There is light at the end of the fibre


By Peter Lee*
Wednesday, 23 October, 2013


There is light at the end of the fibre

With the federal election now past, the opportunity for the incoming Coalition government to deliver on its plans for growing the economy and make real traction requires strong leadership, efficient and effective collaboration and decisive action within the first six months of government.

For an industry that has been in a recent state of hiatus, particularly in infrastructure investment, there is still plenty of light at the end of the tunnel (or the fibre) to reinvigorate the industry and stimulate new and sustainable growth in our economy.

Hidden under the guise of the ‘services sector’ in our national ABS data, which represents approximately 70% of Australia’s GDP and employs upwards of 80% of the Australian workforce, is the information and communications technology (ICT) and telecommunications sector. Depending on the source data and criteria used, the ICT/telco sector alone is said to contribute between 4 and 8% of total GDP and employs between 290,000 and 550,000 people.

However, it is not just the ICT/telco sector in which we need to stimulate investment opportunities and growth, but it is this sector that provides the underlying platforms for delivering innovative products and services to other sectors of our economy. The services sector as a whole is not only reliant on the innovative products and services delivered by the ICT/telco sector but also on government providing the supporting framework that allows Australian businesses and consumers to take full advantage of technology evolution if we are to become a truly competitive and sustainable economy.

The Coalition government’s commitment to support investment in ICT skills, use technology more effectively in the public sector and encourage innovation and research will all be key factors in lifting our productivity and economic competitiveness. The term ‘digital economy’ is used widely and often in today’s digital age, but it is the Australian economy as a whole and our ability to compete effectively in a global economy that remains the underlying and fundamental challenge.

With approximately 20% of recent GDP growth in advanced economies being attributed to internet and digital technologies, the government needs to play a leadership role to encourage adoption, use and ongoing innovation in order for all Australians to leverage the real benefits of technology.

A cultural change is also needed to address the risk-averse nature of investment in Australia if we are to encourage future investment and growth in the technology sector that allows Australian start-ups to compete effectively with their international counterparts. This requires accelerating the creation of an environment promoting investment in the local high-tech industry via tax incentives for local R&D and technology investment, government supported co-investment programs, alternative equity funding schemes and support for Australia’s nascent industry of technology start-ups and high-tech incubators.

If there is a single theme to the transformation of the Australian economy flowing from digitisation and the internet, it is trade exposure across all industry sectors. The Department of Foreign Affairs and Trade (DFAT) has acknowledged that the services sector plays an increasingly important role in our international trade, with services exports growing by an average of 4% per annum between 2006 and 2011. According to DFAT, in 2011 total trade in services accounted for 17.9% of Australia’s total trade in goods and services, and services exports accounted for 16% of Australia’s total exports.

The Internet Industry Association (IIA) agrees with DFAT in that an efficient services sector is critical to Australia’s trade and economic growth. It is also well recognised globally that the businesses and industry sectors with the highest levels of productivity tend to be those who are early adopters of technology and have the skills and innovative resources to fully recognise the benefits. As such, the relative importance of the services sector in Australia embracing technology evolution cannot be underestimated.

The Australian economy is also highly dependent on the safety and security of the internet. This means that the stakeholders, in securing the internet, extend to a diverse range of interest groups including service providers, government and consumers. The IIA supports a framework that will ensure Australia’s infrastructure security is strong and effective but operating with due process and a high degree of accountability and transparency in order to build business and consumer confidence in the security of online information.

In what has been historically recognised as a highly regulated sector, we now need a regulatory framework suited to a more digitalised economy. Existing regulatory settings across the economy are under pressure, such as the taxation system as it operates in relation to imported goods and services supplied online from offshore, the regulatory framework governing Australian media, our copyright laws, the regulation of gambling and the content classification system.

More than ever the rules imposed on Australian businesses can determine whether new, more efficient businesses are allowed to grow and whether global businesses base themselves in Australia or choose to supply into Australia from overseas. Updating outdated legislation and providing more appropriate levels of regulation is vital to making the Australian economy more competitive.

Underpinning the need to stimulate investment opportunities and growth across all sectors of the Australian economy is government investing proportionally in our national infrastructure, such as the National Broadband Network (NBN), that supports innovation, new digital technologies, meets market demand and provides for increased productivity and growth.

Whether the NBN itself is fibre to the premises (FTTP), fibre to the node (FTTN) or a mix of optimal technologies, there still remains light at the end of the tunnel (fibre) for the Australian economy and we all have a role to play to keep it burning bright.

*Peter Lee has over 28 years’ experience in the telecommunications industry and is currently Chief Executive Officer at the Internet Industry Association (IIA), the body representing Australia’s internet industries.

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