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The Issue Is the Digital Economy, Not Broadband

After some five years of public debate on the national broadband network it is heartening to see that more and more people are getting the message that the network means more than just fast internet access. Increasingly key decision-makers in business and government are reaching an understanding of the transformation that is underway in the economy.

It started with the music industry, followed by the publishing industry. The retail sector is learning its lessons the hard way but it is now beginning to understand the new environment. The entertainment industry is still trying to stop the tsunami by employing armies of lawyers, but it will soon also be engulfed by the changes. The banking sector is making a much smoother transition, while the demise of Kodak is another example of ‘missing the boat’.

One by one, all sectors of the industry are being confronted with the business transformation that the internet is bringing with it, and yet, incredibly, the ICT industry itself is still struggling with it (Sensis, Nokia, Microsoft, Motorola, Nortel, etc).

Progress in e-education is moving at an enormous pace and already some schools are limiting the number of printed text books—some are going totally e-book. With over a million children now with laptops it is only a matter of time before the education system switches over. The savings in books and other printed material alone will pay for this digital revolution. South Korean schools will be entirely e-book-based by 2015.

Changes in e-health are following the same path, with electronic patient records slowly being introduced and health insurance schemes starting to refund e-health services. This will be a user-driven development as it is more likely that the users will be able to adapt to e-health much faster than the healthcare system can deliver it.

This will clear the way for a whole new e-health industry, worth billions of dollars. One only has to look at some of the e-heath systems linked to the high-end private hospitals in the USA to see what is in store. They use their e-health facilities as a major marketing tool to attract customers, not just to the actual hospital, but to all of the other facilities around it. The add-on revenues are significant.

Those who are still talking about broadband as an end in itself do not understand the situation. Broadband is simply the tool that will further enable and advance the digital economy. So those who are looking at broadband in isolation are totally missing the point.

Included in this group is the Liberal opposition in Australia, and for that matter the Republican party in the USA. To them broadband is ‘it’—they are completely missing the point of the digital economy.

On the other hand, as an example, the former chief information officer to the United States, Vivek Kundra, praises the Australian national broadband infrastructure investment for all the reasons mentioned above, clearly stating that the cost of that investment should be judged within the context of the digital economy.

FttH is not needed to get the digital economy started—that actually started a decade ago. One only has to look at Apple, Google, Facebook, Amazon, eBay to see what effect the digital economy is having on their valuations and compare it with what is happening to those who were slow to act upon that change. Those who are still lagging behind are going to find it increasingly difficult to catch up. There are now enough examples of struggling sectors that made the change too late that we can predict the impact this will have on these sectors.

In Australia the high dollar is having a negative effect on many business activities in traditional industries such mass manufacturing, retail, banking, airlines, etc. At the same time the unemployment rate remains low. This suggests that it is not so much an economic decline as a shift towards new jobs in new and different sectors, using new technologies and creating innovations and value-adds.

A digital infrastructure is essential to manage this transition. One only has to look at manufacturing—Germany, for instance, remains one of the leading global manufacturing countries, based on technological innovations that give it the edge over the countries whose manufacturing industries continue to operate in more or less traditional ways.

The digital infrastructure plays a key role in German innovation and manufacturing leadership.

Once there is more widespread understanding among business leaders, union leaders and politicians of the impact that these developments are having on the overall economy it becomes clear that we do need to make sure that we have the right conduit for the development of the digital economy. Those who don’t understand the impact of the digital economy—or who, for political reasons, don’t want to know about it—will argue that we can make do with second-rate infrastructure. It would be most regrettable if their lack of vision were to put a brake on the economic transformation that is already clearly taking place—this would result in Australia missing new economic opportunities for its future.

There are certainly many ways to skin the infrastructure cat, but unless the importance of the digital economy is made the central factor of the decision-making process (and not simply broadband) the right choices will not be made—decisions that will have to deliver the social and economic benefits that lie ahead.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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