Paul Wallbank – Brilliant Communications

Category: Australia

  • Telecommunication’s lost tribes

    Telecommunication’s lost tribes

    This week saw Australia’s telecommunications industry gather for the annual Comms Day Summit at Sydney’s Westin Hotel.

    A constant in the telco industry is change and new technology – few industries have had to reinvent themselves in the same telephone companies have had to over the last 30 years.

    For telcos, that period of change has been immensely profitable as the switch to mobile networks proved to be a river of gold for the industry as consumers enthusiastically moved away from fixed line networks and into lucrative products like SMS services.

    Missing the passion

    So it was notable how the Comms Day summit was missing a sense of excitement or vision about the approaching opportunities such as 5G networks, the Internet of Things and other new markets. Much of the conversations were mainly focused on the dysfunctional Australian industry and the flawed regulations that got it to where it is.

    As an Australian event it’s not surprising that much of the focus would be on domestic failings – thirty years of misguided policy, political opportunism and schoolboy ideologies have left the nation facing the prospect of the “world’s most expensive broadband”  in the words of Megaport founder Bevan Slattery – however the stasis in the telecoms sector betrays a far deeper uncertainty in the global industry.

    That uncertainty was on show at this year’s Mobile World Congress in Barcelona where most of the conference’s buzz was around virtual reality headsets and connected cars, areas where telecommunications providers are, at best, a ‘dumb pipe’.

    We are not a utility

    Being relegated to being a ‘mere utility’ is the fear of every telecommunications executive, which is why they spend so much on abortive Pay-TV, online and sports rights acquisitions. In the Australian context, Telstra’s acquisition of PacNet and Slattery’s own East Asian ventures are possibly the most interesting developments in the local industry yet they were barely mentioned at the Comms Day event.

    While the Comms Day Summit told us much about the insular nature of modern Australian business – and the depressing mess three decades of poor regulation has left the local telecommunication industry – the bigger message is the global communications industry is struggling in a world of commoditised bandwidth where the opportunities to make huge profits is not immediately obvious.

    It’s hard to see how telcos can be completely disrupted in the way media companies have been given how regulated their markets are – although the same was being said of the taxi industry five years ago – but it is clear their managements are struggling to find new business models.

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  • Playing Innovation Buzzword Bingo

    Playing Innovation Buzzword Bingo

    One of the frustrations of being a technologist in Australia is how the media, and population in general, doesn’t pay much attention to technology stories beyond the latest shiny consumer device or quirky stories from the weird and wonderful internet.

    So when one of the nation’s main political TV programs, Q and A, decides to do a program on the government’s Innovation Statement with a panel involved in the tech and startup sectors it’s a must watch.

    As usual the Q and A format lets the viewer down with the panel suffering from having an unwieldy six guests of which two are major party politicians who tend to trivialise the discussion with party talking points. Regardless of the topic, the show usually ends up an unsatisfactory experience for anyone wanting to explore the evening’s issue.

    Startup focus

    In the case of last night’s panel the initial focus of  the discussion reflected the startup obsession of most commentary around the Innovation Statement.

    While encouraging Australians to start new businesses and take entrepreneurial risks is worthwhile, it’s concerning much of the thinking is based around the current Silicon Valley startup model which is based on easy access to venture capital and ruthless marketing.

    Coupled with that is a surprising hostility towards the research community and education establishment, while there the panel featured no discussion of how little Australian corporations invest in research or development.

    Lacking diversity

    This little genuine research and development carried out by corporate Australia exacerbates the nation’s poor economic and business diversity. The effects of that are crushing for those studying in high tech fields.

    One audience question came from a young woman, Elana Nerwich who is studying mechatronics. She correctly noted in Australia, it’s unlikely she will get a private sector job in that field and some of the panelists advised her to stick with it and build their own startup.

    While admirable, that advice overlooks how high level workers can’t advance their skills in the Australian economy. This in turn results in more derivative taxi and pizza delivery apps rather than genuine innovations using cutting edge technologies being applied in the private sector, which are the real drivers of economic growth.

    Concentrated economic power

    Another issue for the Australian economy is how the nation’s economic power is concentrated in the inner parts of Sydney and Melbourne, something briefly flagged by panellist Holly Ransom. The startup obsession exacerbates that concentration of talent and business in the same way it does in San Francisco, if anything it illustrates the weaknesses of applying the Silicon Valley VC model to other societies.

    Sadly a deeper discussion on how the Innovation Statement’s benefits can spread beyond the affluent parts of Sydney and Melbourne was beyond the scope or focus of the Q and A panel. That the challenges of regional Australia are restricted to the occasional token program in a country town illustrates both the limitations of Q and A format and the nation’s Sydney centric media.

    The greatest take away from the Q and A innovation panel though was how Australians are dependent upon government. Almost all the discussion around how the nation becomes ‘innovative’ was around government policies and not on how does a nations of complacent conformists create a competitive 21st Century economy.

