E-shopping 'til we drop - Kiwis are in the net

By ADAM GIFFORD

New Zealand is a world leader in its adoption of electronic commerce, says a new report.

But it needs to develop people alongside its technological infrastructure.

The State of E-New Zealand, by researchers from Victoria University's Institute for the Study of Competition and Regulation, said earlier studies which said New Zealand was lagging behind Australia and close trading partners were flawed.

"New Zealand is not only much more e-ready than past studies have portrayed, but indeed already much more active in uptake of new infrastructures and technologies than past international comparisons have led us to believe," said authors David Voles de Boer, Lew Evans and Bronwyn Howell.

The study compared infrastructure investment and use in a number of Organisation for Economic Cooperation and Development countries.

It measured factors such as the number of secure servers - needed to conduct e-commerce - the number of internet domains registered and hosted, the telecommunications environment and the highly competitive internet service provider industry.

And it concluded that far from being a tardy participant, "New Zealand is among the world leaders in electronic commerce and potentially offers a conducive environment for the development of new ways of trading electronically."

Keeping this advantage in the face of continually changing technologies relied on retaining and improving the infrastructure environment which had encouraged the present position.

The report warned against enshrining into regulation prices and strategies based on the qualities of a limited number of existing technologies.

The high use of electronic banking interfaces - ATM machines and Eftpos terminals - although not driven by the internet, was a "significant indicator of not just New Zealanders' preparedness for, but their significant practical uptake of, electronic commerce."

The authors warned against changing telecommunications regulation unless it was done to maintain or improve the four key policy areas the OECD has identified as encouraging e-commerce:

Support for a range of tariff options, particularly those favouring "always on" internet access.

Support for infrastructure competition.

Support for unbundling local loops.

Support for development of high speed access options.

One reason earlier studies assumed e-commerce adoption was lower here than in Australia was the number of secure servers for every million inhabitants - 92.7 compared with 119.1 across the Tasman and 170.4 in the United States.

That could be explained by New Zealand's import and export patterns.

Since the most commonly bought items over the internet - computers, books, clothing and entertainment - are all areas where the country is a net importer, it can be assumed New Zealanders are more likely to be buying from foreign than local sites.

The same goes for business users importing inputs to production.

"In this scenario, New Zealand's secure server number could be expected to be lower than in a market where proportionally more of these items are produced internally."

The lack of economies of scale, banking restrictions which stop local sites accepting foreign currencies, credit company rules and having to trade in a volatile currency also discourage New Zealand firms from selling their goods through local sites.

As well, the bulk of the country's exports are agricultural products, many of which go through single desk sellers, providing little incentive for growers or farmers to maintain their own shop sites.

Even so, New Zealand still has the fourth highest number of secure servers per head of population.

The other key indicator for which New Zealand has been marked downin the past is the cost of telecommunications. The report said that was because the OECD included the full cost of telephone line rentals when comparing internet access costs.

Take this out, and New Zealand prices for internet access were cheaper than in most countries, with a 41 per cent price advantage on Australia in some situations.

The study singled out the lack of skilled people as one of New Zealand's biggest handicaps in making technological progress.

"Significant emigration of skilled personnel in the scientific, technical and managerial sectors, apparently flat and low levels of patent registration in an international environment where patent registering activity is increasing, and uncertainty in policy treatments of research and development activities raise significant causes for concern."

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Institute for the Study of Competition and Regulation