UK/China Internet Roundtable
Baroness Shriti Vadera, Minister for Economic Competitiveness and Small Business (jointly with Cabinet Office)
Reuters, London, 20 March 2008
It is a tremendous honour for me today to join Vice Minister Cai in addressing the first in a ground-breaking series of joint UK and China roundtable events on internet content issues. You are very welcome to London – and here to Reuters which represents the heart of our financial and communications industries.
Congratulate you on the pace you are setting us in China.
When our Prime Minister Gordon Brown visited China in January he said:
“I believe that we can use the power of the internet together to build a truly global society where the connections and contacts and communications between people brings about peaceful relationships all across the world.”
For me the exciting potential of the internet is that it is about communications not just between organisations and states but between people on a scale never seen before. The internet’s contribution to innovation, creativity and economic productivity is driven by its empowerment of people. The freedom for users to access content, when and where they want it; freedom for users to create and publish their own content.
Development of the technology is critical to the productivity gains for our economies. But not I would say as critical as the way people use the technology. And that combined with ensuring we have healthy competition in the market is, I believe, the driving force behind its growth.
I spent 8 years at the Treasury, as an adviser to Gordon Brown, most of the time fixated with the gap in productivity between the UK and the United States. We have made strides in the last 10 years in decreasing our historic productivity gap with European competitors but not quite the same with the US.
In the EU over 40% of productivity growth is now due to ICT. In the US though the contribution to productivity has been above 50%,
But in our analysis of this gap it became clear that investment in technology or technological change alone does not provide productivity gains. Productivity is gained from establishing strong competition in the market combined with the investment in technology.
As both McKinsey – in their 1998 report “Driving Productivity and Growth in the UK Economy” and Bart van Ark at the University of Groningen in the Netherlands, have demonstrated it has to be accompanied by change management and, crucially, sector competition.
The evidence of the growth of the internet supports this. It is the combination of innovation with open markets and competition – both domestic and international – that has driven its development.
There is no better place to demonstrate this than in the telecoms sector, where in Europe the European Competitive Telecommunications Association have demonstrated a solid relationship between the quality of regulation in the market, the levels of investment and the extent of competition. The evidence is that competition increases investment; something we all need to keep in mind as we contemplate new faster broadband networks.
And to ensure this competition, we must have the right regulatory framework in place to let the market prosper.
We are one of the first countries in the world to have a converged, independent regulator; with Ofcom widely recognised as a model both in Europe and globally of a converged economic regulator.
One that is pioneering the market management of spectrum; letting the market rather than government decide how this valuable resource should be exploited. We saw in this context FCC in the US (announced yesterday) raising $19bn in their spectrum auction.
And in this context it would be interesting to hear, Vice Minister, how China’s plans to restructure its ICT sector and reform its regulatory law are progressing.
But not content with just converged regulation we now have a convergence think tank to look at the next steps.
It will consider the opportunities and challenges a converged market presents; identify areas where policy and regulation need to change, and consider the future form and provision of public service content to help shape future policy development, and necessary legislative reform.
We are realistic about our intervention. We should essentially let the market lead, and not intervene unless we have a clear role. And we should certainly not be picking winners’,
But there are serious questions for government – are we joined up enough in how we address broadcasting and telecommunications across government?
Should we do more on access regulation to content (an issue that came up in a think tank session earlier in week); and should, in the modern converged world, relations with BT and other telecoms operators come under my department, but the BBC and other content providers fall under the Department of Culture Media and Sport?
And should we have converged legislation, for example on internet and telecoms. At present we have the Communications Act dealing with essentially telecommunications matters but separate legislation dealing with broadcasting and the internet?
And does it make any sense to have different European regulatory and legislative regimes for broadcasting, telecoms and the internet. And can institutions like the International Telecommunication Union – only dealing with one element of our ICT jigsaw – be made more relevant in a converged world?
