Internet Will Disappear', Google Boss Eric Schmidt Tells Davos

Google Chairman Eric Schmidt is in Davos for the World Economic Forum along with other tech tycoons. Photo: The New York Times

Google boss Eric Schmidt predicted the internet will soon be so pervasive in every facet of our lives that it will effectively "disappear" into the background.

Speaking to the business and political elite at the World Economic Forum at Davos, Schmidt said: "There will be so many sensors, so many devices, that you won't even sense it, it will be all around you."

"It will be part of your presence all the time. Imagine you walk into a room and... you are interacting with all the things going on in that room."

"A highly personalised, highly interactive and very interesting world emerges."

On the sort of high-level panel only found among the ski slopes of Davos, a panel bringing together the heads of Google, Facebook and Microsoft and Vodafone sought to allay fears that the rapid pace of technological advance was killing jobs.

"Everyone's worried about jobs," admitted Sheryl Sandberg, chief operating officer of Facebook.

With so many changes in the technology world, "the transformation is happening faster than ever before," she acknowledged.

"But tech creates jobs not only in the tech space but outside," she insisted. Facebook this week released a Deloitte study that estimated the site's value to the global economy at more than $US200 billion.

Schmidt quoted statistics he said showed that every tech job created between five and seven jobs in a different area of the economy.

"If there were a single digital market in Europe, 400 million new and important new jobs would be created in Europe," which is suffering from stubbornly high levels of unemployment.

The debate about whether technology is destroying jobs "has been around for hundreds of years," said the Google boss. What is different is the speed of change.

"It's the same that happened to the people who lost their farming jobs when the tractor came... but ultimately a globalised solution means more equality for everyone."

Everyone has a voice

With one of the main topics at this year's World Economic Forum being how to share out the fruits of global growth, the tech barons stressed that the greater connectivity offered by their companies ultimately helps reduce inequalities.

"Are the spoils of tech being evenly spread? That is an issue that we have to tackle head on," said Satya Nadella, chief executive of Microsoft.

"I'm optimistic, there's no question. If you are in the tech business, you have to be optimistic. Ultimately to me, it's about human capital. Tech empowers humans to do great things."

Facebook boss Sandberg said the internet in its early forms was "all about anonymity" but now everyone was sharing everything and everyone was visible.

"Now everyone has a voice... now everyone can post, everyone can share and that gives a voice to people who have historically not had it," she said.

Schmidt, who said he had recently come back from the reclusive state of North Korea, said he believed that technology forced potentially despotic and hermetic governments to open up as their citizens acquired more knowledge about the outside world.

"It is no longer possible for a country to step out of basic assumptions in banking, communications, morals and the way people communicate," the Google boss said.

"You cannot isolate yourself any more. It simply doesn't work."

Nevertheless, Sandberg told the assembled elites that even the current pace of change was only the tip of the iceberg.

"Today, only 40 per cent of people have internet access," she said, adding: "If we can do all this with 40 per cent, imagine what we can do with 50, 60, 70 per cent."

Even two decades into the global spread of the internet, the potential for opening up and growth was tremendous, she stressed.

"Sixty per cent of the internet is in English. If that doesn't tell you how uninclusive the internet is, then nothing will," said the tycoon.

The World Economic Forum brings together some 2500 of the top movers and shakers in the worlds of politics, business and finance for a four-day meeting that ends on Saturday.

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NBN Setup was ‘Rushed’ and ‘Inadequate’ According to Audit by Bill Scales

The findings by former Telstra Director Bill Scales could mean political parties which promise massive infrastructure projects during election campaigns will have to present more stringent costings.

Mr Scales, who also used to head the Productivity Commission, said the policy set up in April 2009 by the Rudd government went through only 11 weeks of consideration.

It was first estimated to cost $43 billion and take eight years to finish but is now tipped to blow out to about $73 billion and take up to 20 years to complete, he found.

“There was no business case or any cost benefit analysis, or independent studies of the policy undertaken … and without any consultation with the wider community,” Mr Scales said.

According to his audit, NBN Co, which was set up to oversee its rollout, was “not fit for purpose”.