    Explaining innovation

    Which leads us to the biggest unanswered question from the Q and A show – what does ‘innovation’ really mean?

    For the average viewer watching this program the conclusion would be ‘innovation’ is a meaningless string of buzzwords put together by a group of people lobbying for government support.

    Those pleas for government funding illustrates the greatest weakness in the current Australian mindset, the nation’s real problem is the private sector’s reluctance to invest in new industries and technologies. Rather than throwing money at startup incubators, the most important thing the country’s politicians can do is reform taxation and corporate governance rules to encourage productive investment over property speculation and incumbent ticket clipping.

    Sadly little of that was discussed on the Q and A program partly as a result of its clunky format.

    Australia faces a great challenge in pivoting from a successful late Twentieth Century economy into one that’s competitive in the 21st, sadly the Q and A program format left us with nothing more than more buzzwords while failing to convey the opportunities for the nation.

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  • Australia’s lost dreams of global champions

    Australia’s lost dreams of global champions

    One the notable things about the Australian economy is how most sectors are dominated by a handful of corporations.

    The concentration of Australia’s business power has its roots in the 1980s where the then Hawke Labor government decided the nation’s corporations couldn’t be globally competitive unless they had scale in the home markets, and so a wave of mergers and acquisitions started.

    An industry that was particularly problematic was telecommunications. At the time Hawke came to power in 1983 there were three government owned telcos; Telecom Australia that operated the domestic network and the Overseas Telecommunication Corporation which handled the nation’s global links along with a small satellite provider, Aussat, intended for remote access and some defense functions.

    David Havyatt at InnovationAus describes the late 1980s thinking that lead to Telecom and OTC being merged to become Telstra, the company that dominates the Australian telecommunications industry today.

    The then political troika of Prime Minister Bob Hawke, Treasurer Paul Keating and communications minister Kim Beazley decided allowing OTC and Telstra to merge would give the company global scale, as Havyatt quotes from a policy discussion around 1990.

    “A strong vertically integrated national carrier which is able to provide a one-stop-shop for Australia’s telecommunications services both domestically and internationally, providing economies of scale and scope and the prospect of a unified and enhanced international profile.”

    Despite the lofty ambitions and a few half hearted attempts to grow global business operations, a quarter century on sees Telstra’s international returns at an almost derisory level.

    Dodging global bullets

    One could argue that Telstra’s shareholders dodged a bullet – Canada’s Nortel followed the same path and, after early successes, failed spectacularly in the early 2000s.

    For Australians in general though, Telstra’s insular focus has been a disaster as maintenance and investments were deferred to make the company’s yields more attractive and the Howard government’s compounding the Labor party’s mistakes in fully privatising the business without breaking its monopoly power.

    Which lead Australia into the folly of the National Broadband Network – while the original intention of investing in the telecommunication sector and breaking Telstra’s lock on the industry was a good idea and supported by this writer –  it quickly morphed into a massive waste of money and remains so today. If anything, the NBN will only increase Telstra’s market power while delivering more expensive services to the nation.

    Missed opportunities

    The tale of regulatory mis-steps and dashed political hopes illustrates the failure of Australia’s ‘go big, go global’ policies of the 1980s. Today, Australia is more dependent on mining exports than it has been in more than 50 years while manufacturing and services have actually fallen since the 1980s as a proportion of outward trade.

    Australian exports by sector: Department of Foreign affairs and trade
    Australian exports by sector: Department of Foreign affairs and trade

    Notable in the above graph is how in the 1990s it appeared the ‘go big, go global’ was working but by the turn of the century, the combination of the mining boom and the nation’s business elites – particularly in banking, insurance, retail and media – had starting looking at exploiting their domestic markets rather than competing internationally.

    While there have been successes such as Westfield in shopping centres, Lend Lease in construction and Brambles in logistics management, the bulk of Australia’s corporate leaders are inwardly focused on extracting maximum revenue from their captive local companies.

    Global ownership

    Increasingly, those dominant companies aren’t even Australian. The brewing industry is a good example where locally owned beer producers make up less than ten percent of the market dominated by New Zealand’s Lion Nathan and British based global conglomerate SAB Miller. Australians, it seems, cannot even brew their own beer any more.

    Australia’s managers have been the greatest beneficiaries from the nation’s failed business policies as it’s insulated them from global competition, life is good when you’re the biggest fish in a tiny pond.

    While good for managers, the lack of business diversity competitiveness and insular focus leaves Australia’s economy deeply exposed. The failure of the 1980’s grand vision where Australia developed a cohort of globally leading businesses is one that will be regretted by future generations as they pay higher prices for poorer products.

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  • Rethinking the media business model

    Rethinking the media business model

    Last week Australia’s Fairfax Media announced the company will cut another 120 editorial jobs at the Sydney Morning Herald and the Melbourne Age. What strategies beyond cuts can save old media companies as traditional advertising revenues dry up?

