The Digital Economy: It's the Economy Stupid

The Digital Economy is The Economy as everything we do is digitised and everything is becoming connected to everything else. Improved technology in the connected economy is vital to “Creating Better Ways of Working Learning and Living” but improved technology is not sufficient in achieving these goals, the connected economy will fail to achieve its full potential for humanity without better ways of organising and managing people and things.

Technology has fascinated mankind and was core to the epic journey portrayed by Arthur C Clarke and Stanley Kubrick beginning with that memorable opening image of the primitive club in the hand of the humanoid in 2001: A Space Odyssey and sending a chill down our spines as Dave Bowman asked:

“Open the pod bay doors, HAL”

And HAL replies

“I’m sorry Dave, I can’t do that”.

As a small child growing up in Gippsland in the 60’s science fiction created an expectation of personal air travel vehicles in the Jetsons where working life in 2062 was for George at least the pressing of a single computer button but complaints about the remaining inconveniences in life still remained. Maxwell Smart more accurately anticipated not just mobile phones and devices but wearable communications devices albeit just a phone in his shoe.

The Challenge

Our challenge and what we need to hear from our political leaders in this election year is how they will provide policy settings that will encourage the development of systems that build trust in data, applications and people, get our strong banking system to deliver frictionless payment systems where value is exchanged efficiently, provide new legislation so that intellectual property rights work in this modern economy, provide online security so that people and communities feel safe and global taxation can be levied appropriately so that public infrastructure is paid for equitably reflecting the benefits delivered by that infrastructure. It will be these policy responses that enable solutions to these major challenges that will determine what level of return we get from our $43 b investment in the NBN technology.

The Emerging Connected Economy

It is often felt that we are at a dawn of a new age, that this moment has significance unlike most of what has gone before. Tom Stoppard wrote in Arcadia “A door like this has cracked open five or six times since we got up on our hind legs” and goes on to highlight that relativity and quantum mechanics has yet to provide A theory for Everything pointing out that we can’t even predict the next drop from a dripping tap when it gets irregular. Each drip sets up the conditions for the next, the smallest variation blows prediction apart…”

Yet even with Stoppard’s warning the impact of a truly connected world built on an internet connecting billions of people and trillions of things does feel like a momentous, epic achievement that will impact humanity for eons. How will connecting billions of people and trillions of things benefit our world?

What will we be able to achieve with our NBN at 1GB? With an Internet that provides instantaneous access to all digitized content ever created all in an interoperable world where everything we design can be stored, shared and reused? For any situation existing data and applications can be mashed together so that you never have to reinvent the wheel again. Take a picture of that building in front of you, use that image to search and learn about its heritage, property title, identify its tenants, and receive their special offers. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly.

The Internet of Things, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, using the same Internet Protocol (IP) that connects the Internet.

What we thought was for the future is here now. Pill-shaped microcameras already traverse the human digestive tract and send back thousands of images to pinpoint sources of illness. Precision farming equipment with wireless links to data collected from remote satellites and ground sensors can take into account crop conditions and adjust the way each individual part of a field is farmed—for instance, by spreading extra fertilizer on areas that need more nutrients.

We will soon see freeways with lanes that set speed of cars capable of disabling errant or stolen vehicles. We will see cars that can connect with one another to form pelotons or connected car fleets that will save 30% or so in fuel costs. But it will require electric cars that can share the power consumption in such pelotons between front and following cars otherwise who will be happy to take up pole position?

New insurance products are emerging requiring location sensors in customers’ cars to set the price of insurance on how a car is driven as well as where it travels. Pricing can be customized to the actual risks of operating a vehicle rather than based on proxies such as a driver’s age, gender, or place of residence.

Manufacturers of jet engines retain ownership of their products while charging airlines for the amount of thrust used. Aeroplane manufacturers are building airframes with networked sensors that send continuous data on product wear and tear to their computers, allowing for proactive maintenance and reducing unplanned downtime.

In retail environments some companies are gathering data from thousands of shoppers as they journey through their stores. Sensor readings and videos note how long they linger at individual displays and record what they ultimately buy at the cash register. Analysis of this data helps to increase revenues by optimizing retail layouts.

Whilst funding models are clearly important in developing our health system eHealth was sadly neglected in the recent stoush between our PM and all the state premiers. Today patients can be monitored not only during periodic visits to their doctor for weight, blood pressure, and heart rate and rhythm. Sensors placed on the patient can now monitor many of these signs remotely and continuously, giving practitioners early warning of conditions that would otherwise lead to unplanned hospitalizations and expensive emergency care. Better management of congestive heart failure alone could reduce hospitalisation and treatment costs by a billion dollars annually in each of the developed economies.

If our politicians stop caving in to voters automation and control system can utilise time-of-use pricing and better information to empower residential consumers to shut down air conditioners or delay running dishwashers during peak times. Commercial customers can shift energy-intensive processes and production away from high-priced periods of peak energy demand to low-priced off-peak hours.

I like the way IBM puts it: Instrumented, Interconnected, Intelligent. Systems not only need to do what they are supposed to, rather they need to do it in the most efficient way producing the most effective outcome. Interconnect systems talk to one another to achieve powerful outcome such as irrigation systems being connected to weather systems.

I have also heard it put as awareness that a device is aware of other devises and can communicate what is relevant to that other device.

I began by saying that the applications and systems that utilise the NBN technology will be more important to achieving societal benefits than the technology itself. I will end by listing the economic policy responses necessary to maximise our return on the $43 billion investment cover five areas:

  1. creating trust throughout the economy but most importantly in the connected economy
  2. providing frictionless payment systems
  3. legislating an IP environment that fosters innovation and invention
  4. establishing security systems that protects our citizens and all connected resources; and
  5. develop a national and global taxation system that can fund the required infrastructure and services for a dynamic and vibrant society