closely.

The government is also funding an Advanced Research Network for the Research, Higher Education and Innovation sectors. Over time this will spur the development and use of broadband services and allow greater real-time research capability with overseas.

So we’ve come a long way – nearly all New Zealanders have access to broadband, the price has dropped to be in line with the OECD averages and more people are waking up to the opportunities that ICT offers.

You have all played a part in that progress and should be congratulated. You also know that if we are to excel in the new on-line world, there is much more to do.

Digital Strategy Overview
Earlier this year I launched the government's draft Digital Strategy. It sets an integrated framework for ICT policy for the next five years. The draft strategy was the product of a whole-of –government process, led by the Ministry of Economic Development. Thirty government agencies were consulted. Key industry and community players were involved early on. It drew on themes developed at the World Summit on the Information Society, held last year in Geneva.

We took the draft on the road, holding fifteen industry and community workshops and hui across the country, attended by over 1000 people.

Around 200 written submissions were received – almost universally supportive and in most cases very thoughtful.

The summary of that feedback will be available on the Ministry of Economic Development's website tomorrow.

That the draft Digital Strategy has been so well received across a wide variety of sectors, communities and interest groups is, in large measure, due to the generosity of the many people who freely gave their time and expert advice to officials.

Money could not buy the insight and experience we were able to access. Today is an opportunity to say thank you.

With all of this input, let us recap what the draft digital strategy actually says. Stripped down to its bare essentials it contains three key insights.

The first key insight is the recognition that 'being digital' magnifies both our opportunities, and our challenges.

Opportunities to drive productivity gains from the highly innovative ICT sector right across our economy.

Opportunities to empower all of our people with information to enrich their lives, and their communities.

But the challenge is that we are in a global race for the former and at risk of missing out on the latter.

Digital opportunity can too easily become a digital divide if selective access to new information flows is a layer over existing disparities of wealth and poverty.

So if we are to be a leading economy with a first world standard of living, we need every New Zealander empowered to play on the team.

The second key insight is that to achieve this we must drive forward in three inter-related areas of action. We need:

• Content - the right information in digital format
• Confidence and capability – the skills to use ICT effectively, safely and creatively, and
• Connection – affordable access to ICT infrastructure. We want all of New Zealand Online.

The third key insight is that the best way to grow the ICT sector to the next level is to grow demand by:

• ensuring all businesses know what the smart use of ICT can do for them, thus boosting productivity and innovation across sectors
• working with communities to help them build ICT access and use, and to bundle demand from the bottom up, and
• pushing hard to streamline government ICT processes. Improving interpretation, driving efficiency and redesigning ICT procurement processes.

Feedback
If that is the essence of the strategy, what have you told us in your feedback?

To quote Russell Brown in last week’s Listener it has been greeted with significant enthusiasm.

The central thesis that ICT is a general purpose enabler for economic growth, and social and community development was universally acknowledged. The vision – that New Zealand should be a world leader in using ICT to achieve its economic, social and cultural goals - was strongly endorsed.

Whilst the Strategy may not have everything that all contributors wanted to see, there has been unmitigated support for:

• having a strategy that integrates previously disparate initiatives for ICT enablement
• identifying the main interlocking factors that need to be developed in parallel before we can move forward – the three C’s
• the catalytic role for government in implementing the strategy in partnership with other stakeholders
• having a rigorous process and a definite timeline to deliver tangible benefits, and
• the resulting win-win for a strong ICT sector of boosting demand while helping drive productivity gains economy wide.

The submissions are constructive and aim more at drawing attention to perceived gaps or lack of emphasis than challenging the fundamental precepts. A consistent theme is questioning how and when initiatives will be delivered rather than whether they should be.

Most feedback fell within the scope of the focus areas but first let me mention a few that fell outside them. These are:

• the need for consideration of environmental issues (including recycling and disposal of ICT equipment and energy concerns)
• the need for a Maori digital development strategy
• the need for a broadcasting strategy.

In relation to first, the Ministry for the Environment is already considering a work programme to address environmental concerns in relation to ICT equipment and the Digital Strategy is, of course, supportive of the work of Computer Access New Zealand Trust.

Second, Te Puni Kokiri, the Ministry of Maori Development, developed a project outline in 2002 to address the need for a Maori Digital Strategy but this work needs to be progressed. I might add that in the light of the divisive policies of our parliamentary opponents, it was gratifying to receive submissions calling for the full and proper involvement of tangata whenua.

At every community forum, we received a very clear and strong message here that ICT should be used to both celebrate and advance Tikanga Maori. This is central to what makes Aotearoa New Zealand unique and it has economic as well as cultural significance. Moreover, examples of iwi as advanced users and developers of ICTs, such as the cyber-waaka by te Whanau Apanui.

