So internet, such beneficial

What’s the internet worth, economically speaking?

I recently finished a project on the economic benefits of Internet use for businesses in New Zealand, as part of a team with some other folks from Sapere.

It was funded by Google and Internet NZ under the Innovation Partnership. You can read the report here from the Innovation Partnership website. Or get a gander at the launch event slides.

There has also been some press, for example, in the Herald.

A cows plus strategy, and clustering

Some thoughts prompted by ‘The New Geography of Jobs‘, by Enrico Moretti

This book is a great description of the economic geography of the modern United States and an explanation of how it got that way. It is also a primer for policy-makers interested in how to ensure more good “innovation sector” jobs. Mr Moretti talks about how the “brain hubs”, like San Francisco, Seattle or Boston, came about, and what to do if you find yourself (like New Zealand and most United States cities), wanting to transform your local economy over time while avoiding the cul-de-sacs and mistakes that others have fallen into along the way.

Headlines

Mr Moretti divides cities into places with good jobs, those without, and the places that could go either way. “Good” jobs are involved in the innovation sector, which is loosely defined as high-tech plus any other occupation that makes intensive use of human capital and ingenuity. Places without good jobs are mostly declining or declined manufacturing centres in the Rust Belt where the book starts.

Wider economic benefits from innovation sector jobs are very big. Mr Moretti reports that for every innovation sector job, e.g., a new software engineer at the Googleplex, there are an additional five jobs created, two professional jobs (e.g., doctors, lawyers, teachers, nurses) and three non-professional jobs (e.g., waiters, carpenters, taxi drivers, shop workers). Most sectors in the economy have these multiplier effects but those in the innovation sector are particularly big. So while employment in the innovation sector will never account for the majority of jobs (at the moment it accounts for around 10%), it has a disproportionate and positive impact on the economy overall. Although Boeing employs twice as many people in Seattle as Microsoft, it ultimately creates fewer local jobs.

There is not just a jobs effect but also a big income effect. Everybody earns more in a brain hub than s/he does doing the same job in a Rust Belt city. Your neighbour’s skill level affects how much you earn, regardless of your own skill level. This result is not necessarily intuitive, but Mr Moretti (on page 99) says there are three reasons for it. First, skilled and unskilled workers complement each other: an increase in the former raises the productivity of the latter. Second, a better educated labour force encourages the deployment of new and better technologies, raising productivity. And third, the economic magic of human capital externalities, i.e., when people interact they learn from each other, and those who interact with better educated peers ultimately become more productive and creative.

The result holds for employees of all skill levels. So a college graduate in Boston, where 47% of residents have a college degree earns $20k a year more on average than a college graduate in Yuma Arizona, where 11% of residents have a college degree. But the biggest impact is for the least skilled. A high-school graduate in Boston earns 34k more a year than a high-school graduate in Yuma. Part of this difference, says Mr Moretti, is compensating for the higher cost of living in Boston. But using a nifty longitudinal dataset that follows the same individuals over time, he finds that the same individual can make a very different salary depending on how many skilled workers s/he has around.

Learning from history

The early part of the book charts the decline of American manufacturing jobs and the rise of jobs in innovation economy. It explains the hollowing out of the American labour market, as new technologies favour high-skilled workers, reduce the need for many occupations that call for medium-level skills, and have little effect on occupations at the low end of the skill spectrum: jobs that involve non-routine tasks have not been particularly hurt by computers.

Since every city, of course, wants to be a brain hub, the book also explains how brain hubs developed, by way of sketches of the development of Seattle, Silicon Valley and Hollywood. This part is particularly interesting because it goes back far enough in time to show what Seattle was like in 1979 when Bill Gates and Paul Allen moved their then fledging business there. They did this not for professional reasons but for personal ones. Indeed Seattle seemed like a terrible place at the time: The Economist had recently labelled it the “city of despair”. And especially compared with Abuquerque, New Mexico where Microsoft was founded and which already had the beginnings of what might have become a tech hub. Nevertheless, they moved to Seattle and the rest, together with the decisions of many others to set up shop there over time, is history. Jeff Bezos started his new firm, Amazon, in Seattle in 1994 because by then Seattle had the engineers, programmers and venture capitalists that he needed to get started.

