Published on the 24/06/2016 | Written by Newsdesk
Connectivity key for NZ’s future…
More internet usage equates to a substantially better-performing economy. That’s among the findings of NZTech’s Digital Nation New Zealand study, released this week. To the initiated, that makes perfect sense, even if quantifying the benefits of better connectivity has always presented a challenge.
But quantify it NZTech has done. In a statement, it proclaims that ‘if all firms were more extensive users of internet services, the productivity impact on national gross domestic product would be as much as $34-billion a year’.
That figure is drawn from a 2014 report from Sapere Research Group which claims a 6 percent productivity improvement for businesses which ‘use the internet extensively’. However, what constitutes ‘extensive use’ is itself difficult to define.
With the country’s GDP of around US$200-billion (NZ$276-billion at current exchange rates), this more extensive use of the internet would deliver economic growth well in excess of the 2.8 percent growth forecast for 2016 by the NZ Institute for Economic Research, which produced NZTech’s report.
The businesses which can benefit from more extensive internet use are across the board – and includes primary producers said NZTech chief executive Graeme Muller. “Digital agriculture, in the form of precision farming, big data, sensor technology and drones, delivers a new potential for productivity gains across rural New Zealand.”
Muller said the economic impact of the internet and the importance of the underlying networks are beyond question. “We must ensure that network builders and the operators using them continue to have incentives to invest to maintain our global competitiveness. We want to see the Government carefully consider the importance of certainty in the telecommunications regulatory framework when looking at how best to regulate ultra-fast broadband (UFB) services from 2020.”
The good news is that the country’s use of the internet continues to grow rapidly, as demonstrated in Cisco’s recently released Visual Networking Index. This report said the number of people connected is expected to go from 86 percent of all Kiwis in 2015 to 96 percent by 2020. The average speed of connections will go from an already respectable 19.5 mbps in 2015 to 49.1; the number of connections per capita, from 4.3 to 7.7; data from an average of 25.8 to 50 GB per month.
Cisco’s VNI also said IP traffic will grow two-fold from 2015 to 2020, a compound annual growth rate of 15%, with traffic reaching 236 petabytes per month in 2020. That’s a lot of Netflix.
Company activity is where the biggest improvements will come, said Muller, which is as it should be. However, he also believes government activity has a major role to play. “The largest economic growth opportunities from the internet will come from businesses and government organisations effectively using internet services better to improve their productivity.”
He noted that the UFB programme and Rural Broadband Initiative (RBI) are at an advanced state of deployment; by December 2015, the UFB network was available to 875,000 households and businesses, 60 percent of the total target of connecting 1.459 million households and businesses with fibre to the premises by the end of 2019. “These networks are critical drivers of economic activity, productivity growth and employment across the economy,” said Muller.