I do not have answers to these questions; but we will need them if we are to secure the real economic benefits that converged markets can deliver.
Content rather than technology is exciting the web right now.
Internet users are in the driving seat. They are changing the way they consume their media, seek information and communicate.
The younger generation are increasingly watching television on the web, and on the move. And organising their social lives through social networking sites such as Facebook and Bebo.
A survey of young Americans showed that 13 to 24 year olds now spend 11.7 hours a day with media of one kind or another and are leading the way watching video content on the internet with the cell phone moving to centre stage as an entertainment device. Our young people in the UK and China will be following similar trends.
Increasingly economic and social activity is being conducted on-line; we are seeing the power of mass collaboration whether through online petitions or canvassing in the US primaries as good examples. As Jjames Surowiecki says “the many are smarter than the few”.
Some of the most successful websites today are being created or the content driven by the people who use them.
Information exchange still remains the number one reason why people log on – 86% in the UK saying they use the internet to find information about goods and services.
The success of advice sites such as moneysavingexpert.com – with four million visitors in February alone, or netmums.com with a quarter of a million people providing advice to parents and parents-to-be.
Ordinary people are now the modern media stars; they are the new providers of content. Youtube now has 8 hours of content uploaded every minute.
News channels are increasingly using footage or images provided by the public via mobile phones, as we saw last year in the UK on the floods across the country.
And it does of course have profound implications for the workings of governments whether in the provision of services from government to people or in the manner of communication between citizens and government.
As people become used to the internet allowing them to tailor content and services to meet their individual tastes and needs, they will come to expect the provision of services provided by the public sector to be similarly personalised and responsive.
Web petitions have been controversial and in certain cases provided uncomfortable reading for government, but there is no doubt that they encourage participation and break down the walls between legislators and electors
A few ministerial colleagues now write blogs – David Milliband our Foreign Secretary writes a blog from around the world, providing an opportunity for citizens to give instant feedback on world issues, direct to the Foreign Secretary. He is one of 112 million bloggers now out there.
And at local level it can be the citizen telling the council where the pot holes are or where street lights have failed – fixmystreet.com or finding out how their MPs are voting on an issue or discussing in Parliament in theyworkforyou.com.
There is probably nothing more exciting in this area than the developments in virtual worlds.
Am very proud that since their invention at the University of Essex in the UK in 1979, virtual worlds have steadily grown in diversity, popularity and global reach as online virtual environments – imitations of the real world.
However, they are no longer the preserve of online games. We are now seeing a rapid uptake in the use of virtual worlds for corporate applications and education. Public sector organisations are also acquiring large presences inside virtual worlds for scientific research and innovation.
In the UK, for example, the virtual world known as Second Life is being used to experiment with new ways of working and of developing business models. Consumers inside second life are able to create their own intellectual property in the shape of virtual assets which they are then able to trade using its own fully-convertible virtual currency.
In China, I hear of the digital media industry link up with the telecom operators, banks, content developers and the equipment industry to create wholly integrated, extensive online worlds or hubs such as dotman which are transforming the operation of business parks into virtual economic zones.
We know most virtual world providers will want to put in place good governance procedures – and that is what we would prefer rather than any rush to regulation.
As we in government seek to realise the economic, social and environmental value of these converging technologies and applications, we need to ensure that the market is able to take the lead and make the crucial investment decisions, without constraint or threat from regulation
Looking forward we need to harness the opportunities that these developments bring. Time is not on our side and we need to seize these opportunities.
I am keen for strong trade and investment links to continue between our two countries. And as one of the most open major economies in the world, we of course support open global markets as the surest way to harness the power of trade and technology to boost competitiveness and productivity.
I am hoping that on this tenth anniversary of the WTO GATS Protocol on telecommunications that we can all strive to ensure our markets are as open as possible to competition and innovation.
And therefore create opportunity of wealth creation for all
That is our challenge, and one that we are keen to pursue with you. I look forward to hearing how the rest of the day goes.