“It was a start-up company given a job that only a well-functioning, large and established telecommunications company would have been able to undertake in the allotted time frame,” he concluded.

“Tight time frames and inadequate operating instructions took their toll immediately on NBN Co.

“During the first 12 months of the existence of NBN Co, some of those involved describe the process as ‘making it up as they went’.”

In a 186 page report tabled last night, Mr Scales recommended political parties be made to have infrastructure election promises “fully and independently costed by the Productivity Commission or Infrastructure Australia … and to disclose fully the costs of the project to the public”.

Australians should also be able to see a “full project plan” open for public comment before the project begins, he said, with large projects costing more than $1 billion subject to a cost-benefit analysis.

Former Communications Minister Stephen Conroy this morning defended the previous government’s actions, arguing the audit was politically motivated.

“The government has now spent $10 million commissioning six reports of which this is just one that are all political attack on the National Broadband Network,” he told ABC Radio.

“Why is Malcolm Turnbull spending $10 million of taxpayer’s money to attack the NBN? Because his policy is a dog.”

Mr Scales said there was no “evidence that a full range of options [were] seriously considered”.

But Senator Conroy insisted that was not true and instead wanted to praise the public servants who “worked extraordinarily hard” to work up the policy.

“Mr Scales isn’t aware of all of the evidence and all of the deliberations. There was an alternative position discussed but Mr Scales is not aware of that because it was discussed in Cabinet committees,” he said.

Opposition Leader Bill Shorten stood by the policy “process” which Labor began but admitted it was a “massive undertaking”.

Addressing reporters in Tasmania, the Opposition Leader urged the Liberal Party to get on with delivering it.

“It is time they started acting like a Government not an Opposition. They are addicted to getting reports after reports to run their political agendas,” Mr Shorten said.

But Communications Minister Malcolm Turnbull, who commissioned the audit, insisted it is important to “learn from the mistakes from the past”.

“The purpose of doing this audit is so that you have an independent sober assessment of what happened, the mistakes that were made, and we learn from those mistakes and let’s hope we don’t make them again. Because there’s tens of billions of dollars wasted because of this.”

Mr Turnbull said the government will continue to roll out the scheme in a “careful and diligent and transparent manner”.

Australian Telcos Could Access Your Phone And Internet Data And Store It For Up To Two Years

Australian telecommunication companies could soon store your phone and internet data for two years under a compulsory data retention scheme proposed by Attorney-General George Brandis.

The collection of metadata the telcos would have access to includes times, location, sender and receiver, and possibly URLs and IP addresses, according to iiNet boss Steve Dalby.

“Metadata reveals even more about an individual than the content itself,” Dalby says in a submission to the data retention inquiry.

Despite national security agencies saying the system will help to combat terrorism, there are concerns the telcos aren’t equipped to handle such sensitive information and have no need for customers’ data beyond the billing purposes.

“Carriers only collect appropriate data for their businesses. There is a world of difference between the data collected in order to bill a customer for their Internet usage, versus the collection of a mass of data generated by a customer during their sessions on-line,” Dalby says. “The data generated by telecommunications traffic massively outweighs the data required for ISPs and carriers to run their businesses.

“This suggestion from the Attorney General’s Department could be likened to saying, ‘You are going to the shops to get a litre of milk anyway, and so it’s no big deal to bring me the whole
supermarket’,” he said.

Dalby estimates the cost the scheme to cost $100 million over two years, which would be an extra $5 to $10 a month for customers.

Read his submission here.

Complacent Monopoly Unlikely to Innovate

Opposition communications spokesman Malcolm Turnbull says a monopoly service provider would not push itself to improve its effectiveness and efficiency for customers.

Mr Turnbull responded to a speech on Monday by NBN Co chairman Harrison Young, who said a natural monopoly could serve the entire market at a lower cost than at least two suppliers.

This thesis denied the "dynamic, creative forces" that only competition could deliver in the market, Mr Turnbull said.

"A monopoly is always likely to be complacent - there is nothing to stir it to innovate, to improve its efficiency," he said in his blog on Monday.

Mr Turnbull said the opposition supported all Australians having access to very fast broadband but it preferred the private sector to deliver that aim in a competitive environment rather than by a government-owned monopoly provider.

