For decades, the question of how the future of our society should look like had a rather simple answer: it was supposed to be a smooth evolution of the present situation. This is no longer the case with the Digital Revolution. Instead, we will be facing a phase of massive change of existing structures, which is already announced by the immense investments into new technologies and their effects on productivity, labour market and income distribution which we observe today. Hence, this requires an active, open and goal‐oriented discussion about how our society will be able to cope with the upcoming disruptive structures – a discussion which in addition has to be led on an international level.
75.4 Summary and Outlook
The Digital Revolution is about to leading to a change whose economic and social importance can hardly be underestimated. The impact of the upheavals lying ahead can without any doubt be compared to the industrialization or the age of enlightenment. Especially the parallels between the digital transformation and the industrial revolution are evident. Then and now, the driving factors were new fundamental technologies and resulting technical changes. Today, new applications are essential for the social and political evolution, because they are used to advance organizational changes in economy as well as in the entire social fabric. This structural change will go far beyond technical changes, and the digital transformation is of significant impact to society and politics. Therefore, it has become a social and political issue, just like new philosophies, political movements, social insurances, universal and equal suffrage and emancipation were the answers to the industrialized society (and, after all, the industrialization has led in the 19th and 20th century to new political orders, the disappearance of five empires and the development of welfare states).
Hence, from our point of view, the key consequences of this dramatic evolution may be summarized as follows. Note that, while our conclusions are based on the outcomes of the participation process triggered by the Austrian parliament as sketched above, we are fully convinced that they are similarly valid also for all other countries with a comparable democratic system. E‐participation as an opportunity for evidence‐based decisions: If politics is facing the requirement of dynamic changes, decision making can be supported by new technical solutions. The possibilities in direct communication between experts, citizens and decision maker can enable deliberative democracy in a new quality. Thus, diverse knowledge can be introduced in the formation of opinion in a much earlier stage and with a wide participation. As the project has shown, consultation procedures, performed under the existing parliamentarian rules of procedure, can provide a valid basis for decisions within a few weeks. The only thing required in these deliberative processes are a developed self‐image and an adapted behaviour of the Members of Parliament. In the interest of open legislation that brings better and more accepted political decisions, new pre‐legislative process must be developed. Project reports, green papers, stronger scientific support and consultation procedure may allow interested citizens and the MPs a substantial participation in the development of policies and bring about better policy decisions.
Political culture and practice: Until now, a culture of e‐participation has not been properly developed in Europe. As much as the Internet may facilitate the participation, it is not an amplifier for political interest and political participation itself. Facing the new opportunities, the existing digital divide must be acknowledged and be taken care of. Economic, social and technological factors are relevant for the individual opportunities. Therefore low‐threshold offers must be provided. During the consultation, also creating a common federal standard for e‐participation has been proposed. The discussion on e‐voting will gain weight in a digitized society, despite of the still unresolved security concerns.
Adaptability as an essential locational policy factor: The consultation has also clearly demonstrated that the challenge now is to create scope for innovation and entrepreneurship. Existing conditions must be checked, and regulatory tasks have to be put on the legislative agenda. Regions that are able to involve expert knowledge will have a competitive advantage, and this knowledge is often very easily available. However, the transfer into the political sphere is the critical factor. Moreover, policy requires also new forms of strategic early warnings.
Changes in the politics and media labour market: Publishers, journalists, think tanks, public affairs managers and political consultants are concerned with new tasks. The changed political markets will bring new demands. Also increasing is the need for guidance, information and community management. A revolution in political life would create new jobs. This “revolution” would lead to new political actors and create new types of organization. In this way, new competitors would occur for the classical parties, political media, pressure groups and existing think tanks.
The parliament as deliberative centre of politics: The present project has demonstrated interesting opportunities for the Austrian Federal Council with respect to strengthening the dialog oriented (deliberative) democracy in Austria. Following this path may lead to a general new orientation of this second chamber of the parliament, thus creating a novel, clear and more self‐confident image of this legislative institution. As a result, it would become a driving force for organizing public participation and deliberation activities, which at the same time would significantly strengthen both parliamentarianism and representative democracy in this country.
Summarizing, the digital revolution offers indeed significant opportunities on the way to new forms of high‐speed democracy. As the history of the industrial revolution has taught us, however, it typically takes quite some time for technological advances and breakthroughs to lead to innovative applications and subsequent changes in society and politics. Hence, the phase of dynamic disruptions due to the Digital Revolution may still lie ahead of us.
Acknowlegements
The authors would like to thank all participants of the initiative “Digitaler Wandel und Politik” for helpful discussions, and especially Gottfried Kneifel and Bettina Fernsebner‐Kokert for their valuable input.
