On Tuesday, InternetNZ will host a debate about New Zealand's Digital Future. In parallel, InternetNZ has released a discussion document titled Future: Digital (PDF).

Vikram Kumar explains, “Future: Digital is about the need for a shared, common vision for where New Zealand will be in 10 to 20 years time. The economic opportunity is for high growth, exports, jobs, productivity, wages, returns and prosperity. The social, cultural, environmental and government impacts are profound. All elements have to be woven together to form a fabric of fundamental change.”

These are powerful themes to work from to plan how we can contribute to our country reaching its potential. Since Microsoft’s inception, we have been excited about technology’s role in building a better future. We would like to see New Zealand make the best of these opportunities.

An impressive panel of political party spokespeople and commentators is participating in the debate. It promises to be a great event.

Conquering distance

InternetNZ says, “The Internet is by far the greatest conqueror of distance, giving Kiwi entrepreneurs unprecedented access to a global marketplace.”

Building world-class internet access within New Zealand and to connect us to the world is essential with the growth of rich internet services and the increasing ubiquity of connected devices around the world. Our comparatively small domestic market and our distance from major export markets adds urgency. But there are also opportunities in this. 

It's instructive to look back at a previous technology revolution that helped our exporters conquer distance.

In a paper looking back on 125 years of refrigeration (PDF), Dr Andrew Cleland explains, “In 1882 the first refrigerated meat left New Zealand for London, the pioneering use of a technology that was to transform the New Zealand economy. Animals were no longer grown for wool only, and the wealth of the nation developed rapidly. From 1882 until as recently as the early 1990s refrigerated food has returned at least 30% of New Zealand’s export income. Whilst much of the equipment has been imported, expertise in the application of refrigeration was developed in New Zealand.”

For New Zealand, the internet could be the best thing since refrigeration.

But if we're going to look back on it that way in years to come, we need to be smart about what we do with it today. And perhaps we should aspire to be reflecting not only that “expertise in the application of the internet was developed in New Zealand”, but adding that “important internet technology is exported to the world from here”.

We need to deeply understand the myriad business models that can succeed in this new connected world. We need to ensure that our laws are not only compatible, but that they will nurture the known opportunities of today and the unkown opportunities of the future.

Sustainable policies should be flexible, empowering people to make decisions that make sense. This is important not only for entrepreneurs building their businesses, but also organisations striving to save costs and improve their services to the community.

Incentives to build weightless technology

InternetNZ says, “Our spending on research and development across government, businesses and universities as a proportion of Gross Domestic Product is amongst the lowest of developed countries. This is a fundamental weakness.”

At Microsoft we believe that the best is yet to come. It's far from the biggest company in the world, but no one has invested more in research and development in the last year than Microsoft. One reason we are willing to invest so much is that we believe in the potential of weightless technology.

For businesses to invest in research and development, they need to have a way to earn a return for their work. There are diverse business models to achieve this, but all are underpinned by the fundamental principle of being rewarded for work that others value and desire.

In technology, intellectual property plays a particularly significant role. And that role is evolving. Technology is undergoing a transformation from the physical to the virtual, where increasingly work that once relied on mechanical devices is being done better by software.

A diverse and vibrant business ecosystem requires a mature and globally interoperable and technology neutral approach to the foundations of a weightless economy, including meaningful options for everyone to use copyright, trade marks, patents, trade secrets and technical protection measures.

Serious concerns have been raised about a proposal to take away an important choice from businesses investing in research and development that involves computing: Clause 15(3A) of the Patents Bill. If it becomes law, it will disadvantage precisely those businesses that we need in New Zealand to build a future based on a direct return from digital technology, rather than only being paid for hours worked or ancillary products.

Trustworthy computing

InternetNZ says, “Without trust and confidence in accessing and using information and services online, much of the potential of digital technologies will be unrealised. Developing digital skills and confidence in students, the disabled and the elderly requires more resources and effort. Staying safe online and combating new cyber threats, particularly for youngsters and small businesses, also requires more resources and effort. Privacy and protection of personal information remains critical.”

More than a decade ago, we realised at Microsoft that we were not doing enough in this area and in 2002 Bill Gates wrote an email outlining a change of direction that the company needed to make.

Trustworthy Computing has four pillars: reliability, security, privacy and business integrity.

‘Reliability’ means that a computer system is dependable, is available when needed, and performs as expected and at appropriate levels.

‘Security’ means that a system is resilient to attack, and that the confidentiality, integrity and availability of both the system and its data are protected.

‘Privacy’ means that individuals have the ability to control data about themselves and that those using such data faithfully adhere to fair information principles.

‘Business Integrity’ is about companies in our industry being responsible to customers and helping them find appropriate solutions for their business issues, addressing problems with products or services, and being open in interactions with customers.

Given the complexity of the computing ecosystem, and the dynamic nature of the technology industry, Trustworthy Computing really is a journey rather than a destination. Microsoft is fully committed to this path, but it is not something we can do alone.

It requires the leadership of many others in our industry and a commitment by customers to establish and maintain a secure and reliable computing environment."

At Microsoft we strongly agree with InternetNZ’s statement and value their longstanding work in this area. We think New Zealand can be a leader in trustworthy computing.

Enduring laws based on principles, not specific technology

InternetNZ says, “Enduring laws are principles-based and should not be technology-specific.”

There are many New Zealand businesses that earn a portion of their revenue from licensing software to customers for a fee, a model proven over many years. This can be through traditional licence agreements, or more recently through app stores such as the Xbox Live Marketplace, the Apple Store, or the upcoming Windows Store.

It is a compelling business model that is easily understood. Creators earn a direct return for their work. The initial investment is often costly and carries significant risk, but low marginal costs mean that there is a potential for spectacular success particularly for products that succeed on a world scale.

There is also great economic opportunity from cloud computing. Cloud services offer organisations easier and cheaper access to technology. Entrepreneurs have new opportunities to build on trustworthy platforms to more cheaply and easily achieve global scale. 

Software products and cloud services - digital technologies that are commonly licensed for a fee - are sound examples of weightless high-value exports.

Yet we would not advocate preferential treatment for any particular technology, business model or intellectual property licensing scheme. It is best to leave people free to weigh up the merits of what the market offers. That is what will provide the environment for businesses to thrive and grow high-income jobs in this economy.

Governments can encourage the continued creation of new companies and jobs by enacting policies that promote further investment in the ICT sector. And we do believe that the government can be a leader in adopting technology. Government investment in ICT infrastructure and cloud services, particularly sectors such as healthcare and education, can save costs and improve services while stimulating the domestic ICT ecosystem. But the policy emphasis should be on removing impediments to innovation - arbitrary preferences, red tape, and unnecessary barriers - so that technology can be chosen freely on the basis of merit.

Microsoft's recommendation on this issue rings true in New Zealand:

When government procurement policies are objective and merit-based, they ensure that government departments have the widest possible choice among ICT products and services and can make decisions in an open and transparent manner. Governments are best served when they do not rule out - or give preference to - specific products or suppliers by favouring certain business, development, or licensing models.

Keep talking

The thoughtful Future Digital paper produced by InternetNZ has many more valuable areas for discussion that we would like to cover in future articles.

We would welcome your feedback on these issues. As a next step in this continuing dialogue, we look forward to watching the debate on Tuesday.

By Waldo Kuipers, Corporate Affairs Manager, Microsoft New Zealand Limited