The coalition has criticised Labor's $37.4 billion national broadband network (NBN) as too slow and too costly.

Under Labor's plan, NBN Co will deliver high-speed fibre-optic cable to 93 per cent of homes, schools and businesses by 2021, with fixed wireless and satellite technology to provide the rest of Australia by 2015.

Mr Turnbull opposes the NBN's plan to roll out fibre to the home in Australia, preferring a mix of technologies including fibre, cable, wireless and copper.

Mr Young said ongoing analysis of NBN's plan was "good".

"We are spending a lot of the public's money," he said in his speech at a Committee for Economic Development of Australia event in Sydney on Monday.

"There ought to be scrutiny of our plans and performance."

He said the potential cost savings of a fibre-to-the-node network would depend on how far ahead planners looked.

The coalition has said it prefers a mix of technologies to provide broadband services as quickly and as cost effectively as possible.

As part of the coalition's policy, fibre-to-the-node (or corner) would underpin a significant part of its plan to provide broadband across Australia.

Mr Young said maintaining the copper that connected the nodes to the premises and coping with inherited information technology systems were both dear.

"The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at," he said.

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Costs 'Could Rise' With NBN Plan Switch - Internet Australia

The chairman of NBN Co, Harrison Young, hopes to broaden the debate about the merits and cost of the government's National Broadband Network in a public speech today.

Mr Young will argue that changing the network design to the Coalition's preferred "mix of technologies" could increase the long-term costs of the network and fail to deliver key policy targets, at a forum about “Australia's Digital Future" and hosted by the Committee for Economic Development of Australia (CEDA) in Sydney.

Mr Young's speech outlines three "interwoven" aspects of the NBN – a super-fast broadband network that will cost about $40 billion to construct - the telecommunications market structure, infrastructure and future applications and benefits of the network, according to a draft copy obtained by Business Day.

While saying he wants to stay out of the debate about whether fibre to the premises is needed when fibre to the node technology exists, Mr Young says that “if you retain Telstra infrastructure as part of the national broadband network, even just the last bit, you will not have accomplished the separation of [Telstra] wholesale from retail that was a major objective of Project NBN”.
A fibre-to-the-premise model runs fibre optic cables all the way from an exchange into households, while fibre-to-the-node only runs fibre cable from the exchange to an air-conditioned street side cabinet – the node - serving dozens of premises but keeping the copper wire between the node and households.

Mr Young also says fibre-to-the-node is more expensive over the long term than NBN Co's current design.

“The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at. In the long run, as Keynes famously said, we are all dead. Estimating costs is an engineering problem. Deciding on the relevant time frame is a policy question.”

Opposition communications spokesman Malcolm Turnbull has promised a Coalition government would deliver “very fast broadband sooner, cheaper and more affordably” using a mix of technologies, including fibre-to-the-node.

A future Coalition government would also keep the pay-television and internet cable owned by Telstra and Optus, which is connected to about 1.2 million households in wealthy inner-city areas.

NBN Co has struck commercial deals with Telstra and Optus to buy their cable customers and decommission the cable, a move that is heavily criticised by the Opposition.

But Mr Young will today tell the CEDA audience that since the cable networks were only built in suburbs containing Australia's wealthiest households, forcing NBN Co to keep to cables and not build fibre would create the “ironic situation that the wealthiest suburbs have the lowest-quality broadband in the country”.

NBN Co's super-fast fibre network will start operating at 100 megabits per second, but can be upgraded to 1 gigabit per second and faster speeds in coming years. The existing cable network does not have the same upgrade capacities.

Mr Young, who is a director at the Commonwealth Bank, former director at the Bank of England and former chair of Morgan Stanley Australia, lays out the policy and market reforms the current Labor government wants to achieve and says natural monopolies can be the most most efficient use of society's resources.

Using the example of bridges, he says building two toll bridges right next to each other would halve the flow of traffic on each bridge and push tolls to cover the owner's construction costs higher than a single bridge-owner would have to.

Further, NBN Co will not become another Telstra because it is not allowed to sell services at the retail level, he says.

