Paul Budde, Managing Director, BuddeComm

Paul Budde, Managing Director, BuddeComm

I formed this company back in 1978. I have a marketing degree from the Institute of Marketing in the Netherlands, my focus is business strategies and government policies. As a special consultant to the ITU/UNESCO Broadband Commission for Digital Development, I am heavily involved in international developments such as FttH, mobile broadband, trans-sector use of infrastructure and the digital economy. I write most of the international analyses and also, of course, closely follow the markets in Australia and New Zealand.

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Dutch Smart City Delegation back in Australia

It will be the third time in six months that a Dutch Smart City Mission will visit Australia. This time the visit will coincide with next week’s Smart Communities Conference in Adelaide, organised by the Australian Smart Communities Association (ASCA).

The first visit took place in November last year when Queen Maxima of the Netherlands was the esteemed guest of the Australian Dutch Smart City Summit in Sydney, together with the Hon Henk Kamp, Minister for Economic Affairs of the Netherlands; Senator the Hon James McGrath, Assistant Minister to the Prime Minister; Mrs Lucy Turnbull, Chief Commissioner of the Greater Sydney Commission (GSC); as well as several mayors and other government and industry dignitaries.

A follow-up visit took place in March, when the delegation visited all the cities that have signed MoUs with the Dutch-led Global Smart Communities and Cities Coalition (GSC3).

Since that time significant effort has gone into building collaboration links between smart cities in the Netherlands and the GSC3 smart cities in Australia (Adelaide, Canberra, Bendigo, Newcastle, Lake Macquarie, Sydney (GSC), Ipswich and Moreton Bay).

The upcoming visit will further strengthen the links between both countries, with plans for meetings with the participating cities.

Businesses in both Australia and the Netherlands are critical in assisting in the collaboration projects between Australian and Dutch cities. This is particularly interesting for businesses that operate internationally and a range of meetings are planned to explore these business opportunities.

The Dutch Government is hosting a networking reception in Adelaide on Sunday 28th May. GSC3 will also participate in the Smart City Mayors Meeting hosted by the Lord Mayor of Adelaide, the Hon Martin Haese.

Apart from Adelaide the delegation will this time also visit Sydney and Brisbane.

But also R&D collaboration will be explored. During the same period the Amsterdam Institute for Advanced Metropolitan Solutions will meet with potential R&D partners in Australia.

The next international activity will be the Australian Smart City Mission to the Netherlands. Last November the Dutch Government invited the Australian Government to lead such a mission. It will take place from 19-22 November and coincides with the Global Smart City Conference in Barcelona, which takes place in the week prior to the mission.

Paul Budde

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People are ready for smart environments

With an increased awareness of the importance of digital infrastructure many local councils are disillusioned by not having access to infrastructure such as FttH and smart grids. The organisations involved in the delivery of this are slow in upgrading their infrastructure since in many cases they will not be the recipients of the benefits derived from it. The benefits are social and economic and do not show up on the balance sheets of these companies. As this is essential national infrastructure strong leadership is needed to make it happen. Many countries are struggling with this situation as the incumbent operators have strong lobbying powers and are resisting change and expensive infrastructure upgrades.

The situation in the USA is perhaps the most dramatic, as the incumbents there are even able to force state governments to implement legislation that prevents cities from building their own digital infrastructure – this despite the fact that the Obama Administration and the Federal Communication Commission (FCC) both developed policies aimed at encouraging municipalities to do just that.

In the Netherlands municipalities have been taking a very proactive role and have been working together with telecommunication companies and electricity utilities to build local networks. Remarkably, this has been most successful in regional and rural towns. More than one-third of the Dutch municipalities now have FttH networks in place.

In other countries – mainly in Scandinavia, but also in Italy, France, Spain and Portugal – telcos have been building local FttH networks. Most of Scandinavia now has nationwide FttH. Great progress has also been made in Eastern Europe, again mainly through leadership from telcos; Estonia, Bulgaria, Slovakia and many others now have a higher level of FttH penetration than many of the so-called western economies.

In the mid- and late 00s, Australia, with its plans to develop a nationwide FttH network, positioned itself as one of the global leaders. However this became a political football between conservative and progressive politicians and the whole project collapsed. The same thing happened with the nationwide plan for smart grids. Under pressure from incumbent utilities the conservative government that came into office in 2013 also cancelled this plan.

