Future Broadband and Fibre?

The New Zealand Institute recently released it's final report on broadband where is suggests the only way for New Zealand to get a world-class broadband service is serious investment into a fibre up to the last mile.

Reports in the media have questioned the conclusions and in some cases called the plan "myopic". It seems that the Institutes direction has some implicit backing as another recent report, this time from the OECD, suggests future broadband requirements will dictate 50Mbps connections, something that may indeed point to the need for a fibre backend.

Telecom has said in recent announcements that planned upgrades will get NZ's broadband services to 10Mbps by 2012 for 80% of the population. Unfortunately this means we will still be 40Mbps short. Maybe the estimate of 50Mbps is wrong or maybe we will yet again be doomed to the bottom half of the OECD?

New OECD Broadband Figures Released

The Organization for Economic Cooperation and Development (OECD) has released its latest figures relating to broadband statistics. While not completely rosy for New Zealanders, we have moved up one place (20th from 21st) in the broadband uptake list. The figures for "Average advertised broadband speed" on the surface look really good with New Zealand coming in at 5th
behind Japan, France, Korea and Sweden. Unfortunately that ranking comes with a caveat - which basically says that ranking is based a theoretical maximum for the technology (ADSL 2+) and I am pretty sure we don't get those kinds of speeds here.

The question is should we really worry too much about the OECD figures? If we are to become the knowledge economy that the government wants then the answer is probably yes. It has been well noted that reliable and cheaper broadband is going to be a key factor to competing in the global economy.

New Zealand Votes Against Microsoft OOXML

The following story reports that New Zealand has voted against Microsoft OOXML being fast tracked as ISO certified. ISO certification would provide a clear and stable definition of requirements for organisations, such as software vendors, implementing the standard and allow the technology to be further adopted.

It is not just New Zealand that is raising questions about OOXML so this is good news for the other competing Open Document Format (ODF), also XML based, which is being championed by a number of large organisations including Sun Microsystems, IBM and Novell.

It seems at this stage there is no consensus on what will be the de facto XML based standard for documents. Unfortunately, like any technology with competing formats - BluRay vs HDVD - this is probably going to be bad for consumers if a clear winner does not emerge.

Follow up:
Results of the vote from national bodies came in with only 53% support; a two thirds majority was required for fast track status. The full vote from all member countries was much closer - requiring a three fourths majority - with 74% voting in favour of the standard. Further reports on the votes are available at Ars Technica and Wired.

ISP's Happy with Telecom Peering Proposal

It seems that at least one of Telecom's proposals has been greeted positively by the ISP community. Telecoms plan for regional peering would set up 29 regional peering points to ensure that local Internet traffic stays within New Zealand.

There is no current peering agreement between the major New Zealand ISP's after they stopped peering at Internet exchanges in 2004. This means that traffic generated within New Zealand can sometimes still be routed through international links, having a real effect to broadband capacity in an already under performing infrastructure.

Hopefully this is a only one of many positive steps between Telecom and ISP's on the road to LLU?

Pay-For-Blog Site...Is it Kosher?

Associated Content is a user driven site that allows bloggers to write articles and get paid for it. Online content is the major component of any good site and Associated Content have seen a market for licensing content to online publishers.

However, issues have been raised about the style of the content that is been generated by Associated Contents' bloggers. Instead of quality articles, the content has been described as "made for marketing"; written specifically for its advertising-value as opposed to its value for site users. This is probably valid given that the amount each blogger gets paid is dependent on how well their articles "perform", viz. how much revenue it generated via Googles' Adwords.

Questions have also been raised about a potential conflict of interest for one of the Associated Content board members, Tim Armstrong - he also works for search engine giant Google. Working for both Google and a company that makes money from a Goggle service is not illegal, but is it perhaps a little dodgy? Does Tim Armstrong have unfair advantage over other companies that look to make money from Google services? Surely he is the best person to make money from Google if he works there too?

