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Trans-sector on hold in the Netherlands

22 July 2010

Given the ongoing political uncertainty in the Netherlands it could take months before a new multi-party government is formed following the elections in early June.

As a consequence, unlike elsewhere in the world, not much progress is taking place in that country in relation to trans-sector policies.

There is certainly increased awareness of the need for new industry policies, for a new direction for social and economic innovation, and for the need to break through the various silos in order to make advances, both in relation to budget savings and to develop new policies and strategies to address the various challenges that the world is presently facing.

However none of this will happen without strong leadership, which needs to emanate from a position above the silos. As was the case in the run-up to the election, that strong leadership is still missing in the Netherlands. This is most regrettable, since the term ‘trans-sector’ was invented in that country by Professor Nico Baken at the Technical University of Delft and the concept has been sponsored and supported by the incumbent telco operator KPN. The country’s national ‘Innovation Platform’, lead by the Prime Minister himself, was an example of an entirely silo-based strategy.

Theoretically the Netherlands should have become the leader in the trans-sector movement, but it has now been overtaken by more visionary government policies in the USA, the UK, Australia, New Zealand, USA, Korea, Finland, and even Rwanda. We are also seeing more progress in Europe generally as well as at a global level, with the EU accepting the Digital Agenda for Europe and the UN supporting the ITU/UNESCO Broadband Commission for Digital Development. Pointedly, the Netherlands is absent from this Commission.

As is now increasingly accepted, without government leadership it is very difficult to transform sectors such as healthcare, education, energy, transport, etc.

In the Netherlands it is accepted that the trans-sector concept makes sense, and new industry initiatives are taken regularly; however, without the ability to upscale these projects nationally, they all terminate in the endless line of ‘death by pilot’ projects.

In order to protect their own silos conservative forces, bolstered by a general sense of fear spread by the media, propose obstacles such as privacy, security, reliability, etc to block these initiatives. A weak government is thus unable to address these issues properly, and as a result e-health and smart grids have become some of the casualties from these ineffective policies.

Of course, issues such as privacy are critical and must be addressed, but they need to be addressed within the context of what needs to be done to make sure that the country can take on the serious challenges ahead.

And again this comes back to the issue of leadership.

When I was in the Netherlands a year ago two interesting projects were launched: ‘Smart Living’, an integration of a number of innovations in relation to the various elements that would make up such a project; and a Taskforce for smart grids. However, as we cautioned at that time, due to a lack of strong vision, leadership and a commitment towards real government policies both projects have made little progress, and it is unlikely that this will change any time soon.

During the previous government’s regime there was a strong tendency to leave these developments to the free market, with little or no government involvement. While the industry is more than ready to move forward, they have no control whatsoever over the various government sectors that control the demand side, and, as mentioned above, this results in the initiation of small pilots, which offer no potential for upscaling.

There is a strong political lobby aimed at breaking through the current deadlock but equally there are strong forces – especially in the wake of steep budget cuts – to maintain the status quo, which would see the Netherlands slipping further behind.

Paul Budde

NBN Co bringing us to the next stage

Trans-sector approach now well-accepted

It is gratifying to see that most of the key stakeholders involved in the broader ICT market have given their support to the government’s policy for development of the NBN, a new national infrastructure that will facilitate, through its wholesale arrangements, a range of very innovative and competitive new ICT (retail) services.

An open infrastructure – separate from its applications – is going to deliver both new services and new players into the market. With the trans-sector approach people are beginning to recognise the potential to increase the size of a rather limited telecoms pie, and to realise that a decrease of market power from some of the telcos, on the one hand, can be more than compensated for by an increase in overall ICT business.

In the next phase, which we are now entering, we no longer need to make a case for the trans-sector approach and its social and economic benefits; the government has clearly linked e-health, smart grids, smart cities and smart infrastructure directly to the success of the NBN and most of the other stakeholders (other government sectors, investors, industry, business and consumer groups, etc) are supportive of that concept as well. The government has also promoted the NBN as opening up the infrastructure for innovations, more choice and more competition. These policies are now a given, and should become the platform from which the next level of decisions are made.

The next step is for the NBN infrastructure to be developed in a way that will make this happen. We need to ensure that the intention of the NBN – according to the trans-sector vision provided by the government – will now be carried out in its implementation. The government will need to follow this up with further supporting policies in other sectors (healthcare, education, energy, etc) and NBN Co will be the most critical element in the actual implementation.

We certainly can’t underestimate the enormity of this project. It hasn’t been done anywhere else in the world and Australia is becoming the international benchmark here. It is essential that we keep the bigger picture – why we want this NBN – clearly before our eyes. It would be far too easy for this project to become bogged down in endless technical details.

The government needs to make sure that the vision stays in place.

The role of NBN Co

The NBN as a government-funded public infrastructure initiative is aimed at providing a national infrastructure that can be used for the delivery of a range of commercial and public ICT services on a trans-sectoral basis. Wholesale services need to be made available in such a way as to enable NBN Co to facilitate this trans-sectoral approach, whereby these ‘sectors’ can independently buy and deliver services to create their own retail services.

This should be carried out, not in a telecoms-centric manner, but in a truly trans-sector context. NBN Co should facilitate not only telcos but a broad range of access seekers. The needs of these other sectors will also have to be facilitated by NBN Co. These sectors are not well-represented in the discussion. From a social and economic policy perspective it is essential that these sectors receive special attention in the debate.

Specific (trans-sector) requirements will also need to be facilitated within the new regulatory environment of the NBN. A broader participation of sectors in the NBN will have far-reaching consequences for issues such as regulations, privacy, security, USOs, etc.

