Friend or foe: Labor and the Aussie channel

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This article appeared in the January 2008 issue of CRN magazine.

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The Labor party whet the appetites of CIOs around Australia by including IT-related policies in its 2007 election platform. Previously taking a back seat to high profile issues such as national security in 2001 and the withdrawal of Australian troops from Iraq in 2004, the recent election saw ICT for the first time emerge as a key political topic.

According to the Communications Alliance ICT Industry Pulse Survey conducted just prior to Rudd’s instatement as prime minister, Australia’s ICT industry is confident of strong growth in sales, profit and recruitment in 2008.

“For the first time in our history, ICT was a major issue in a federal election and the incoming government has unveiled an extensive program of initiatives that have captured the attention of the Australian public,” said Anne Hurley, chief executive officer, Communications Alliance.

“As those initiatives begin to roll out, we will be able to gauge their impact on our industry through successive surveys.”

PC hardware vendors were the first to take notice when Labor pledged $1 billion to provide every senior secondary student access to a computer. The contract that would be up for grabs had vendors salivating as they looked forward to a golden era for their education sectors.

Then Rudd uttered the words ‘thin client’, which peaked the interest of major virtualisation players such as VMware, Wyse and Citrix.

“There’s a huge opportunity for the channel when you hear the words virtual client as opposed to 300,000 new PCs that will most likely be run by the PE teacher,” said Ward Nash, regional sales manager NSW, Qld and NZ, Wyse. “There are also opportunities to make money in support if the federal government takes over schools power play and hires companies to build a farm of servers that are all centralised.”

The possibility that the next prime minister of Australia could be a bona fide techie was an exciting prospect for the Aussie channel, but something didn’t quite add up. Rudd’s background consisted of a degree in Arts (Asian Studies) and positions as a diplomat, a senior official in the Queensland government and a business consultant. So where did he pick up the IT jargon? His wife, Therese Rein, owns a share of Igneus that delivers welfare-to-work and recruitment services in Britain, France and Germany, as well as Australia. Interestingly, the company recently migrated to Wyse thin client technology.

In a media release, Rein stated: “We clearly anticipated that using PCs would not give us the Standard Operating Environment we needed ... we also realised that, in line with continued growth, we would need to set up new offices quickly, and the best way to do this was to adopt server-based computing and thin client technology.” Sounds like someone knows her switches from her servers.

So perhaps Rein is ‘the woman behind the man’, nevertheless the channel waited with baited breath to see what the politician who has a pretty good understanding of technology would do next. Few anticipated that Labor, the representative of the working class, would be an advocate of innovation and a champion of technology providers. Historically, the Liberal party preserved the interests of captains of industry, including IT. Many would argue that this strategic move by Labor played a significant role in the party’s victory.

Reseller Brian Brannigan, managing director, Agreon has noticed a change in political allegiances within the channel. “No one can believe that as a small business owner that I wouldn’t want Liberal to be re-elected. With Silicon Valley in the heart of California I suspect it is a Democrat stronghold federally. Similarly, I would be interested to see whether our industry demographic is Labor or Liberal at this time.”

Kevin Rudd then unveiled a $4.7 billion plan to provide high-speed Internet communications across Australia, another bold promise that was met with enthusiasm. Post-election the party insists steps are being taken to make it a reality, despite hesitations from telco giant Telstra.

“This new network will jump Australia into the 21st century,” said Rudd in a statement. “It will be open access, promote competition and put downward pressure on consumer prices.”

The improvement to Australia’s communications network appeared to justify the cost. That was until Telstra, which owns the copper wire that will be used to carry broadband to individual premises via the fibre-to-the-node system, started questioning the project. Telstra’s attitude is crucial to the realisation of Labor’s grand broadband scheme and this signals the potential for problems if the telco refuses to co-operate. The main point of contention is ownership of the infrastructure. Rudd proposed a 50 percent split between the government and the telco that has been mocked by Sol Trujillo, chief executive, Telstra as an impractical “kumbaya, holding hands” theory.

“We are only going to participate in the things that we own and control,” he said.

Trujillo is also concerned that the competition regulator, ACCC, will limit the prices Telstra could charge for the new network. “The one network that hasn’t been built is a fibre-to-the-node network and it hasn’t been built simply because of the regulatory policies, the regulatory settings that are still mired in what I would call backward-looking focus as opposed to forward looking,” said Trujillo. “I would like to see the environment for investment change – it means a policy change, it means that it’s a change the government will have to lead.”

Kevin Rudd might feel that he is suffering for the sins of his predecessor if he is later held to ransom by a previously government-owned entity. On the other hand, the current PM has also embraced a few Liberal-enacted initiatives such as the plan to make the Internet safer. Labor’s ‘clean feed’ filtering system that will attempt to block violence and pornography is an extension of the Howard government Internet safety program known as NetAlert – Protecting Australian Families Online. The Internet Industry Association warns, however, that the project could come in direct conflict with his other election promise to speed up Internet access.

“You’ve got to be aware of the fallibility of the approach,” said Peter Coroneous, spokesman, Internet Industry Association. “There is a potential for slow downs in access to occur. The more sites you attempt to block, the greater the effect on the network performance and speed.”

Perhaps he should have consulted his wife on that one?

Back to a topic that Rudd knows all about – climate change. Within hours of being sworn in as Australia’s 26th prime minister, Kevin Rudd met with governor general Michael Jeffery who agreed with his request to ratify the Kyoto Protocol. The decision has widespread implications not only for the environment, but also Australian businesses.

In 2005 ICT use by Australian enterprise generated 7.94 million tonnes of carbon dioxide – equivalent to 1.52 percent of total national carbon dioxide emissions. This presents both opportunities and obstacles for the channel.

Virtualisation vendors could be the main winners as firms scramble to reduce energy consumption of their data centres through server consolidation. The Australian Computer Society estimates that each server removed represents an annual saving of approximately 3.35 tonnes of carbon dioxide emissions.

David Blackman, channels director, VMware A/NZ said: “Today, the conversation around environmental policies is more prevalent across Australia and can be further demonstrated with companies such as News Corp and NAB saying they will be carbon neutral by 2010.”

The enthusiasm surrounding Kevin Rudd’s election victory may be waning as the practicability of his IT policies are scrutinised. However, there are signs of a shift in political allegiance within the channel. Friend or foe, Rudd promises to make the coming year an eventful one for the Australian IT industry.
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