The new picture of economic geography

I saw this picture recently on Twitter (created by Reddit user atrubetskoy). The blue areas are responsible for 50% of US GDP. So are the orange areas. Twenty three successful cities.

Mr Moretti talks about why this clustering happens, and why is it that new software firms, which might be just two guys in their garage, decide to locate in San Francisco or Silicon Valley or Seattle despite the fact that these are amongst the most expensive places to live in the United States. The contrast with industrial economy firms is stark: they go where resources plus transport are cheapest, so paper mills are near forests, milk factories are near farms, and steel mills are near coal mines. The lobster industry is in Maine, because that is where the lobsters live, and the oil industry is in Texas, because that is where the oil is.

There are three factors that create clusters First, firms go where they think they will find good employees, which happens to be where all the other employers are. Second, they also want to find good suppliers, and customers for their products,hence the ecosystem. The venture capitalists of Silicon Valley are far more helpful to a growing firm looking for funding than the venture capitalists of other places with less developed ecosystems. And third, it turns out that innovation, collaboration and the creation of new ideas are highly influenced by proximity. Even small physical distances are enough to deter collaboration and information sharing. This is seen from networks of patent citations: inventors are significantly more likely to cite other inventors living nearby than inventors living far away. Similarly, I recall a study from Google some years back of information flows in the workplace that said that what you know is determined largely by where you sit (sorry I can’t find the reference just now). Mr Moretti says (p141), “being around smart people tends to make us smarter, more creative and ultimately more productive”. These cluster effects are intensifying because they are self-reinforcing, and because, once a cluster is established, the costs of moving it are overwhelming.

The policy of inevitability

The question for policy-makers, especially local economic development agencies, is therefore how to turn their city into a brain hub.

Mr Moretti explores a few options. Basically it is hard. The best bet is to have already got lucky and have had some innovation sector businesses set up shop. If that has not happened, then you could look at supply side ideas or at demand-side ideas to get things started (this is from the perspective of the labour market, so “supply side” means increases the number of workers, and “demand side” means increasing the supply of jobs).

On the supply side, the basic strategy is to attract highly skilled, young, creative types, and then expect that high-tech employers will follow, hoping to take advantage of the ready local labour supply. Mr Moretti is down on this approach, arguing that Berlin is the best example of this strategy but that Berlin continues to have amongst Germany’s worst unemployment problem and weak economic growth. That said, Berlin is widely considered to be one of the most interesting and vibrant places in Europe at present. Conclusion: there may still upsides for residents in adopting the supply side strategy, but it is far from a slam dunk case from an economic point of view.

In some industries, and Mr Moretti says biotechnology might be one, attracting stars is also important to encourage both other workers and to encourage employers. Qatar does this. So does Singapore. And probably other places with which I am even less familiar. New Zealand’s efforts to attract over-achievers from other countries to come and live here might also be an example, so when James Cameron or Julian Robertson come live here, they can help attract other people and establish an ecosystem. Mr Moretti talks about the cautionary tale of the University of Washington, whose efforts to build a classy economics department foundered when resources ran scarce before the star attraction programme was completed.

The demand side idea is basically about attracting high-tech employers to come set up shop. The main tool is subsidies or tax breaks as part of so-called “place-based policies”. Mr Moretti says around $60 billion a year is spent on them in the United States. The idea is to provide subsidies for the first firms to come along, and then stop the subsidies after enough firms have arrived that economic development is self-sustaining: the “big push” strategy aims to break the impasse that keeps high-tech firms from locating outside of existing high-tech areas.

