Friday, May 31, 2013

Need for Internet speed heralds zettabyte era

By Business editor Peter Ryan

A leading technology firm forecasts that the need for internet speed will increase at a mind-boggling pace over the next three years.

A forecast out this morning from Cisco predicts that by 2017, global internet traffic will be measured in measured in zettabytes. One zettabyte is the equivalent of a billion DVDs downloaded every day for an entire year.

"Our report is showing that in the year 2017, in four years time, the internet and IP traffic will be three times larger than it is today," forecast Ken Boal, Cisco's managing director for Australia and New Zealand.

Listen to the interview with Ken Boal broadcast on this morning's AM.

"If you summed all of the traffic on the internet from 1984 through to the end of last year, 2012, the traffic in 2017 will actually surpass that in one year alone, so huge growth across the world and it is going to be very large in Australia as well. We'll still be twice as large as what it is in Australia today - so huge growth."

Cisco is expecting 1.4 zettabytes of internet traffic by 2017 and, for those who have never heard of a zettabyte, it is an enormous amount of data.

"A zettabyte is the equivalent of a trillion gigabytes. It's a very, very large number with a lot of zeros - 21 zeros - but what that means in reality is if you digitised all of the movies ever made, that could cross the internet every four minutes around the world. So it's an awful lot of data and huge volumes," Mr Boal explained.

"Obviously it's going to have implications for government, business and everyone concerned with the internet."

Cisco's report forecasts that much of the growth will not come from direct human usage, but from automated business processes that are increasingly using the internet.

"It's predominately been, historically, PCs and computers, phones and those things," Mr Boal observed.

"Now we're seeing the rise of the machines - video surveillance cameras, digital health monitors, asset tracking for business, public transport vehicles and cars will also be connected, so in Australia that will sum to about 145 million devices. So considering we'll have roughly 23, 24 million people, that's a lot of extra devices per every user connected."

Outside increasing business use of the internet, Ken Boal says households are increasing accessing their entertainment via the web.

"Three-quarters of the traffic will be video, and we're connecting things like TVs, so high definition TVs, internet video will be absolutely a huge contributor to the growth," he said.

"11 per cent of the internet use in Australia in 2017 will be through internet connected TVs, and that's got new opportunities for providers, content players and so on."

Mr Boal says the increase in internet usage will necessitate a massive increase in access speeds.

"If we look at the global trends, the average worldwide speed will be 39 megabits per second for broadband residential access in 2017. At the moment Australia is around about 9 megabits per second on average, so clearly there's a significant platform upgrade required," he said.

"You know, we're agnostic on the access technology but clearly significant increase in capacity is required and that's what this report is highlighting."

Thursday, May 30, 2013

OECD warns about Australia's post-boom outlook

By Business editor Peter Ryan

The future growth of Australia's economy has been questioned in a surprisingly frank update from the Organisation for Economic Cooperation and Development (OECD).

The OECD says the weakening of the resources boom will only be partly offset by a strengthening of the non-mining sector.

It is an unusually direct warning that the OECD makes deep inside its World Economic Outlook, on page 103, and it says Australia's economic growth will temporarily slow to 2.5 per cent this year before picking up to 3.5 per cent in 2014.

However, the report cautions that the anticipated weakening in mining investment, which the Reserve Bank has been warning about for the past year, will only be gradually offset by mining exports and the strengthening of the non-mining sector.

The OECD also says the persistently high Australian dollar and a lack of confidence are holding back new drivers of growth.

Here's my analysis from this morning's AM.

Read the OECD's World Economic Outlook here.

Even so, Australia remains a pretty bright spot in a world of gloom - ranked 16th out of 59 countries, down one notch.

Professor Stephen Martin, chief executive of Committee for Economic Development of Australia and a former Labor MP, says local businesses need to thinking beyond mining and how to cut the cost of doing business in Australia.

"These are genuine issues which the business community has to confront," he said.

"It's about innovation in management practices, it's about looking at some of the labour flexibility questions again but, look, we are a high wage country but we're a very productive country, and we could do better and I think we'll see some of the changes on how, for example, labour productivity is measured when the effects of the mining investment actually can be measured and come on line."

The OECD's report card has a tick for the Reserve Bank's economic management, which has seen the cash rate cut by 2 percentage points since late-2011. The OEDC says more cuts might be needed.

It says a marked slowdown in China would weigh on exports, hence the need for an accommodative monetary policy to help stimulate the non-mining sector.

On balancing the budget, the OECD says if activity worsens, fiscal policy could be relaxed - so it is not calling for a return to surplus at any cost, but sees it as a desirable aim.

The OECD also thinks that an increase to the GST would enhance efficiency.

On the political front, it thinks the uncertainties weighing on the pace of budget consolidation will probably be clarified one way or another after the September election.

Today also sees the release of the latest quarterly figures from the Australian Bureau of Statistics on business investment - economists are looking at a slight improvement after a 1.2 per cent fall in the last reading.

These figures go to both the weakness and low confidence in the manufacturing sector, and also what mining companies have been doing - paring back or reconsidering their spending plans.

The transition from the resources boom to non-mining growth could be bumpy and these figures will give an indication of how rocky that road might be.

Tuesday, May 28, 2013

Corbett warns Work Choices rollback went too far

By Business editor Peter Ryan

Reserve Bank board member Roger Corbett has warned the nation is under-taxed and labour markets are over-regulated.

Speaking to reporters after a speech to a business event in Adelaide, Mr Corbett said the Federal Government went too far when it rolled back Work Choices after the Rudd government was elected in late-2007.

Mr Corbett, who's also the chairman of Fairfax Media and a board member of the US retail giant Walmart, was very careful to say he was not advocating a return to WorkChoices.

However, he argued that a sensible balance needed to be achieved and, at the moment, employment costs are eating away at foreign investment and he wants to see a middle ground that respects both employer and worker rights.

Mr Corbett said cost overruns had already seen major resource projects shelved, with Woodside's Browse project in WA a case in point, and his comments would appear to put pressure on the Coalition to take a harder line on industrial relations in the lead up to the election.

"I think this argument of whether we're going back to WorkChoices is highly emotive and clearly very political. I think, very simply, there is a sensible balance between labour and enterprise," he argued.

"It is my judgement and view ... that has moved under the current Government a little far, and I think that needs to be corrected."

However, while Mr Corbett is calling for less labour market regulation, he is also calling for more taxation if Australians want to fund social schemes such as a national disability insurance scheme and more school funding.

"Very clearly, if we are to sustain the level of education, the Gonski report, if we are to sustain a disability provision, a facility across the nation, if we are to provide for health as we need to do so moving forward, if we are to provide other social structures that we need as a community, then very clearly we've got to pay for them, and it would appear that our current taxing base is not adequate for that purpose," he cautioned.

Mr Corbett also had a warning about the ABC in his role as Fairfax's chairman.

Like other commercial media organisations, Mr Corbett is worried about the growth and influence of public broadcasters such as the ABC.

He said restrictions needed to be placed on the ABC's taxpayer funded activities because, at the moment, commercial companies like Fairfax are finding it difficult to compete in the new digital era where traditional media models are hurting badly.