On broadcasting a great deal of work is already being done through the Ministries of Broadcasting, and Culture and Heritage, to promote the digitisation of broadcasting content and increase its accessibility through broadband. This is a key component of the content part of the Strategy. We see the demand for digitised broadcasting material as a key driver for the growth of broadband.

Now, let’s take a closer look at what the submissions said about the six focus areas.

In each area feedback has contributed new insights and assisted the design and prioritisation of initiatives for the budget round. However, I want to stress up front that the Digital Strategy will not be a fiscal lolly scramble. Its key challenge will be to align action and fill some gaps and encourage rather than 'crowd out' activity better done by the business and community sectors.

Content
Submissions on content strongly endorse the view that information creates demand. Demand drives uptake. Different sectors emphasise different types of content, but the importance for New Zealanders to create and use their own digital content to create value was seen as paramount. To achieve that feedback stresses the need for:

• more access to New Zealand’s own scientific and research and historical information
• digitisation of cultural and community information (especially Te Reo Maori)
• development of common metadata and interoperability standards and ensuring that the needs of particular groups eg visually impaired, or the deaf are not overlooked, and
• the clarification of content ownership (intellectual property) and copyright of digital materials.

There is strong support for the proposed National Content Strategy, which will play a significant part in implementing the Digital Strategy.

Capability
On building capability and confidence, submissions elaborate on issues of raising awareness and ICT education addressed in the Strategy.

There is a broad consensus that although socio-economic factors play a part in the accessibility to ICTs, by far the biggest barrier to the effective use of ICTs is the lack of understanding of the potential benefits. This may stem from perceptions relating to a number of factors including culture, age, language, disability and experience.

Several key risks are identified, ranging from health and safety issues to cyber-security, new technologies, and e-crime. Protecting out kids from online and text based threats received a strong endorsement from forum participants.

Submitters tell us that building an information-empowered society means more education at all levels. This can be bolstered by support through ‘infomediaries’, front-line information delivery agencies or centres with 'coaches' including public libraries and Citizens’ Advice Bureau. Similarly, they endorsed learning pathways for technical ICT training and careers, and an increased number of graduates in ICT fields.

Confidence in ICTs can be raised by greater collaboration and partnership with international partners and the ICT sector. For example, in establishing interoperability, encouraging industry self- regulation (such as the SMS spam code), and facilitating training and awareness programmes is most welcome. We are pleased to be working with the Telecommunications Carriers Forum on many of these issues at present.

Much work is already underway. The Ministry of Education, for example, has an extensive e-learning policy, encapsulated in the phrase “lifelong learning”. It begins with ICT education in the kindergarten and extends beyond the formal primary, secondary and tertiary sectors into such areas as community education, collaborative projects for the development of e-content, the e-learning interface with industry and Maori e-learning opportunities.

National Library is developing a plan for fostering digital information literacy skills in libraries and Citizens’ Advice Bureau.

The e-Government Unit of the State Services Commission is proposing a national awareness campaign to encourage effective use of government online information.

The Department of Labour is developing an initiative to use ICT in workplaces to assist skills acquisition and development.

The Department of Internal Affairs in partnership with non-government organisations such as the Internet Safety Group are working to ensure cybersafety and security awareness are included as part of government ICT awareness programmes.

New Zealand Trade and Enterprise is planning to extend the current E-Business Guide to build ICT capacity of firms.

Connection
As TUANZ members you will be pleased to hear that the importance of affordable connection to a reliable high-speed network was probably the most consistent feedback received.

Project PROBE is applauded and there is a strong call to extend the broadband access offered to schools into other areas to enhance community and business access, particularly in the regions.

There is endorsement of the ambitious ten-year broadband bandwidth/speed targets in the draft strategy, and a strong call for intermediate year targets and rigorous monitoring systems.
Submitters recognise that connectivity entails a lot more than just a fibre or copper wire connection and that public access to broadband may need assistance for infrastructural development and maintenance.

Suggestions include community owned or community partnered networks and a facilitative role for government to speed the process.

The Advanced Research Network, being implemented by MORST, is seen as critical to enable our research and tertiary institutions to participate in the world research community and to foster innovation.

Some submissions from local government and industry groups want to see the research network extended to the creative industries and to local government as a significant provider of content.

The Ministry of Economic Development is considering options to build on the successful PROBE model to allow businesses and communities to access true high speed broadband both nationally and internationally.

Further work is also being done on monitoring the provision of high speed broadband following recent decisions by the government on recommendations of the Telecommunications Commissioner.

Communities
On the demand side, there was extensive feedback on the ICT needs of communities.

Submitters identify two major impediments to community progress: access to funding to make ICT’s a reality and developing the capability at the community level. Businesses are often able to find resources to implement ICT strategies, but many non-profit and community organisations, which would stand to benefit to the same or greater extent, cannot make the leap.