Mr Moretti says the push needs to be really big, decisive and sustained, and it has to target the right people. And the big problem is this last point: local government needs to be in the business of picking some winners.

The track record of these types of policies is mixed, to put it nicely. Many hubs have nothing to do with government action: Silicon Valley, the biotech cluster in San Diego, and the movie cluster in Hollywood are examples. Even in smaller places, Portland Oregon being one that I am familiar with and that seems actively to encourage the inward migration of young, skilled people, the heart of the high-tech hub is a private employer: Intel’s semi-conductor facility in 1976 was the start of things there. More locally, it is not obvious that government had much to do with Weta, nor with Xero, both of which have substantial local ecosystems around them.

That said, internationally Israel and Ireland would be held out as examples of success, the former more so than the latter these days, and even there the intention of government spending was not to create a local tech sector but instead to develop innovative defense technologies. Taiwan is another relevant example, transforming from a rural economy to an advanced one courtesy of government-sponsored research in the 1960s and 70s. Policy-makers bet on several failed technologies, but also on semi-conductors, which turned out extremely well. The history of efforts by governments is not studded with success, however. Mr Moretti reviews the experience of Fremont California, where Solyndra, a major employer, maker of solar panels, and recipient of significant federal government support, went broke in 2011. It seems that the industry of making solar panels does not exhibit strong forces of agglomeration, although it is hard to find this sort of thing out without trying.

Smaller scale efforts to attract employers, e.g., Twitter’s recent move to central San Francisco, are very common and, in some cases, seem to pay off for the communities involved, i.e., the benefits from spillovers can be bigger than the cost in tax foregone. That does not make the residents happy necessarily, since they appear to be giving city tax breaks to enormous profitable companies.

A programme that successfully encourages development, that does not try to pick winners too directly, that targets incentives carefully, and that incentivises private investment is more likely to be a winner, says Mr Moretti.

So what to do

Sadly Mr Moretti does not offer too much encouragement. There are no straightforward answers it seems, and you will only know you have succeeded once you have succeeded. His policy agenda is fairly broad, mentioning vouchers to encourage people to move to areas where they are more likely to find a job, a boost to RnD, a major improvement in the quality and quantity of education especially in technical subjects, and a loosening of immigration policy, since immigrants seem to be a lot more inventive than locals in the United States.

What all this means for New Zealand, a place that is not a brain hub in many industries and is far from the world, is not especially clear. The picture is even less clear for regions within New Zealand, which are still further from brain hub status by comparison with the major centres of New Zealand.

But let’s say New Zealand wants to be a brain hub, i.e., we want to adopt some policies that will attract or create high-tech companies that will hire high-tech workers, and this will generate jobs and boost everyone’s income. Assuming we have not got lucky, i.e., we are not a brain hub already, and we have good education, immigration and RnD policies already, some possibilities include the following:

* Understand the situation, i.e., figure out what New Zealand is good at and not good at, what is useful and can be built upon and what is difficult and will need to be worked around. Thinking about how the whole hangs together (“the city of four million people” to quote Shaun Hendy) and how we can compete with much larger Australian cities that attract more people is useful.
* Back some local employers or employment initiatives with public money, and over time expand the ones that seem to be working (i.e., the example of Taiwan, but not of Solyndra). Bear in mind that tech venture capital firms expect only one of every ten investments to succeed, a few to muddle on, and the rest to sink without trace. Politically you are going to have to be resilient to failures with public money. Not easy.
* Connect with educated locals and encourage them not to leave. The experience of Otorohanga might be inspirational as well as educational at the level of the nation.
* Connect with your diaspora, and try to encourage them either to come back with their businesses and networks, or to take an active role in supporting local initiatives from wherever they are in the world.
* At a national level, I think it would really helpful if New Zealanders went to a more diverse set of places (and not just focusing on the UK and Australia). We are not sufficiently well connected to China and the coasts of the USA.
* Make some localised improvements to amenities. Perhaps just giving talented people a place to run into each other could be a useful step forward. ATEED is building an innovation hub to house high-tech firms: a cluster of them is clearly already developing on Viaduct Harbour Avenue, with Vodafone, HP, Microsoft and others already in residence, just to name the brands you can see on the door. Fonterra is moving in next door.