Less Content Is More

It seems that researchers have determined that when providing content choice to users, less really is more. The study found that when provided with a list of options, in this case it was pictures, online users were able to better focus when provided with a smaller number of options. When presented with a small number of pictures - 6 - as opposed to a larger number - 24 - the test subjects were found to recall the pictures with greater accuracy.

So it seems that all those news sites that try and cram more and more on the front page have been going the wrong way.

The Future of the Web

An interesting interview with Tim Berners-Lee, the "creator" of the World Wide Web (WWW), discusses how he sees the world wide web evolving. Berners-Lee gives good examples of some of the more abstract concepts and specifically discusses the difference between the currently hot term web 2.0 and his own future vision of the world wide web, which he calls the semantic web. In a nutshell the semantic web is defined by Berners-Lee:

The Semantic Web is about putting data files on the Web. It's not just a Web of documents but also of data. The Semantic Web of data would have many applications to connect together. For the first time there is a common data format for all applications, for databases and Web pages.

These are some fairly exciting prospects...now someone just needs to figure out how to do it - luckily Berners-Lee mentioned that he is part of a research group at MIT which is developing systems that may be able to achieve these lofty goals.

The article also touches on many other aspects of the Internet such as net neutrality and future Internet governance as well as a quick reflection from Berners-Lee's regarding his time at CERN.

Broadband Speeds - US Also Suffers

An interesting article at Wired discusses the recently released report by the communication workers union. The report highlights that the US suffers from relatively low broadband speeds when compared with the rest of the world. The median US speeds sit around 1.97 megabits/second while Japan is at 61 megabits for the same price. The difference between these speeds is illustrated by the time it would take to download a movie - 2 minutes compared to 2 hours for the US!

Are we expecting too much in New Zealand if a large and highly competitive market like the US fails to have world class broadband offerings? Given the current timeframes for local loop unbundling it looks like we will be waiting a while regardless.

Internet Collapse Imminent?

It is something which has been said year after year but is the Internet finally reaching a crisis point?

The prevalence of high bandwidth websites has exponentially increased and access to a wide range of online content (such as video streaming and MP3's) is an expectation of most Internet users. Will the global infrastructure supporting the Internet be able to cope? The following article from the BBC explores this topic further and notes that just one days worth of traffic from YouTube is equivalent to 75 Billion emails. This is only one of the pressures that wasn't around a couple of years ago and with the rise of online applications such as Google Docs & Spreadsheets are things going to get much worse?

There will be many people here in New Zealand who might ask if we have already reached this point? After all, some evenings (that is being generous) it is hard to know if our broadband speeds are any better than those on dial-up. This shows how our local infrastructure fails to cope with the current demands - will we see this at a global level in the near future?

Microsoft Surface - Futuristic Computing

It seems Microsoft have been busy developing a new technology and are now showing it to the world. Currently called Microsoft Surface, the technology is a table/computer; the tables surface is both the user interface (a touch screen) and display.

Based on information provided by Microsoft, these developments have been underway since 2001 but now the technology is being actively promoted. If even half of the functionality that is demonstrated on the showcase site becomes available then some of those futuristic scenes from many blockbuster movies are not at all far fetched.

So the question remains, is this just exceptionally clever marketing or has the future finally arrived?

Telecom Plans GSM Implementation

The NZ Herald has repoted recently that Telecom New Zealand is set to hand Alcatel Lucent a contract worth between $300 - $400 million to build a new GSM mobile network. It appears that Telecom's intention is to construct a GSM system to deliver voice services while retaining the current CDMA network for high-speed data services and voice calling during the transition to the new technology.

Of course, this is good news for Telecom users - a greater range of handsets and improved roaming capability will now be available. However, this level of service has been enjoyed by Vodafone users for some time. I am sure that Telecom's initial decison to commit to CDMA technology was a well considered one, but ultimately this respresents the reversal of another investment decision where the users end up as the guinea pigs in the experiment.

NZ Exports More ICT than Australia...

