There was an interesting question raised by David Garrett on Kiwiblog the other day around what actual economic benefits something like Ultrafast Broadband would bring to NZ. This is usually put in terms of ‘tangibles’, which means ‘I can Skype’ or ‘we’ll be able to watch TV over the internet’. I must admit that I enjoy both Skype and Netflix, but neither of these services represent an ‘economic improvement’ (although the underlying technology of video-conferencing is really handy and means we can talk to people for work purposes very easily now, such as through MS Lync). These are merely improvements in entertainment and represent substitutes (we could purchase an inferior product, in the form of a telephone call or Sky, but we have something better and cheaper now).
However, let’s take a simpler position: the sheer competitive effect of improved internet is massive. Historically, New Zealand has had a small IT market and one which relies on a small pool of local talent (which means, again, there is less competition for both skills and people). If you’ve got better bandwidth, suddenly you’re open to a whole new world of competition. You now can access technologies, basically, anywhere on earth, exempli gratia you can now put your data into well designed and supported data centres, which aren’t limited by what is available in NZ. Do you want a virtual machine to run mission critical work? How about it needs to run Linux or the latest Microsoft toys? Do you not want to worry about an earthquake or the competence of local vendors? How often have you been told something is ‘bleeding edge’ (which I often joke means the person is bloody stupid). Well, have I got a deal for you! And what’s more, that has a reverse advantage: now that our own IT is subject to far more competition, it will need to ‘lift its game’. NZ has a massive advantage of being non-aligned, perceived as being a ‘green location’ (we do generate all that wonderful hydro and geothermal electricity – regardless of whether it’s all really nonsense), and with a stable and prosperous society. We’re a potential benefactor, if we can just improve our IT capabilities and skills, and more competition will allow that (not reduce it). Personally, I’m looking forward to people upping their IT skills, as NZ has a big way to go (myself included).
Finally, there is the potential to improve economic efficiency. I am currently working from home while I write this, because I can simply ‘remote desktop’ into work, where I have a mixture of physical and virtual stuff that I use and need to do. I do like popping into the office for meetings (good old social contact), but the reality is that I find it far more relaxing to work from home than be at the office, where I am subject to constant social distraction(s). The not driving into work saves me $60-odd a week in petrol. That is more efficient, as what I do for work is IT-related, so bringing me to the computer seems dammed silly compared with bringing the computer to me.
In effect, it is our ability to reduce resource consumption (whether that be through not needing lots of satellite dishes, shops, or driving to work) coupled with the increase in competition which improved internet capabilities will bring. This transformative capability, mixed with improvements in mobile technology, means that more people will be able to access competitive products and services without needing to even get off their bums (which means my 10km runs during the week really do make a difference). It’s not an economic silver bullet, but it provides a great platform to gradually improve our economic circumstances, both through improved efficiency and increased competition (with all its ‘destructive creativity’).
p.s. It will also drive governments mad from the individual liberty that the citizenry can now have. Hence why they’re always whining about the impact on GST and how we’re going to ‘fix it’.