You could also get some useful ideas on talented people and how to attract, retain, develop and connect them from the ever-interesting McGuinness Institute, and their project TalentNZ.

Do not expect speedy miracles. Sustainable economic development takes a long time. You can see New Zealand’s exports and imports broken down by type below, courtesy of the MIT observatory of economic complexity. First is 1990. Second is 2010. See how many colours have changed?

NZ Exports 1990

embed_tree_map_sitc_export_nzl_all_show_1990

NZ Exports 2010

embed_tree_map_sitc_export_nzl_all_show_2010

Use technology better, New Zealand!

On Monday I had the joy of speaking at an academic Symposium organised by the Productivity Hub, a large group of Crown agencies looking at the challenge of how to boost New Zealand’s productivity.

My basic point was that I think that smart use of the internet by New Zealand businesses can help boost the productivity of our businesses and ultimately lift the prosperity of the nation.

We are big on connectivity and are major users of technology, but we do not use it in the most productive ways in our businesses.

You can read the slides, look at the paper, or even read about it in the newspaper.

Stickybeak by proxy (Part 2)

In Part 1 we looked at some aspects of online privacy. In this article we look at the law.

Can the old dog still hunt

New Zealand’s privacy laws are generally considered to be pretty sound. The Privacy Act began life in 1993 describing a set of principles and giving you a bunch of rights in relation to controlling the collection, use and disclosure of personal information.

“Personal information” is defined in the Act as “information about an identifiable individual”, i.e., information from which you can be identified. If an agency is collecting anonymous information about your movements online, that is one thing, but if your online profile grows to the point that you could be identified from it, the rules in the Privacy Act can apply. As discussed in part 1, the line between anonymous and identifiable can be pretty uncertain.

The Law Commission looked at the Act in a three-year review of privacy laws that was completed in August 2011. It continues to believe that self-protection is the best protection, but suggests a substantial set of changes aimed at improving the law including:

  • new powers for the Privacy Commissioner to act against breaches of the Act without necessarily having received a complaint, and allowing it to order those holding information to comply with the Act or submit to an audit of their privacy rules, and
  • measures to minimise the risk of misuse of unique identifiers, and require those holding information to notify you if your information is lost or hacked, and
  • controls on sending information overseas.

The government agrees that it is time for substantial changes to the Act, although it does not agree with everything the Law Commission has proposed. A new draft Bill is expected next year.

To the ends of the earth

One obvious issue in the internet age is the lack of matchup between the international nature of internet services, and laws that are limited to the borders of any particular nation. A modestly-sized nation at the end of the world, like New Zealand, has limited ability to influence foreign organisations who may not have any local presence, although our Privacy Commissioner has taken action against reputable major players offering services in this country.

One answer is to harmonise our laws with other countries, or rely on the big fish to protect our privacy. If the US or the EU forces firms to improve privacy protections we will benefit. The US Federal Trade Commission can legitimately argue that its actions will protect users in other countries (see the summary of a talk from Nethui 2012 here, and it is focused on this stuff. Vivian Reding, then the EU Justice Commissioner said that privacy for European citizens “should apply independently of the area of the world in which their data is being processed …. Any company operating in the EU market or any online product that is targeted at EU consumers must comply with EU rules”. The French data protection agency is investigating Google’s new privacy policy.

Another evident challenge to existing privacy law is to the notion of “informed consent”. As a legal principle it is fine, i.e., your favourite online service has a privacy policy and you consent either directly to it by checking the box and clicking “I accept” or implicitly by using their service. So long as the policy does not breach the law and the service follows their own policy, they are legally blameless.