The national FttH network will provide a multiple access facility within each premises that allows for the independent delivery of these trans-sector services.

For this purpose it is important that NBN Co is seen as a regulated basic national infrastructure provider and not as a telecommunications company. Its tariffs should be subject to ACCC approval.

NBN Co should be permanently enjoined against providing telecommunications services or information services to retail customers.  It may self-provision these services for its own administrative use, or for incidental purposes, but should not engage in direct competition with its customers.

From a government policy point of view NBN Co should be able to provide wholesale services (only) that will allow for the creation of a range of independent services:

• telecommunications retail services (voice, data, video) – customers can include telecommunications carriers, ISPs, mobile operators, and non-carrier companies including information service providers, broadcasters, cable/pay television service providers, digital media companies, etc;
• sensor-based networks providing end-to-end connectivity for utilities (smart grids), M2M networks, monitoring networks, etc;
• infrastructure facilities that allow for the establishment of e-health, tele-education and e-government services;
• corporate and other government networks as well as large system integrators.

It is also important to note that applications will come and go, and they will continually improve, but the NBN infrastructure at its most fundamental level should be sustainable, lasting near-forever, and incurring only routine, periodic improvements along the way.

NBN Co should impose no restrictions on the sharing or resale of its facilities.

The underlying NBN government policy is aimed at facilitating both public and commercial arrangements, which can be developed by the wholesale customers of NBN Co through a model facilitating maximum choice, competition and innovation, at both a wholesale and a retail level.

The end result of this should be that any access seeker will have, in principle, the opportunity either to buy basic infrastructure to develop their own services, directly from NBN Co, or to buy from wholesale providers who might offer ‘value-added’ infrastructure services.

Paul Budde

FCC investigating trans-sector opportunities of FttH

Earlier this year I led a group of international colleagues (Big Think Strategies) in the presentation of a range of Big Think Reports to the Obama Transition Team – all in relation to the future of telecoms in the USA.

The trans-sector concept means that an investment in infrastructure should be based on the economic and social multiplier effect of that investment in other sectors such as healthcare, education, entertainment, energy and communications. This demands a high-level of leadership from above the silo structure of the individual sectors.

One of the key reports presented was on Open Networks, utilising some of the open network wholesale principles as they had been developed by the Digital Economy Industry Working Group in Australia.

The Big Think team was very pleased when the Obama Administration at the White House took the lead and included a request for ‘open networks’ in its Broadband Stimulus Package and its Smart Grid Stimulus Package.

At that stage the FCC was still working under the policy structure of the previous government, which had greatly favoured the incumbents – and as a result competition had been shrinking under its regime. New appointments to the FCC would be needed to bring the telecoms policies more into line with those supported by President Obama and his team, who understood the trans-sector benefits of a national broadband network.

However, such a regulatory transition takes time and some people in the USA became disappointed with the rather small changes that were taking place in the wake of the Broadband Stimulus.

I always saw this Stimulus as a policy-setter rather than an end goal – let’s be honest, $7.2 billion is a very small figure when applied to the American telecoms industry, which is worth more than a trillion dollars. It has always been my understanding that this was a one-off policy decision and I was confident that the Administration would make sure that the new FCC, under its leadership, would have to take over broadband policy-making.

However, very importantly, the direction was set by the original Obama Transition team, key members of the group who said ‘Yes We Can’. And so the Big Think group presented the Obama Team (as well as the governments of Australia, New Zealand and the Netherlands) with a report on the trans-sector concept.

The feedback that we have received has always been very positive; for instance, the White House publicly indicated its interest in the Australian NBN model and the way it was applied on a trans-sectoral basis.

Australia has embarked on a National Broadband Plan that will see a US$36 billion FttH infrastructure investment linked to a trans-sector strategy that will use this investment for e-health, smart grids, smart infrastructure and e-government services as well as for entertainment and high-speed Internet access.

As a sign that the new FCC is getting on top of the issue it has now asked for submissions to its FttH Research Project with the following stated purpose:

To explain the policy rationale for embracing a national goal for the accelerated deployment of FTTH over the next decade because the economic and social benefits of such accelerated deployment far outweighs the costs.

While the term trans-sectoral isn’t used, the FCC specifically asks for submissions to address issues in relation to the FttH and applications in the areas of:

• Energy independence through efficiency
• CO² reduction through reduced travel
• Medical cost reduction
• Improved medical care
• Improved homeland security
• Improved education.

It is also looking at developments in Japan, Korea, Australia, New Zealand, and U.K.

There will no doubt be a strong lobby from the incumbent telcos, arguing that the market should be left as it is and that they will look after these issues, as long as they are receiving the right regulatory protection (eg, a monopoly). However there is a rapidly growing groundswell of people who are using this new opportunity to argue for significant changes that would speed up the deployment of a national open FttH network based on its trans-sectoral benefits.

The incumbents argue that open networks constitute state interference, which would be unconstitutional. The only conclusion that can be reached, however, is that government policies from the past are now interfering with this ‘open’ development – negative factors such as the monopolistic models needed for scarce resources, which were developed in a different era and have now outlived their usefulness.

An open network policy would be a way of cancelling out past state interference that has produced a state of affairs that is no longer acceptable in a modern open society.

This will no doubt be a very interesting discussion but in my view the outcome will have to be an open network that will be able to deliver nationwide first-class broadband-based services to its citizens,

Americans shouldn’t ask for anything less.

Paul Budde