References
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J. Rifkin, The End of Work, Putnam Publishing Group, 1995.
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A. Kovar, H. Leo und F.-K. B., “Grünbuch Digitaler Wandel und Politik,” November 2015. [Online]. Available: www.besserentscheiden.at. [last access 15 September 2016].
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[Online]. Available: www.besserentscheiden.at. [last access 2016 September 2016].
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P. Reichl, A. Kovar, G. Kneifel, G. Jacoby, P. Gfaeller und S. Berck, “Towards High-Speed Democracy: Lessons from the Austrian ‘Digital Change and Politics’ Initiative,” Proceedings CeDEM′16, Krems, Austria, May 2016.
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[Online]. Available: www.pnyxnet.com. [last access June 20, 2017].
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C. B. Frey und M. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” Oxford University Programme on the Impacts of Future Technology, September 2013.
© Springer-Verlag GmbH Germany 2018
Claudia Linnhoff-Popien, Ralf Schneider and Michael Zaddach (eds.)Digital Marketplaces Unleashedhttps://doi.org/10.1007/978-3-662-49275-8_76
76. Build It and It Will Disrupt: a National Broadband Platform to Fuel New Zealand’s Digital Economy
Fernando Beltrán1
(1)University of Auckland Business School, Auckland, New Zealand
Fernando Beltrán
Email: [email protected]
76.1 Introduction
The transformation of the market place in many sectors of New Zealand’s economy is fuelled by the deployment and adoption of faster, more reliable and robust broadband networks. Access to high‐speed communications networks by consumers and businesses is seen as a critical factor of success, if not survival. But the road to improved communications infras
tructure demands high levels of investment. Telecommunications companies must upgrade, replace or deploy new technologies, which usually render the existing facilities obsolete.
Telecommunications networks capacity encounters a bottleneck in the access to end‐users. Current technologies, such as Digital Subscriber Line (DSL), that use the telephone network lines to provide access to broadband services deliver a range of speeds to support broadband services. However the increasing demand for capacity from new services or the evolution of established services, render the DSL technology insufficient for such purposes. This situation is further exacerbated by the fact that in households and business users’ devices rely on multiple access to broadband wireless, such as Wi‐Fi, but usually on one single connection to the Internet. In order to keep up with the demand for access data rate fibre‐to‐the‐home (FTTH) technology is viewed as a solid replacement of copper‐based broadband technology, while being highly reliable.
Fibre, as an enabler of end‐user access to the network has proved superior to copper and has been in the market for some time yet its adoption has been slow. In countries such as New Zealand and Australia governments have acknowledged that the transformation of the telecommunications network from copper‐based technologies to fibre will not happen if only private investment is expected. Therefore, those governments have stepped in to provide much needed funds and managerial oversight on nation‐wide projects that accelerate fibre‐based access networks deployment and adoption.
New Zealand started a transformation of its telecommunications networks and markets by investing public funds in a high‐speed, fibre‐based broadband network, expected to reach 80% of households and almost every business in the country. The FTTH, broadband network deployment in New Zealand is a reliable, high‐speed telecommunications infrastructure regarded as a precursor to the creation of an entrepreneurial digital ecosystem that will most certainly fuel the creation of digital marketplaces. Not only is such modern communications infrastructure enabling businesses to turn technological features such as speed, reliability and cost into factors that must positively affect their business case, but also, and most importantly, the techno‐economic decisions made about its ownership and operation are facilitating strategic business factors that should contribute to business competitiveness on a global scale.
The premise of this chapter is that infrastructure is the facilitator of digital markets. In the 1990’s with the widespread adoption of personal computers and the availability of modem devices operating over the telephone lines, the Internet transitioned from labs and university facilities to the general public. Soon it was realised that the open architecture of TCP/IP would facilitate the creation of software applications that would create a direct link between a provider of goods and products and the consumers without the intervention of either the infrastructure’s owner or intermediaries. Fast forward to today’s conditions and as markets develop and transactions are completed on websites and portals, the need for more reliable, faster networks are an imperative. Such new networks, as pointed out, require large investments. When a government decides to invest in the country’s telecommunications infrastructure, policy, financial, legal and business decisions have to be strongly aligned in order to achieve an optimal return. If a broadband platform enables easy, sustained and effective operation of digital platforms which, in turn, facilitate the efficient establishment and growth of markets, it can then be argued that general public broadband policy, and technical and regulatory mandates are reaching their goals.