At the same time, on a local level we see many people continuing to do what makes sense for them. They install PVs; they oppose CSG and other fossil-fuel mining projects. They save energy; they continue to support projects such as FttH and wireless broadband; they use new e-health and education apps, internet services and wearable technologies.

Despite often counter-productive national policies we see many cities working towards the generation of renewable energy and net-zero plans in relation to carbon emission. Most new corporate buildings follow a similar trajectory and many businesses are now looking seriously into alternative energy plans, micro-grids and battery.

City-based infrastructure for LED street lighting, waste and water management, smart parking and other applications are all being implemented, and, by sharing infrastructure and linking it to Wi-Fi networks and the well-connected high-broadband, cities can start implementing their smart city concepts. Around the world we also see cities pursuing the concept of gigabit cities.

Gigabit cities

A gigabit city is one where all residents and businesses have access to ultra-high-speed broadband of 1 gigabit per second (1Gb/s) or faster. This makes it easier for citizens to access the internet, and for businesses to thrive and expand. It is considered by many to be an essential component of smart city technology. Such networks are essential for modern healthcare, education, entertainment and business applications. It provides the city with social and economic capacity to create new jobs, to develop the digital economy, and to improve the lifestyle of its people. Chattanooga in the USA was the first fully-connected gigabit city in the world to offer 10Gb/s. Many other cities, such as Seattle, Chicago, Kansas City and Atlanta, are following in their footsteps.

At a more moderate level other cities, such as Adelaide in Australia for example, are by offering such a network to business users around the city.

Such ultra-high-speed networks allow cities to create intelligent city-based ICT platforms that cut across silos. Great efficiencies can be created and, supported by big data and data analytics across the silos, new services and applications can then be made available to the citizens. From here the broader community can be engaged and the city, as a platform, can be used for a range of add-on developments such as apps for the city. This opens up new opportunities, innovations and the development of new entrepreneurial small businesses, as well as new jobs, especially in the ‘sharing economy’.

Paul Budde

See also Global smart city reports

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Adding creativity to collaborative innovation and other smart developments

A few months ago I reported on the many incubation hubs and innovation labs that have sprung up around the country, and indeed around the world. Many of these centres are developed within smart cities; some are using local libraries; many ICT companies have their own centres; and the universities have also become key players in facilitating these developments.

Some concentrate on students, others on local businesses, and others on start-ups. And there are, of course, many crossovers.

I commented at the time that I was very impressed by these grassroots developments and by the many young and passionate people involved. One of my aims is to link these centres nationally and even internationally. I believe that there is a great deal of synergy here, and bringing these entrepreneurial people together and linking them up with others working on similar projects helps them to learn from each other. And this linking process can be broadened to include the movers and shakers in local communities (business, bureaucrats, politician, community leaders).

The only way to move ahead in our increasingly complex environment is to collaborate; and in particular to collaborate across sectors and disciplines.

I was further inspired about this when I visited GX Australia last month at the Sydney Showground. I was originally motivated to visit this gaming show because my son was one of the exhibitors.

GX Australia advertised itself as: a weekend-long celebration of everything gaming & geek related — whether you’re into comics or video games, cosplaying or consoles, you’ll find something here showcasing your interests and hobbies. And best of all, it’s all taking place in an epically awesome, inclusive, and supportive environment!

Very similar to the incubation experience mentioned above, here too I found unbelievable passionate people with brilliant ideas and, of course, enormous creativity – most of them were using many technology tools to create the most creative and incredible realistic games. However, there were also other creative games not necessarily based on technology – more like board games.

While there is obviously a strong emphasis on entertainment there were also lots of examples in education and in business.

I am sure that some of the incubation hubs I mentioned above already facilitate the gaming community; however I believe that there is significantly more synergy to be found if we bring these groups together more actively. Having experienced this vibrant and creative group of people this is now something that I will pursue more actively in my smart city work. The high level of innovative creativity would be a very welcome addition to the rational developments that are taking place in the more traditional business focussed incubation centres and generally in smart city, smart building and smart community activities.

Paul Budde

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Telecoms competition on a downhill slide in America

That is what happens when you base your telecommunications policies on the wrong foundations.

The problems with the telecommunications industry in America go back to 1996, when the FCC decided that broadband in America should be classified as internet (being content) and that therefore it would not fall under the normal telecommunication regulations. Suddenly what are known as telecommunications common carriers in other parts of the world became ISPs in the USA. How odd is that?