In a time when the New Zealand export market is struggling in the global economy - due mostly to a high dollar - it is nice to see we lead our Australian neighbours in at least one respect.

Although the figures in this story were flagged as possibly incorrect due to the statistical methods used in each country, it is probably worth recognising anyway. The figures quoted were $389 per person in New Zealand and for Australia, $315.

NZ's Business View on Climate Change & Other Emerging Risks?

In a survey conducted and released by Marsh in 2006, NZ companies were asked to comment on the World Economic Forum's identified key emerging risk area's.

• Terrorism
• Oil Price Spike
• Fiscal Crisis
• Pandemic
• Climate Change
• Liability Regimes
• Counterfeit Goods
• Increasing Corporate Governance Requirements
• Exchange Rate Fluctuations

(The full report is available from www.weforum.org)


When these risks were ranked in reference to their own businesses:

" . . . respondents showed that despite huge media profile around the issue of climate change, pandemic preparedness rates as number one of the emerging risks".

This result may simply indicate a pragmatic assessment by business leaders whereby a Pandemic does represent greater risk than climate change. Even so, some commentators are asking whether NZ business are failing to grasp the true impact of climate change to its primary industry (diary, beef, and lamb) based economy.

So just how far progressed is NZ when seriously considering the impacts of climate change?

Anti-Trust for iTunes | DRM Scraped by EMI

There have been two major developments in the DRM world within the last few days. Firstly, EMI announced that they will sell their entire music catalogue without DRM and whats more the sound quality of the downloads will be improved as well. Apple has said that iTunes will be the first online store to sell the DRM-free downloads.

Secondly, Apple's worries in the EU continue . It appears that the EU has determined that record companies and Apple are limiting peoples access to competitive pricing by having regionalised versions of iTunes. Investigation will follow and it looks likely that a EU wide store is what the commission is after.

Two-factor Authentication - Ineffective and Expensive

Reports from a recent e-Crime Congress in London have "rubbished" two-factor authentication as ineffective for the user and expensive to implement.

Although the technology is touted as the next generation of user security - and has been implemented by a number of banks here in New Zealand, in addition to remote access technologies such as Citrix - the experts are not impressed.

"There are a whole bunch of things that can go wrong with two-factor authentication," explained Ross Anderson, professor of security engineering at Cambridge University's Computer Laboratory, citing the 'man-in-the-middle' attack as one example of the technologies weaknesses.

Therefore, the issue of dubious online security remains and we must hope that the experts will provide a viable alternative to the current incarnation of "next generation security" in addition to pointing out its failings.

NZ Mobile Market About to Get Much Bigger

According to the NBR the mobile phone market will have at least three new entrants due to pending legislation relating to number portability.

Essentially the legislation will allow phone users to keep their mobile or home numbers when switching providers. The long standing coupling of the telephone numbers with the service provider has been cited as a key barrier to more competition in the market. With NZ based Orcon, Compass and Australian based M2 Telecommunications Group all signing deals with Vodafone to use its network to provide mobile phone services, the number of providers in the market will essentially double.

There is one remaining question, how will you know whether you are calling a Telecom or Vodafone mobile if the type of number (021 or 027) is no longer a reliable indicator? It's going to make those free minute and TXT messages hard to manage.

Is the New Zealand Telco Market About to Actually Get Competetive?

It has been noted in the local media (see the NZ Herald and Stuff stories) that TrustPower is gearing up to be an all-in-one service provider, after it's acquisition of the call centre company Pulse Business Solutions and the Oamaru-based telco CallSouth.

It looks like the relatively uncompetitive telco market could be in for a shake up with Trust Power's community relations manager Graeme Purches confirming the intention to move into the full-service telco space. This is good news for consumers and businesses alike as the New Zealand telco market could certainly do with the extra competition.

Telecom to Offer Guaranteed Broadband Services

The ability for organisations to truly rely on the quality of service delivered by their telco provider could almost be here. A requirement stipulated under the Telecommunications Amendment Act that was passed last year, requires Telecom to provide broadband with performance guarantees.