New Zealand’s national broadband network seems to have been conceived on a “build‐it‐and‐they‐will‐join” approach. Although the public debates revolved around the need for higher speed and more reliable access for consumers, in the end, political willingness mixed with hopes for the best played an important role in the decision‐making process. Build‐it‐and‐they‐will‐join is slowly solidifying; policy initiatives affecting the network architecture and regulatory measurements recently introduced are helping consumers feel reassured about their decisions to leave their copper connections behind and adopt the new fibre‐based access connections. With that in sight this chapter argues that the old adage is changing. As high expectations for productivity and growth have been placed on the new broadband ecosystem, a feeling of “build‐it‐and‐it‐will‐disrupt” seems to be taking hold of the sector which has unfolded in three stages: (1) an ambitious infrastructure upgrade accompanied by major policy changes and ensuing transitional regulations; (2) a steady uptake of fibre and the creation of a remarkable number of service retailers on the fibre; and (3) an emergent broadband platform that stimulates the creation of digital platforms for entrepreneurs and innovators. This chapter will describe and analyse those three stages.
76.2 Broadband FTTH: Enabler of Digital Markets
The worryingly low New Zealand Internet speed and broadband quality‐of‐service ranking positions in 2008 led the contending political parties to propose changes to the telecommunications infrastructure. Aiming for an ambitious infrastructure upgrade of the access network via FTTH, in 2009 the newly elected National government announced it would spend close to NZD $1.6 billion in broadband expansion by means of a programme to deploy FTTH in the urban areas complemented with an initiative for upgrades and access improvements in rural areas. The former is known as the Ultrafast Broadband (UFB) project and the latter is the Rural Broadband Initiative (RBI). Funded through two investment models agreed with four partners, the UFB network is a based on a public‐private‐partnership model of investment, a contract between a government and a private investor that seeks an alignment of the partners’ objectives as it shifts a substantial amount of risk onto the private partner.
In 2011 the UFB project promised New Zealand that, by 2019, 75% of households – a figure revised up to 80% in 2015 – and most businesses would be enjoying high‐speed broadband by means of optical fibre access. Crown Fibre Holdings (CFH), a government‐owned company, was created to search for private investment and manage the project, providing the government with an executive body that oversees the construction. The search ended with a bidding process that saw four companies win shares of the available funds in 2011. The companies, known as Local Fibre Companies or LFCs, were to deploy fibre in four mutually exclusive geographical regions. Shortly after, Telecom and Vodafone won respective bids to become CFH’s partners in the RBI.
A ‘recycling shares’ model was signed with three LFCs. Under such PPP model funds are used to build the fibre passing the premises, also known as dark fibre; when a customer decides to subscribe to the UFB network, the partner builds the “drop” into the customer’s premises [1]. At this point the customer has already made a decision as to which of the many Retail Service Provider (RSP) to subscribe to, which in fact starts a subscription‐based retail commercial relation. Unlike LFCs, RSPs are allowed to deal directly with the end‐users. Once the subscription is started, the RSP is ensured of a revenue stream from such customer, which in turns creates a flow of funds to the LFC. Such funds are then used by the LFC to buy shares in the government‐funded part of the UFB network. Depending on the subscription turnover by new customers, the recycled funds will allow that the ownership of the network gradually shifts from CFH to the private investing partner.
Participation in the UFB project brought the split of the former incumbent, Telecom NZ. As the company sought to bid for a share of the project the Government conditioned any bidder’s participation to only companies not operating the wholesale and the retail sectors. In other words, only non‐vertically integrated firms would be able to become partners in the fibre deployment initiative. Following such decision Telecom NZ demerged into two completely separate companies, Chorus, owner the old copper network and looking forward to own UFB fibre assets, and Telecom
Retail retaining the switched network, the wireless network and the national backhaul (transport) network. Telecom Retail was later rebranded as Spark. The contract signed with Chorus differs from the contract signed the other LFCs: the Crown invests directly in Chorus with Chorus bearing the risk associated with the uncertain demand uptake. The investment amounts to a zero interest loan and in return Chorus has to comply with specific coverage and uptake goals.
The RBI’s goal is to bring rural New Zealand to a higher development of broadband capacity. RBI’s strategy lies on deploying a mixed wired and wireless infrastructure. On one hand DSL connections using latest Long Term Evolution (LTE) standard, are being upgraded. On the other, a nationwide cellular telephony tower expansion program has been completed [2].
In UFB areas consumers and business can choose their provider among a substantially high number of RSPs; LFCs can only provide wholesale services to such RSPs and are forbidden from direct deals with end‐users. As of mid‐2016 about 68% of the build‐up (about 100,000 connections) in UFB areas had been completed, with over 240,000 users connected to UFB services [2]. In average 425 homes have been “passed” every day since construction began; a home passed by fibre is a household enabled to get hooked onto the street fibre backbone if only its owner decides so. In 2014 the average cost for a premise passed was about NZD $2134 (USD $1810) [3] and the cost of connecting a premise was about NZD $1233 (USD $1050) [3].
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