“The problem with Telstra is not that it is a regulated monopoly supplier of wholesale services but that it has been able to behave like a monopolist in the provision of retail services, which is not a natural monopoly.”

Mr Young will be speaking alongside the chair of Regional Development Australia, Dave Abrahams, managing director of IBM in Australia and New Zealand, Andrew Stevens, head of customer relationship management and Medibank, Dermot Roche and head of telecommunications research at Ovum, David Kennedy.

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Digital Storm On The Horizon

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Copyright Law Review Paper delves Into Cloud

The Australian Law Reform Commission's (ALRC) newly released Copyright Act review consultation paper has raised concerns that Australian copyright laws might be stunting the country's cloud market, directly making reference to the Optus TV Now court case.

In the paper, "Copyright and the Digital Economy", the ALRC is looking at whether new exceptions to the Copyright Act should be added, since we are well and truly into the digital age.

"The questions we are asking in this inquiry go to whether our current copyright laws are properly aiding the development of opportunities for Australian creators and not unduly hindering the development of new business models, while at the same time ensuring appropriate protection for copyright," the ALRC commissioner for the copyright inquiry, professor Jill McKeough, said in a statement. "At the same time, the expectations of a global community to access and use material for a whole range of creative, community, educative and commercial purposes also needs to be considered."

The dynamic tech sector has thrown a few curve balls at Australia's seemingly outdated copyright laws, including how users of cloud computing can infringe on copyrighted materials.

Launched in 2011, Optus TV Now has since been pulled by Optus after it lost a Federal Court battle with the Australian Football League (AFL), the National Rugby League (NRL) and Telstra. Optus is looking to appeal the case to the High Court of Australia.

Optus TV Now allowed customers to record in the cloud and playback free-to-air TV content on their smartphones with minimum delay. This was perceived by the football bodies as being a copyright infringement, especially due to a multimillion-dollar deal that the AFL had signed with Telstra to broadcast AFL games on the telco's mobile network.

Analysts have considered the court decision to be detrimental to the growth of cloud computing in Australia. It could place a new legal burden on cloud service providers, since it could mean that they are responsible for the data stored on their cloud infrastructure by their customers. This may deter cloud-computing providers from entering the Australian market.

"The Federal Court case in 2012 concerning the Optus TV Now service highlights the potential for new and emerging cloud-computing services to infringe copyright, or enable their customers to infringe copyright," according to the consultation paper.

The ALRC is keen to hear from the public about whether Australia's copyright law is impeding cloud-computing services, and whether changes should be made to accommodate for this burgeoning technology sector.

"Cloud services, such as digital lockers, may also be used to store and share copyright material acquired illegally," the paper said. "New or amended exceptions presumably should not permit such activity."

Whether cloud service providers should qualify for safe harbour schemes, such as the ones available for carriage service providers, is beyond the scope of the review.

The consultation paper also addressed a number of other topics related to copyright and Australia's digital landscape, one of which concerns caching and indexing online content.

There are currently no exceptions granted to internet service providers (ISPs), search engines and other internet "middle men" to cache content, some of which may be copyrighted content, for indexing and operational efficiency.

"Caching improves the internet's performance, allowing search engines to quickly retrieve cached copies on its server, rather than having to repeatedly retrieve copies from remote servers," the paper noted.

But in doing so, search engines may be infringing copyright. There's also the sticky situation when search engines display links to websites that do contain pirated content. Australian copyright laws cannot determine whether companies such as Google are liable, and there is room to broaden exceptions to the Copyright Act to accommodate for caching and indexing content.

The rise of social networks has propagated a culture of sharing copyrighted content with friends. This user-generated content is also not covered under local copyright laws. While exceptions to the Act can be made for user-generated copyright content for non-commercial use, the parameters need to be defined.

Tying into the growth of social networks is the topic of data and text mining. This could be for analytics and research purposes, with data, text and images collected being stored in databases and repositories.

For commercial companies, this data can prove to be extremely valuable. Yet, there is currently no specific exception in the Copyright Act for data mining that may involve copyrighted content being copied without permission.

Individuals or organisations interested in making a submission in response to the copyright law review can do so here.

Submissions close on 16 November, and a report is due in 2013.