This looks to be a positive step for the internet-based services such as IP telephony and hosted applications (e.g. Google Docs & Spreadsheets), which require these sort of performance guarantees to be seriously considered by most organisations as a viable alternative to more traditional service models.

There are however already fears that this could mean a significant price increase for the consumer, given that Telecom will need to vastly improve parts of its network to provide these performance guarantees. It is likely these sort of fears will be just one of agenda items to be discussed at a workshop hosted by the Commerce Commission later this month.

Cometh the CRO

According to a survey from the Economist Intelligence Unit:

45 percent of companies have already appointed a CRO or equivalent, although the majority of them are concentrated in the financial services sector. However, the role is set to become more commonplace in other industries, with 24 percent of all firms planning to appoint a CRO in the next two years.

Interestingly, respondents identified regulatory risk as one of the top two threats to global business, along with reputational risk. (See "The rise and rise of reputational risk" at this Blog site).

The research indicates that top risk managers now play a central role in co-ordinating their firm's response to an unprecedented range of threats. The main benefit of appointing a CRO, according to 52 percent of executives in the survey, is that they can expand risk management to address more risks.

We (Datasouth Corporate) have long since held that the risk professional must undertake to enhance corporate decision making within their organisation, and to truly integrate "risk" from the project to the boardroom. The report supports this when it states:

They (the CRO) also enable the business to make better investment decisions, in particular by bringing a more effective approach to measuring and comparing risk and reward.

Further on it comments:

Sixty one percent of respondents believe that the ability to understand broad business issues is a critical skill for an effective risk manager.

The rise of the may CRO not quite upon us in all its glory in this part of the world (Australia and New Zealand), but it is only a matter of time . . .

UK Will Not Ban DRM

CNET news has reported that a petition calling for the ban of DRM in the UK has failed. The government rejected the petition and published a response claiming that "DRM could bring value to consumers".

In its response the government said:

DRM does not only act as a policeman through technical protection measures, it also enables content companies to offer the consumer unprecedented choice in terms of how they consume content, and the corresponding price they wish to pay,

It is clear though that the needs and rights of consumers must also be carefully safeguarded. It is reasonable for consumers to be informed what is actually being offered for sale, for example, and how and where the purchaser will be able to use the product, and any restrictions applied,

It seems that the future of DRM is still far from decided.

EMI's DRM Position in Jeopardy...

It appears that Warner Music has signaled an intention to buy rivals EMI which could be a major blow to the DRM'less future that had been suggested by EMI itself.

This is especially true given Warner Music's position on DRM which is probably one of the more vocal industry voices in retaining DRM, that said Warner makes it clear that interoperability is very important for the consumer.

There are a few hurdles to jump through yet before this deal is signed especially in the areas of assessing the "regulatory and operational risk profile" for both companies. Still, it appears that the trend of industry consolidation is not about to change.

The Overrated "Big Four"

In a report from Risk Management Magazine, a survey by Grant Thornton - the fifth largest audit firm in the US - unveils what we have always known; the hype around the importance of alignment with one of the big four is just that - hype.

. . . 67 per cent of those responding to an online survey who had "expressed a clear opinion" said it would make no difference to them if a company changed from a Big Four audit firm to another global or national firm outside of the Big Four.

And:

. . . the auditor backed it up by asking a US academic to study stock price changes over four years to announcements of a shift from either PwC, KPMG, Deloitte, EY and the former Arthur Anderson to Grant Thornton.

Dr Scott Whisenant, from the University of Houston, found "no statistically significant evidence of stock price decline in any of the announcement event windows I studied".

"These findings hold regardless of company size, including companies with sales greater than $500 million," he said.

Now clearly, the report is designed to support the audit services offered by Grant Thornton. However the underlying finding is far more broad reaching, and is in fact, nothing new. Many firms who are regarded by the big four as being 'boutique' and offering little competition, have nevertheless built their businesses through specialisation.