In practice you likely haven’t read the policy, and you may not be in a position to avoid surrendering some privacy in any case. Participating in society increasingly requires online interaction, and any online interaction will involve sharing some information. Legally operators can rely on your click to indicate consent to their privacy policy, but in practice you cannot really withhold it.

One solution could be crowd-sourced reviews of online privacy policies, or organisations that rate others policies. There are similar troubles with the terms of licensing agreements to which you have to consent in order to use software.

Fit for purpose

Users have options to protect themselves online if they care to. They can avoid being tracked, ensure their privacy settings for social media services are well considered, disable cookies, turn off javascript, use fake Gmail or Facebook accounts, use incognito modes on their browsers, access the online world through a VPN or a range of other things. The Privacy Commissioner has guidance also. And you either have now or will soon also have an option to turn on a “do not track” option in your browser, that will impede the ability of firms to piece together your internet history as you find your own trail through the online garden.

Sadly users mostly do not avail themselves of these options. That may be because some impede the internet experience a bit. Or because users do not care to change their behaviour much despite saying they are worried about online privacy.

In these circumstances, there will continue to be debate about how far users can or should take responsibility for their own protection, and how far the law needs to go. This battle is the natural result of the standard model for internet services, i.e., if you want free internet services, you need to realise that your eyeballs are the price. No one should be surprised that advertisers try to make their services more effective by learning more about the brains behind those eyeballs.

 

Hayden Glass is a Principal with the Sapere Research Group, one of Australasia’s largest expert consulting firms. Thanks to Rick Shera (@lawgeeknz) for instructive conversation.

This article was originally published on the TUANZ blog.

Stickybeak by proxy (Part 1)

Our ideas about privacy need redefining in the internet age

I consider myself a fairly typical internet user. Google for web search, a Gmail account for email, calendar and contacts, the Chrome browser for surfing, and my Google drive for a whole host of documents stored and shared in the cloud. On my Android phone I have 60 or so apps installed. I have no Facebook account, but I am on Twitter. I use Dropbox to share files, Flickr for my photos, iTunes for music, and Tumblr and WordPress for blogs. Plus, like the rest of you, I use online banking, shop online, and get my news nearly exclusively from online sources. I provide my location to make Google maps work better and also to help get better search results, but I click “Deny” when my phone gives me the choice to share location with any particular website.

I am sharing, therefore, quite a lot of information on the internet. This is an entirely standard way of life. Around 80% of us use the internet, and 80% of users report using Facebook.

The internet is such a part of daily life that we now share information unconsciously. Everything we do online creates a record and we don’t think too much about what happens to it. In US academic Daniel Solove’s vivid phrase, “data is the perspiration of the Information Age”. Others, like American computer security specialist Bruce Schneier, think of your click-stream as a type of pollution, in the sense that it is created by doing some useful online task but it can have unpleasant side-effects that need to be managed.

In Part 1 of this post we take a brief look at the online privacy environment and what makes it different. In Part 2 we look at how laws are changing to adapt to it.

Something new under the sun

Problems of information privacy are much more difficult in the internet age because the internet itself is so widely available, and information flows on it are difficult to control.

The internet has no borders, and is not based in any particular country. The location of service providers or users is generally unimportant: information available in one place is available in all, and it is difficult to control or trace the flow of data. Content is continually being added or modified, but content is also persistent, i.e., information that was once on a website can be searched for and retrieved even after the content of the site has changed.

The internet is also tricky for governments to control. There are, of course, still telecommunications operators who connect you to the internet. They have extensive physical investments, powerful brands and reputations to uphold. But service providers who hold information about you are generally not dependent on individual governments for resources at all. Most of the New Zealand internet’s most popular services are provided by US firms based in California with servers all over the world, and with little local presence here. The ability of the New Zealand government to influence the activities of, say, Facebook is limited, and given the aterritoriality of the internet, it is often not clear how firms can navigate the thicket of different national responsibilities.