This is rather incomprehensible since, to the rest of the world, it is very clear that broadband is an access product and has nothing to do with the internet as such – and most certainly nothing to do with content!

While nothing to do with this topic it is also important to mention that in exchange for these generous gifts from the FCC the incumbents promised to fibre up America. Over the last 20 years such promises were made again and again, and every time these promises were broken with no retributive action from the FCC whatsoever.

And – surprise, surprise – in the resulting monopolistic situation – the incumbents used their newly won classification as ISPs to their own advantage.

As an immediate result retail-based broadband services were monopolised by Verizon and AT&T. There was no longer any obligation on their part to make broadband available on a wholesale basis and as a consequence there is very little retail-based broadband competition in the USA. It has to be said that the very weak regulation in place before 1996 made it very difficult for retail broadband providers to obtain affordable wholesale rates from the carriers. But the classification as broadband being content totally killed the DSL retail market and within a year all those DSL retail providers were all dead and buried.

The door was now also open for the incumbents to look for extra revenues that they could extract from the big digital media content providers by offering preferential treatment over their broadband infrastructure. This would create a high-speed internet lane for these companies and put the rest in a second-rate slow broadband lane.

This generated a public outcry and as a result the FCC had to introduce what is known as net neutrality (NN), which stopped the incumbents from creating fast and slow lanes. NN was an attempt by the then FCC Chairman Tom Wheeler to keep the internet open.

Now I am certainly not in favour of net neutrality, and in principle I don’t have a problem with telecommunications providers offering managed network services at premium prices to business users and others, but it needs to be provided in the context of a competitive environment. With competition in place the costs of these managed services will be kept in control; some providers will concentrate on business users and others on residential services, so competition will keep misuse in check. When you don’t have such a competitive environment it would be very dangerous to just let incumbents do and charge whatever they want.

It would, of course, be far better if the USA were to address the underlying issues and do what every other country in the world does – classify broadband as a telecommunications access service and regulate it – with proper wholesale requirements – under such a regime, in which case there would be no need to bolt NN onto the regulatory regime.

However there is no hope whatsoever under the current government in the USA that such a broader telecommunications review is possible; and certainly not under the leadership of FCC chairman Ajit Pai (an ex-Verizon executive and a conservative Republican).

One of the key arguments Pai is using on why he wants to dismantle NN is that it reduces investments in the telecoms market. However, both Verizon and AT&T are on the record that this not the case, they have publically indicated that NN has not slowed down their investments.

Pai might be a likable and charismatic person, but he is totally committed to a nearly uncontrolled telecoms market. He strongly believes that as much regulation as possible should be abandoned (he also abandoned consumer privacy in relation to customer data held by the industry). He totally ignores the fact that the American market is one of the most monopolistic telecoms market in the developed economies. I am all in favour of free market principles but not under a regime that only fosters monopolies that pay hundreds of millions of dollars to influence politicians right across the American political landscape, in order to get their way.

So, while, in general terms, I am not in favour of NN, in the case of the USA it is one of the few regulatory tools available to keep the telecommunications monopolies in check. Unless the underlying competition issues are addressed I would keep NN in place.

Paul Budde

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Smart budget – potential for smart developments

Will this be the turnaround for the government that many of us hoped for when Malcolm Turnbull took over from Tony Abbott?

While politics remains politics, and governments remain governments, the tone of this Budget is completely different from the shock horror Budget of 2014 that resulted in political uproar, a gridlocked parliament, and the unpleasant side effect of a rise in populism in Australia – with people, very understandably, fed up with their incumbent politicians.

So the tenor of the Budget is perhaps as important as what it promises. In reality, looking at the promises made over tens of Budgets in the past, the main result is generally a muddling-on of society and the economy. There are real questions regarding the economic data presented, and the targets they are aiming for, but nearly every Budget in the past followed similar lines and very few people actually check whether previous Budgets delivered on their promises, so that probably won’t be any different this time.

However the overall positive feel of this Budget generates a more positive sentiment towards the future. There is enough in it that people and businesses can take on board and use to their advantage.

It is clear that the large-scale problems that we are facing cannot be solved by government. It requires all people to look for new ways. We need transformations rather than tinkering at the edges and a positive Budget will stimulate people to put in that extra effort, to go beyond business as usual.

 The well-known quote from Albert Einstein is an appropriate one here. Insanity is doing the same thing over and over again and expecting different results.