The major points raised in the submissions focusing on communities include:

• local ownership of ICT initiatives must be strong and include genuine partnership between all, including businesses, Central and Local Government and important community assets such as schools and libraries
• grassroots or community based ICT projects need support to ensure they have the needed technical competence and resources available to ensure their continued success
• participation for all New Zealanders needs to be addressed, particularly to take into account different and specialised needs and development requirements for different groups in society
• community ICT initiatives can play a helpful role in bundling demand to accelerate broadband uptake.

The Department of Labour and the Ministry of Economic Development are considering initiatives that will assist communities to make the best use of ICTs to meet their needs, meet wider economic development goals, and provide cross sector practical support for community projects.

I see this as an important new dimension for the Digital Strategy, one that requires careful attention to funding and governance issues.

Businesses
Feedback indicates that while larger businesses are capable of defining their own needs for the effective use of ICTs, SMEs need assistance to seize opportunities for productivity growth and development.

Submissions largely focus on New Zealand’s strong SME culture and how this can be supported through initiatives that:

• raise the awareness of the benefits that ICTs can bring to their growth and productivity
• enhance interactions with government, by getting the support and training they need to take advantage of the opportunities ICTs provide
• allow SMEs to aggregate service requirements so they can address and overcome problems of scale
• facilitate access to high-speed connections that enable SMEs to establish a global presence, build international linkages and partnerships and tap into a wealth of international resources to grow innovative business.

Both the Ministry of Economic Development and New Zealand Trade and Enterprise are considering a number of programmes that support awareness building, skills development and ICT take-up by SMEs.

Government
Submitters argue that a whole-of-government attitude and strong relationships with local government enables government to lead by example.

Industry players are eager to participate in delivering the actions of the Strategy and seek opportunities to work with government to achieve its ambitions for an information-empowered New Zealand.

While a whole-of-government approach is commended, submitters believe it is important that sufficient consideration be given to the privacy implications of sharing information between agencies.

Government procurement processes need to be improved to provide greater consistency and ease of tendering by local ICT providers. Ministers are keen to see tangible progress in this area.

More work is being done to:

• develop a government shared services network in order to deliver better services to business and people, and reduce costs to government
• assess the design, coverage and implementation of the E-Government Strategy; and
• promote the benefits to people and business of using the information and services that can be found or accessed through the various New Zealand government portals through Transforming Government Awareness Programme

So where to from here?
Feedback endorses the general direction proposed in the draft strategy to address connection, capability and content factors in parallel.

The government supports moves to facilitate better interaction between community, business and government users.

Work is now underway on the hard graft of turning plans into reality.

The Budget process
Discussions on the Budget typically take place around this time of year. As this is a whole of government strategy it naturally involves a wide range of Votes and Ministers.

It is not appropriate for me to disclose details under current consideration. It is my intention to release the final Digital Strategy on behalf of the Government around March next year. In that time it should be possible to provide a clearer idea of funding priorities.

At a general level some of the matters under consideration will fall under the Growth and Innovation Framework, which has a strong emphasis on technology and productivity development across a range of sectors. I am hopeful that the Digital Strategy will be a significant component in the GIF going forward.

Conversely, some of the elements of the strategy are likely to fall within Votes outside the GIF.

The final strategy will therefore draw upon a range of funding mechanisms including vote baselines.

Let me reinforce a point made earlier. It is very important to set realistic expectations. It is not the intention of the strategy process to bankroll a lolly scramble of central government programmes. In fact to do so would be contrary to the aims of the strategy.

We are also a prudent and fiscally conservative government. Every dollar of new expenditure will be carefully weighed. Aligning, updating and integrating efforts in both the public and private sectors towards our shared goals should be the touchstone.

Implementation
A strategy that is as large and complex as this must be well coordinated and executed if it is to make a difference. Recognising this, implementation will be overseen by a Senior Officials Group, meeting at CEO level and reporting as required to an ad-hoc group of Ministers with digital portfolio responsibilities.

A Steering Committee will meet regularly to ensure effective implementation at working level. There will be a premium on partnership with business and the community, including key sector groups such as TUANZ, as we have done to now.

Rigorous implementation planning and execution will be expected. Clear milestones will be set and achieved. The process will be transparent. Business, local government and the community will be given the opportunity, indeed be expected, to participate.

Conclusion
Getting all New Zealanders on line is the priority. The road to our future is digital.

Being wired into global competitive markets must be core business for a surging, high value economy that is remote from its major markets. Ensuring all New Zealanders can participate in this online economy and society is a necessity, not a luxury.

A productive workforce, a nation with pride and strong self-identity, requires that there is a place on the team for all.

I conclude by thanking all who have contributed to bringing the strategy this far.

I seek your sustained and determined commitment to seeing it implemented. I believe it has the potential to make New Zealand a more prosperous, more democratic, more dynamic, and a more equitable nation.