Forum: When the status quo blocks innovation

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Some of the building blocks of New Zealand's economic transformation are missing

By Rob O'Neill | Auckland | Tuesday, 15 September, 2009

While editing the current issue (September 14), I’ve had reason to ponder the complex issues around the effect incumbency can have on innovation.

First there is the issue of access to dark fibre. Neither Telecom nor TelstraClear are prepared to provide access to unlit fibre on their networks and, it appears, Telecom’s separation undertakings neither require it to do so, nor restrict it providing such access to its own wholesale and retail operations.

Now while this may seem pretty obscure, access to dark fibre has a lot of benefits to some users.

It can utterly change the way you deliver ICT services within an organisation, especially a distributed organisation or industry, and help cut your costs way beyond the considerable savings to be had through using unlit fibre.

It won’t be for everybody, but for some vital sectors it could help drive transformation by allowing people to use the fibre as they want — and not as bundled, and priced, by someone else.

The second reason I’m contemplating this is the Express Couriers story.

That is a story of innovation and service transformation, but a notable aspect of it was that the company had to go and build its own address register to make it happen.

Just over a year ago, a project to build a national address register (NAR) was abandoned due to cost.

Such a register could have been made available free to business, to emergency services and to web service innovators through open application programming interfaces to allow the development of a range of obvious and not so obvious services.

For now, New Zealand does not have such a facility while other countries do. You can go out and buy access to such a database or maybe do something on a local level through a council, but otherwise, like Express Couriers, you might have to just build your own.

To fix either of these problems, government would have to trample all over private sector providers, something I and many others are quite rightly wary of, but not in my case at least from any ideological point of view.

As a general rule, I think government should avoid competing with private sector suppliers — that in itself can damage innovation.

But having the right pieces in place, the right platform, to spur innovation is also crucial.

Arguably, access to unlit fibre and a NAR are pieces of such a platform.

TelstraClear CEO Allan Freeth recently railed against the rollout of council fibre in Christchurch, saying taxpayer money was being used to replicate existing infrastructure built by his company.

On the face of it, that’s a clear cut waste of money.

But TelstraClear won’t allow access to dark fibre. Christchurch City Council-owned Enable Networks does. In fact, Steve Fuller, CEO of Enable, says dark fibre is a fundamental part of his company’s business model.

So it isn’t just about whether infrastructure is available that matters to New Zealand business — it’s also about what you can do with it, how you can access it and the price you have to pay for that access.

When those become barriers to innovation and the national interest, government has to make its presence felt.