Privacy, of course, is also a non-internet problem. Those holding information need to not, for example, lose sensitive government data in the internal post, or leave their computer systems open for members of the public to access.
But often internet users do not realise how much they are sharing (see these unfortunate Belgians), or what the consequences are. Facebook stands accused of deliberately making it hard for users to control their own privacy, and even the most sophisticated can get it wrong, releasing data that they think is innocuous (like AOL or Netflix that turns out not to be when combined with other public data. See also a local example.

Gold in them thar hills

The major online services companies have also raised substantial privacy concerns by mis-estimating what their users are happy with: cue dismay when Mark Zuckerberg, Facebook CEO, said that his firm was built on privacy expectations that all users might not share and the furore over changes to Facebook’s privacy settings that have led to EU and FTC regulatory intervention, or when Google’s then CEO Eric Schmidt said that if you want to keep something private online “maybe you shouldn’t be doing it in the first place”.
With all of this information about your online activities able to be discovered, there is money to be made in sifting through it,tying it together, and then selling the profiles to online advertisers.

Consider Rapleaf, a US outfit that matches email addresses with a range of public data including Zip code, age, income, property value, marital status and whether the person who controls this email address has children. It claims to have data on over 80% of US email addresses, and charges 0.5 cents per match.

Or this article (registration required), a deal between Facebook and a firm called Datalogix that allows the site to track whether ads seen on Facebook lead users to buy those products in stores. Datalogix buys consumer loyalty data from retailers, and matches email addresses in its database to email accounts used to set up Facebook profiles.

Generalised concern

It is hardly surprising that people are concerned about online privacy. Americans say their biggest perceived privacy threat is social networking services like Facebook and Twitter (they are also worried about unmanned drones, electronic banking, GPS/smartphone tracking and roadside cameras).

New Zealanders are worried too. A Law Commission survey revealed that 84% of respondents were concerned about “the security of personal details on the internet”, more than were concerned about “confidentiality of medical records” (78%) or “government interception of telephone calls or email” (72%).

Expectations of privacy clearly depend a lot on context. Information I share with my mother I may not wish to share with my friends (sorry guys), and information I share with my friends I may wish to keep secret from a potential employer. Information that I directly and intentionally share (e.g., via Twitter) is less sensitive than information that I do not know is being collected. I would consider my browser history, my email and my search history more sensitive than my purchase history from Amazon.com. I am pretty relaxed if information about these things is used just to target online advertising. I am less relaxed if these data were put together and used to establish my identity or calculate my credibility and trustworthiness.

And since my list of privacy preferences will not be the same as yours, it becomes clear that the question of online privacy is about the limits of my ability to control the flow of information about me, and my basic point here is that the internet age means that I have less control than before.

If users are concerned about control but feel (and to some extent are) powerless, what help does the law provide? We take up that story in Part 2.

And broadband for all (part 2)

Now everyone has access to a telephone, the question is how to get everyone great broadband

In Part 1 of this post we look at the historical approach to universal service. This Part 2 looks at the future: and in particular at rural broadband.

To its credit, the government has recognised that access to broadband in rural areas is a serious economic and social issue. The Rural Broadband Initiative (RBI) is the response: an industry-funded, government-led programme building faster broadband infrastructure in rural areas. When it is finished 86% of households outside the cities and most rural schools, health centres and public libraries will be able to access fast broadband, mostly within the next two years. Vodafone is building around 150 new sites and securing fibre to more of its towers, and Chorus is building 3,100 kms of new fibre. You can track Vodafone’s progress here or Chorus’ here.

Like Edward Woodward

The RBI was a big and welcome change in approach on how to to encourage telecommunications companies to provide services in hard to reach areas.