    For decades, the print and broadcast media was incredibly profitable as they provided an advertising platform for businesses and individuals. While television revenues have held up, the rest of the media industry has seen their income collapse.

    In the early days of the web the hope was display advertising would provide revenues for online publishers, however it turns out  readers are blind to the ads and, should the messages become too intrusive or resource heavy, people will install ad-blockers.

    One revenue channel for publishers is ‘content marketing’ or ‘branded content’ where advertisers sponsor specific stories. At the Sydney Ad:Tech conference earlier this week Asia-Pacific Regional Advertising Director for the New York Times, Julia Whiting, described what the iconic masthead finds works in this medium.

    Whiting says there are five key factors in making branded content work for advertisers.

    • Give something of value. Be entertaining, informative, educative or provide some utility.
    • Tell an authentic story. Make the link between the brand and story as subtle as possible.
    • Produce high quality content. Consider how a newsroom cover the story and what would hook the reader.
    • Choose the right environment. Advertisers have to align with publishers that have the right brand values and audience.
    • Targeted campaigns. Use data to define and find target audiences then use that information to deliver relevant content.

    The question with the branded content is how explicit the advertiser’s message or sponsorship can be before readers start losing trust.

    Becoming creepy

    Another aspect is creepiness. One of the campaigns Whiting showcased was The Creekmores, the story of a young family who travelled the world as the mother was dying of breast cancer that was sponsored by Holiday Inn.

    On a personal level, this writer is uncomfortable with such a personal story being associated with a multinational brand and wonders if the family would have been happy for their tale to be part of a branded content campaign for a hotel chain.

    For branded content to really work, that ‘alignment’ between the publisher, audience and advertiser is essential and in turn ultimately relies upon the credibility of the outlet.

    In the case of the New York Times, that credibility rests upon good writing and strong editorial values, although the paper hasn’t been immune from scandal itself.

    Good, well edited writing may turn out to be the greatest asset for today’s media outlets as smaller publications such as The Economist, Punch and The Spectator see readership and revenues increase.

    The Guardian, ironically an outlet that itself is cutting 250 staff, reports these publications are succeeding due to well written articles. “If you produce journalism that is not just better but significantly better than what’s free on the web, people will pay for it,” says Spectator editor Fraser Nelson.

    Which brings us back to Australia’s Fairfax where a succession of clueless managements have eroded editorial standards. Three years ago former editor Eric Beecher wrote a scathing account of his time at the company where an incompetent and unqualified board flailed in the face of market changes it could barely comprehend.

    One of the villains of that tale, board chairman Roger Corbett, was a successful Chief Executive of the Woolworths supermarket chain. That he was so obsessed with a failed business model and protecting margins by slashing costs indicates much about the nature of Australia’s insular corporate world.

    A consequence of Fairfax’s cost cutting obsession has been foreign outlets have stepped into the market with The Guardian, Daily Mail, Buzz Feed and a range of other sites setting up in the country – something that further squeezes the incumbent’s market position.

    In opening her Ad:Tech presentation, the NY Times’ Julia Whiting noted Australia was the outlet’s fifth largest global market, something undoubtedly driven by the decline in the SMH’s and Age’s output.

    The travails of Fairfax and the successes of smaller outlets show what might be an encouraging trend in the media – that a quality product actually attracts an audience and advertisers.

    If that’s true, the managements that mindlessly cut costs that hurt the quality of their core product may be accelerating the demise of their businesses.

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  • Australia’s contempt for technology

    Australia’s contempt for technology

    “The minister sends his regrets….”

    Yesterday I commented how the Australian Tech Leaders event would be a good measure of the state of the country’s technology industry. Instead it illustrated the sheer contempt the nation’s political leaders hold the industry.

    One of the government’s key platforms in the upcoming election is its Innovation Statement and the accompanying Ideas Boom so it wouldn’t have been expected that a minister or at least an informed backbencher would address a room full of technology journalists.

    Instead the government drafted one of their local MPs, Fiona Scott, to make the short drive up the hill from her electorate to haltingly deliver a poorly written speech that focused on her local electorate issues.

    To be fair to Ms Scott, the outer Sydney suburban seat she represents is a bellweather electorate which tends to swing between parties as government changes. It also happens to have a workforce that’s beginning to feel the effects of a shifting economy. Her focus on local issues is understandable.

    However as a member of a government aspiring to drive a technology driven jobs boom and the representative of an electorate whose workforce is in transition, it is remarkable that Ms Scott is so poorly briefed on tech issues.

    What’s even more remarkable is the contempt shown by the government towards the country’s technology sector, a long standing problem in Australian society but particularly stark with the current administration given the Prime Minister’s fine words on the topic.

    One of the saddest things about Australia’s squandered boom is how the nation turned inwards at the beginning of the Twenty-First century and decided to ignore the global technological shifts.

    The contempt shown by the current government towards the technology sector shows a much deeper problem in the Australian mindset, if the country is to rely on more than its luck in the current century then it’s essential to shake off that way of thinking.

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