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Regulating to greatness - and other fables

Phil Burgess, Information Age

13/06/2006 13:08:04

The digital revolution is changing everything about the way we live, work, play, learn, move around and even govern. Yet unfortunately for Australia's future, most of the public dialogue about telecommunications in this country is about regulations.

We should be talking about what the deployment of advanced telecommunications can do for increasing productivity, increasing GDP and the wealth of all people and communities because of stronger economic growth, expanding jobs, improving the quality of life. But how many times do you see these things discussed in the paper?

More specifically, how do we use telecommunications to improve the competitiveness of all Australia's small and midsized enterprises? Create new hope for regional, rural and remote communities, give kids in isolated schools six megabits per second rather than 19.6 kilobits per second to download their distance learning lessons?

I'm going to serve up a vision that I hope will cause you to care more about the substance of the regulatory debate. Because if we don't get the regulatory settings right, then the great opportunities for Australia and the potential of these digital technologies and the potential for the 8.2 million households and 400,000 small and midsized enterprises in this country will be lost, or at least plagued by long, unnecessary and costly delays. To do that, I'd like to step back from the ongoing battles and look at the role of technology in society.

Unintended consequences: beyond the first-order effects New technologies typically have impacts and consequences that were never anticipated by their investors and pioneer users. Consider the railroad. The tipping point for the railroad was the invention of the steam engine, which provided a way to pull rolling stock over rails. The invention of the railroad led to many related innovations, including the Pullman sleeping car, the Westinghouse air brake, electronic signalling systems, remote electronic switching, standardised rail separations, all of which permitted interconnection of passenger and freight cars from one railroad to the other.

Now, that's kind of how we talk about telecommunications today. We talk about DSL and broadband and all these kinds of things, we talk about these first-order effects of the technology.

But the real economic, social and cultural importance of the railroad extended way beyond the technologies and improvements that were made in the technology and practice of moving railcars over fixed trackage. The impact of the railroad was huge and had enormous spill-over effects. The railroad reduced the cost of transportation and increasing speed to market, especially - in the original setting - for agricultural goods that were often produced in the hinterland. The railroad led to social inventions.

For example, the need to develop reliable railroad schedules led to the establishment of time zones. So when we think about time zones today, they didn't always exist, they exist because of this technology, it's kind of a third-order impact of the technology. The railroad also led to the demographic decentralisation of society, away from seaports and inland waterways.

In the US, for example, the railroad led to the opening of the American West and transformed the US into a truly continental country enriched by natural resources and the cultural diversity that was found west of the Mississippi River. The railroad also indirectly led to what today we call the green revolution - advances in agriculture that ended famine and starvation that were regular features of life in India, China and many other parts of the world.

Let me give two other examples. The automobile led to drive-in movies, it led to motels, it led to more sexual freedom, it led to suburbs, it led to sprawl. Not all these things were good, but the automobile had huge impacts beyond just the technologies related to how you make a car run. The same goes for the compass, invented by the Chinese and then adapted by the Europeans.

Eventually that provided the ability to sail in all kinds of weather, allowed the construction of larger ships - because the compass dramatically reduced the dangers of running aground - and provided the ability to sail long distances opening global trade routes. That, we now know, sparked unprecedented wealth creation throughout the world.

The same thing goes for the revolution in information and communications technology, the so-called ICT industries. While microprocessors, wireless protocols, broadband technologies are getting faster, smaller and cheaper, they're also beginning to have impacts way beyond the information technology industries themselves.

Like the railroad, the automobile and the compass, advances in information technology, increasing computer power, expanding wireless coverage, greater bandwidth through all channels, wired channels and wireless channels, combined with advanced in miniaturisation and micro and nano manufacturing technologies, miniaturisation to the extreme, are now being used to reshape how we live, work, play and indeed create whole new industries.

The new workplace One of the major impacts of the digital revolution is in the workplace. The new economy forces that are at work in the world today reward enterprises that are fast, flexible, focused, customised, network and global. Those are the key elements of modern new-economy companies. The result is there are many new opportunities for small and midsized enterprises where most people work and where almost all the innovation comes from.

New digital technologies are shaping important new workplace trends. It's noteworthy that each of these trends mitigates or eliminates the tyranny of distance, and each contributes to speed and flexibility and decision making and action.

Let me just give some examples. The first is telework, which involves moving the work to the people rather than people to the work, and it takes many forms. Many teleworkers are telecommuters who work part-time at the office at a hot desk or a hot seat and part-time at home, or from another alternative workplace. These changes in our culture begin to creep up on us and we don't realise they're happening.

But if you stop and think: what was the airline VIP room like five years ago, as opposed to today where it has all kinds of broadband connections, has all kinds of communication devices? Think about the fitness centres: I don't go there a lot, but the fitness centres today have broadband hook-ups for people who come in there, do whatever they do in those places and then sit there and check their e-mail. And think about the hotels: five years ago you went to the hotel business centre.