  • The TSO simply imposes the obligations on Telecom (and from 2001 to 2011 required other operators to pitch in to the costs). A similar model operates in Australia, where Telstra has the obligations and the other operators compensate it to the tune of around 50m each year.
  • The RBI is a competitive subsidy model (the money actually comes from the industry itself through a levy), rewarding Chorus and Vodafone, who won the tender, for building networks and providing services in rural areas. The German government has done something similar, requiring bidders for new generation cellphone spectrum to commit to build their networks in rural areas before they are allowed to build them in urban areas, implicitly accepting a lower sale price for the cellphone spectrum as the price of universal broadband coverage.

Not only is the RBI a better approach in terms of actually getting services rolled out in rural areas, but it sets a simple and clear standard for minimum broadband services which:

  • will reach 86% of rural customers, over half of whom will have access to multiple competitors and a choice of technology (copper or wireless)
  • will deliver a peak speed of at least 5 Mbps over wireless (a bit quicker than average fixed broadband services today) and 20 Mbps for copper-based services,
  • will be priced so that services cost the same in both urban and rural areas.

Four challenges for the review

First, there will be continued pressure from rural customers for better broadband services (see paras 164 to 167 of this Commerce Commission summary. This could take the form of a minimum guaranteed broadband service that must be available to all New Zealanders. There was much debate around the RBI as to whether 5 Mbps was fast enough for those customers relying on fixed wireless services (although of course it is a whole lot better than the no broadband at all that many rural customers faced before the RBI came along). The UN has defined broadband as a basic human right, and Finland in 2010 made a rule that all telecommunications operators were required to offer broadband access of at least 1 Mbps.

Competition over the RBI-funded infrastructure should mean that customers will gradually get more bang for their buck – in urban areas competition has meant growing datacaps with broadly static prices. Wireless services have smaller data caps than copper-based services reflecting the higher costs of data on wireless technologies. But new mobile technologies should allow faster wireless data speeds and bigger data caps in due course.

Second, the government’s review will need to consider updating the TSO requirements for the internet age.

Certainly free local calling is heavily utilised – accounting for 29% of all voice minutes in 2011 (see page 11), but if the Commission is right it is holding back competition. For the growing number of customers who use mostly or only their mobiles, “free” local calling is rather expensive. Other elderly TSO requirements – like not charging more in rural areas than in urban areas, and ensuring Chorus does not shrink its network seem superflous given the developments of recent years.

What to do with the ineffective price cap on basic voice services is trickier. It does not seem to serve customers very well, although clearly it is helpful for the industry to be able to put up prices every year.

Third, the obligations could be extended beyond just Telecom. With Chorus, the network company, now split from Telecom, the retailer, it doesn’t obviously make sense that the TSO obligations should rest only on Telecom. If Telecom is required, say, to have a standard plan that offers free-local calling as an option, there is no obvious reason why this rule should not apply to other operators as well.

The fourth challenge is ensuring everyone can get decent broadband.

Even after the completion of phase 1 of the RBI there will be coverage and competition black spots. There is a phase 2 of the RBI (ably explained by the Commision in para 159 of this report) to reach schools and other priority users that are not at present covered by the RBI or the government’s fibre network (the UFB).

Systematic, public, up-to-date data on remaining areas of trouble could also help – it seems like it would be an easy extension on the government’s (lamentably out of date) broadband map to show people who do not have service at present. This would help operators figure out the value of network extensions, sharing infrastructure where it makes sense in remote areas. Satellite solutions will work for many. Community self-build solutions like those from Wiz Wireless can also help in some parts of the country.

Over to you

So the ball lies fairly firmly in the government’s court. Its review is required to be completed by the end of 2013. We wait to see the outcomes with interest. A bold answer would consign the outdated TSO requirements to the dustbin, and ensure a sensible alignment between the TSO and the RBI as we continue to work towards universal broadband.

Hayden Glass is a consultant specialising in technology, telecommunications and public policy with the Sapere Research Group. This post originally appeared on the TUANZ blog.