Avoiding this requires a holistic approach to many of the initiatives launched in the Budget – I would suggest the sort of collaborative approach that we are taking in smart city developments, looking for multiplier effects in a close collaboration between all three levels of government, cities, local communities, business and the R&D sector.

If we first look at the infrastructure projects that the government has announced – better road and rail transport systems to and from suburbs, the inland freight train infrastructure, hydro-electricity infrastructure or the airport in Western Sydney. These are all projects that could be used to create transformations. However smart people, smart processes and smart projects are needed.

What I mean by that is that we should look at the potential multiplier effect of these investments. There are now many projects around the world where we can see how this works. New transport systems offer new opportunities for housing affordability projects, the ‘hubbing’ of schools, universities, innovation centres, new economic centres, entertainment and shopping precincts and so on. This requires cross-silo thinking and trans-sector leadership from the top to ensure that organisations and projects across the spectrum are directed to develop in collaboration and with the multiplier effect in mind. Without leadership from the top this will not happen – the projects will simple revert back to their traditional silo thinking mentality – and we will simply waste the opportunity to transform and maximise the potential of these investments with out-of-the-box thinking instead of a ‘business as usual’ approach.

Furthermore the Budget has a range of specific ICT initiatives that can support those involved in the projects mentioned above (but also in relation to other Budget initiatives) in moving in new and smarter directions. If you look for them there are lots of ICT projects that can be used in the digital transformation processes that are needed to address problems differently. There are projects for start-ups, education initiatives, innovation opportunities, and, hidden inside several other projects, a range of opportunities that could be used to work smarter.

Of course there should, perhaps, have been many more such initiatives, but I would like to look at the positives here rather than what the Budget doesn’t provide. Projects and initiatives covered right across the government spectrum include: the Digital Transformation Agency, Data61, Cyber security, ICT skilling, innovation hubs, e-health, Bitcoins, Crowd Sourcing, Biometrics and Fintech. All of these can be used in combination with many of the other initiatives mentioned in the Budget. It is critical that a holistic approach be taken in order to create synergy and that financial multiplier effect to make all of the initiatives smart projects.

Indirectly this can also assist housing affordability. For this we have to look at some of the projects developed in smart city environments in, for example, London, Copenhagen, New York City and Barcelona. All of these cities have exactly the same problems as Sydney and Melbourne, with average house prices around or above the $1 million mark. It is innovative organisations rather than government policies that are successfully addressing this issue, but that requires a different business model based on the triple bottom line concept we have discussed previously. Many of the infrastructure initiatives could have a positive effect on housing affordability if that paradigm is taken on board as a potential outcome of those investments.

Overseas indications are that a 30%-40% multiplier effect can be achieved by utilising the available funds in such a holistic way away. Sustainability is another element that, when it is included from the start, can lead to energy-neutral and carbon-neutral outcomes, all at very little extra cost, just by utilising existing funds in a smart way.

Smart local communities and smart cities are key to the success of this. If these investments simply become federal projects – based on their rigid procurement systems that work against a collaborative approach – then we will most likely miss out on multiplier effects and smart solutions. If, however, we start looking at collaboration with state government, local councils, business and the R&D sector then we can make a real difference. From a federal perspective the Digital Transformation Agency could also play a leadership role in changing the behaviour of the incumbent federal government towards such projects.

However, here also a positive. The Treasurer did mention the City Deals (part of the Government’s Smart City Policy). He mentioned this in relation to the City Deal for Western Sydney. The way that City Deals have developed over the last 12 months, under the leadership of Assistant Minister for Smart Cities Angus Taylor and his team at the Cities Division, is exactly along the lines of collaboration. We all have learned a lot over this period and these lessons can be put into practice as we move ahead with the infrastructure funds that the government is set to release.

But it won’t be easy to change the incumbent structures that are in place regarding how these funds will be used – typically in a non-collaborative and silo-oriented way. It is up to us, the people involved, to be smart about this and take the opportunity to find out how we can use these investments better and smarter.

The Smart City Policy is a good vehicle for this so let’s use it to the maximum. I have also suggested that we should investigate City Deals led by industry, and within the Australian Smart Communities Association I have set up an Industry Board where cities and industries are working together specifically for that purpose.

So let’s grab the opportunities that are available in this Budget.

Paul Budde

For more information see: Australia – Smart Cities and Smart Infrastructure reports

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