(The next time you are online take a look at the websites of the 'big four'. Is there anything they don't do? Realistically, do you accept that they 'lead the market' in all of these disciplines?)

These specialist firms are picking off large accounting firm clients who feel "unloved" and who are tired of the large fees; by offering better quality services at better rates.

Still, the results of these large companies are not exactly unravelling in front of them. But what is this financial performance built on? And how long will the market continue to support them in their current state?

Public Company Non-Financial Risk Reporting: Yay or Nay?

In "The Australian" Today (20/02/07) it reports;

The risk reporting idea of ASX Limited's Corporate Governance Council continues to attract attention in February 2007. Groups such as Australian Ethical Investment and the Sustainable Investment Research Institute are supportive of non-financial risk reporting. However, high-profile business leaders who have rejected the concept include Don Argus, BHP Billiton chairperson; David Gonski, an ANZ Bank director; and John Stewart, National Australia Bank's CEO. A manager of Portfolio Partners, Amanda McCluskey, has revealed that superannuation funds are keen to require greater risk assessment

This is an interesting topic. Many shareholders of public companies have long held that strategic risks should be reported as well as simply financial. After all even core operational risks give rise to the strategic risks within the register, and it is often these types of risks - when left untended - that have taken down companies.

Consider a recent case in New Zealand where a major electricity wholesaler mis-judged the impacts of a well forecast dry and cold winter - two attributes which make for a dangerous scenario in terms of lake levels. Combine this with the company's slowness to recognise and negotiate their hedging position at the expiry of the previous contract. Result? The company survived . . . just, and only after selling off their entire retail division. They lost $300 million in three months - not including the impacts on their share price.

Now consider that such risks are not required to be reported.

Financial management alone does not maketh the company, a fact lost on many CFO's and board members alike. Many are still grappling with the advent of IFRS - and pining for the good old days of GAAP and industrial/manufacturing based economies.

Still, how much reporting is too much? And if the executive and management can't get on with managing the business - as they are both qualified and mandated to do - without being interrupted every two minutes, then what kind of business will they have anyway?

No one doubts it is a question of balance, but whose version of "balance" should public companies adopt?

Warner vs. Apple...DRM to Stay!

The head of Warner Music Edgar Bronfman has said "DRM and interoperability are not the same thing" after Steve Jobs of Apple wrote an open letter to the music industry suggesting that DRM should be abandoned.

It seems that the Warner chief believes it is still possible to protect IP through copy protection mechanisms while ensuring that the consumer experience is vastly improved from the current market offerings.

This a valid point if all the major players in the market - hardware vendors, music companies and artists - will actually work together. If they can't agree to work together then the best way to ensure interoperability is, as Jobs said, to remove the copy protection altogether.

Out of the backroom. Into the Boardroom.

An interesting topic for the risk profession is one of how to avoid the function of Risk Management becoming another silo within the corporate beast. Critical data never seeing the light of day, nor creating positive management opportunities in the enterprise is a significant risk in itself, and sadly such a scenario is almost certain to occur as it does in other internal disciplines.

Building an "integrated risk function" is important. The steps to achieve this are:

* Start by constructing your ERM program
* Then automate that program using appropriate software toolkits (Datasouth Corporate Services recommends Methodware - www. methodware.com)
* From there consider the data you are creating, the database that the information resides on, and then ask yourself this:

How do I use this data to add value back into our corporate objectives, our bottom line, our decion making?

In our business, we are beginning more and more conversations which focus on the integration of risk software into Business Intelligence applications, banking software, HR software and the like. We're trying to create a great big roll-up of meaningful data and information - regardless of its source - for the purposes of "slice and dice".

In many ways this is nothing new in itself, but it is a central theme in promoting the function of risk management from out of the backrooms and into the boardrooms! It requires pooling thought leadsership from risk and technology departments, and working with the executive to marry data to the business. We all know that the information that a risk manager pocesses is of huge importance, but when placed in this context - how much more critical might that data be to overall corporate performance?