Today you don't have to do that; you can do it in your room. And so these kinds of changes happen slowly, we don't realise they're happening but they change everything about the environment we live in.

The rise of the lone eagles Consider also the rise of freelance professionals - what some people call soloists or free agents, and I call lone eagles. I started writing about these people back in the early 90s. These people are knowledge workers: they're writers, analysts, brokers, manufacturers' reps, attorneys, accountants, people who work by their wits. Most of these people live in large cities.

But many of them are now moving to small towns and rural areas for lifestyle reasons, because they can stay connected to their suppliers and to their markets by faxes, modems, express mail and plane tickets. Many are also amenity migrants, pre-retirement, empty-nesters looking for a better quality of life while continuing vocationally to do what they've always done.

I came here 10 years ago to do a lecture tour around this country, precisely on this issue on how telecommunications were just beginning to change the economic basis of many small towns in rural areas in this country. That was 10 years ago, and I come back 10 years later and find Australian demographer Bernard Salt's book The Big Shift, which provides a very convincing account of how this has happened in Australia.

Because those people in Australia who have moved to the sun coast, places like the Gold Coast or Byron Bay, he calls sea-changers, and those who move to the mountains or other inland locations like Ipswich or Orange are called tree-changers, but the demographic movement is all part of a global phenomenon, one that's largely enabled and stimulated by new digital technologies. And I think the impact of this is going to be huge.

Getting things done through project management Another major change that is occurring, just as the automobile spawned drive-in movies and the railroad led to time zones, is the rise of project management as a way for business to get things done. Work in large and midsize enterprises is increasingly project-oriented. A project has a beginning, a middle and an end, and project work is limited by time and objectives. The work is performed by teams that come together, do the job and then break up.

These are virtual organisations that blend in-house personnel and outside consultants or "nomads". They create things like "war rooms" and "skunk works" for longer-term projects, task forces and working groups for shorter-term projects.

One of the important things about project management is that it creates a market for the lone eagles and the soloists and the people we talked about earlier, the professional nomads, this kind of new class of temporary workers that includes a wide range of highly-qualified, freelance professionals. These temps are lawyers, engineers - very highly-paid people. These new economy hired guns staff all these projects that are now running in all kinds of businesses. They include the traditional consultants, the free agents, the amenity migrants and the other project junkies who make these virtual systems work.

One of the things that's really important is the impact this is having on the diffusion of innovation. Because when these project people come into a company, they learn things as well as provide a service.

Public policy always tends to run behind these things, not in front of them. And as technology begins to change very rapidly, public policy often becomes a barrier to innovation and new ways of doing things.

The result of this is that accountants and consultants and other knowledge workers are spending more time with their customers. They're spending more time out where the customer is. The result in some of these industries has been to reduce office space by 50 per cent or more. IBM is one of the prime examples where this kind of reduction and savings has occurred. In manufacturing and transport; fleet managers of trucking companies use modern network and wireless technologies which make possible the just-in-time manufacturing and delivery system. These are changing dramatically the need for warehouse space, how we use space, how people are deployed.

In education, the biggest impact of distance learning may be to support expanded home schooling and other forms of alternative schools and new approaches to continuing education for an ageing population. In governments, electronic town halls and electronic town meetings and other telecoms-based technologies are changing the way citizens participate in government and the way government delivers services to its citizens.

And finally, telecommunications is changing locational decisions as entrepreneurs and freelance professionals and nomads and other knowledge workers increasingly move outside urban centres to small towns and small cities. That's bringing in, in some cases, tens or hundreds of thousands of dollars of contracts to those towns.

What it means for us today First of all, we need to be talking about these kinds of issues. We need to be talking about what telecommunications and the digital revolution can mean for Australia, and what it can mean for our future.

Second, these new technologies unleash powerful social and economic forces, and they're having huge institutional impacts. And it takes a while for new big ideas to catch up with what these impacts mean but we need to let them happen and we need to know they will happen. I think the two most powerful forces going forward in the world are going to be the communications revolution and the biotech revolution, and in this country it's going to be communication because the biotech revolution doesn't have that big a foothold here.

Third, it's clear when you look at the history of these new technologies that established social authorities, governmental authorities, will almost always resist and try to guide and control the introduction and use of new technologies. For example, many intellectuals have mused about the dangers of an Internet without gatekeepers and editors and interpreters.

Governments undertake industrial policies to manage the way new technologies are introduced and used. We see this happening today in segments of the telecoms industries, where there are a lot of people who want to manage the introduction of new technology instead of letting it happen and getting on with business. It seems to me that the final lesson is that you do the best when you let a thousand flowers bloom. Let a thousand flowers bloom and then use the Trade Practices Act if you get any weeds. No nation ever regulated itself to greatness.

(Phil Burgess is group MD, public policy and communications and special assistant to the CEO, Telstra)

This article appeared in Australian Chief Executive magazxine and is reprinted with permission