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Standing Committee on Infrastructure and Communications
28/04/2011
Role and potential of the National Broadband Network

DE LISEO, Mr Tony, President, ICT Illawarra

[11:04]

CHAIR: I now welcome the president of ICT Illawarra to the hearing. We had a good introduction from the University of Wollongong witnesses about the evidence you are about to present to us. Although the committee does not require you to give evidence under oath I should advise you that the hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. We do not have a written submission from you but we do have a background document about the organisation and the comments that were made previously. Did you want to make a five to 10 minute introduction? As you have seen, the committee members are very keen to ask questions so we will have a question and answer session after that.

Mr De Liseo : Thank you. I have a short presentation I want to talk about and there are six points I want to cover in this. I want to talk about the user experience of the web. I want to talk about how the nature of the web has changed and what that means for business in this area. I want to talk about workforce planning and how the interactions between workers and employers and agencies have changed and are changing. I want to talk about the need for collaboration and what that means. It was something that was touched on earlier—how IT professionals will want to collaborate and how they want to engage with the market. I want to talk about training services because one of the questions asked earlier on was, 'How does the individual at home benefit from having an improved solution?' And then I want to touch on faster reruns of MacGyver. I am accompanied here by my managing director who has advised me to remove all humour from my presentation.

CHAIR: No, please disregard that advice.

Mr De Liseo : I have done my best. I will give a brief introduction to ICT Illawarra, myself and our organisation. ICT Illawarra is a group of information, communication and telecommunication professionals in the region. We represent about 45 companies and these include software development firms—some of them are international firms—along with the University of Wollongong, research institutes and individual users as well. My own firm started out as a two-person husband and wife team at home. We were acquired by an international corporation. We now employ about 20-plus people in Wollongong. We also have an operation in Hong Kong and a team working for us in Japan.

Eighty per cent of our staff are University of Wollongong graduates. I will declare now that I am a University of Wollongong graduate, in case anyone feels there is a conflict of interest in some of the stuff I present. Forty per cent of my staff are Chinese speakers. One of our largest markets that we expect for our solution is in China, which is why we have expanded into Hong Kong. We deliver a Chinese based solution from this office and also from our Hong Kong office. Four staff members commute from Sydney to Wollongong. That ties into what the previous speakers were talking about: the fact that we are no longer just exporting day labour up into Sydney; we are a viable place for work. We have had two people relocate from Sydney. We relocated a business from Sydney. We sold our house and moved south here, even though we originally came from this area.

The interesting thing about IT is that all companies are IT companies in 2011. Whether you are a provider of IT services or a user of IT services, everyone trades in IT and information. The fact is that just like when we talked about companies being exporters and exporters need infrastructure in rail, ports et cetera, IT companies—hence all companies—need the infrastructure to support that. It is something that we feel obviously needs some overriding control otherwise we will end up with the railway gauge system between the different states—albeit that most of that was pre-Federation, I believe. It is important to note that we need to ensure that there is some sort of consistency and uniformity in this. The solution that we have had to date really has not offered us any of that.

Regarding the user experience, I am going to talk about some internet speeds. I will quote some research we did in our office yesterday afternoon. The user experience of the internet is dictated by the slowest portion of the web. If we are saying that we are going to build ultra-high speed links in our cities and if the user is in Figtree where I also live—I will give you some figures from my home, and Dr Iverson only lives around the corner from me but it was not planned that way—you will see what we are talking about in terms of the user experience. From my home I can get 1.7 megabits per second download and 1.5 megabits per second upload. This is on the highest service I can buy. I live four kilometres from the exchange. I cannot actually get better internet provider service. In fact, one of the other providers refused to offer me broadband to my home, saying they could not provide it and that I had to go with the standard dial-up.

From my office, we connect through to a US server called DreamHost in California. It is available on a product called Speedtest.net if you want to run your own test of this server. Our office does not have fibre coming direct to a building. We are in the centre of Wollongong, by the way. We get approximately 3½ to four megs download and two megs upload. I pay over $2,000 a month for that sort of service. In my Hong Kong office I get regularly better than four megabits per second and I only pay about $100—actually less now with exchange rate; it is now only $80.

Okay, everyone says, 'Yes you are going to quote figures of New York or Hong Kong or whatever,' but this is still something we should be trying to be aiming for. I should not be apologising for that sort of stuff, I feel.

From a fibre connected office in Wollongong—say, something like the iC Central—I get six megabits download to DreamHost in the US and two megs upload. Basically, the thing is, if I have a service or solution I want to provide via the internet, a user at home in Figtree cannot discriminate between me offering my service here in Wollongong or a solution being brokered out of the US. That means I am now competing with other service providers and not local service providers—not something that I can only provide for my market; I am competing with providers coming out of the US.

About five years ago when we were looking for a hosting solution for our product we had to host in Brisbane. Sydney was just much more expensive and there was no solution we could do locally. Basically we were exporting revenue to Queenslanders. Not that there is anything wrong with that. Interestingly, though, right now it is actually attractive for me to consider relocating that solution to the US. It would be cheaper for me and for about 80+ percent of my users it would it would actually be a comparable solution in terms of their user experience and service.

So the internet is no longer—and we are going to move on to how the nature of the web has changed—this brochure ware type solution; real work is being done on the internet now. Five or 10 years ago that was not the case. But now we are looking at people wanting to connect and run business applications via the internet. If we are then saying that we can only run business applications from cities, then we are now forcing everyone who does not live in a big city to commute to a big city to do their work. Dr Iversen says he would come to the university to get work done at 11 o'clock at night because he could not get that sort of reliable connectivity from home. We are talking about three kilometres away—walking distance.

As a matter of fact, a number of years ago we used to install product that rationed the web connectivity of staff members. You only got 40 minutes at lunchtime to surf Yahoo!—there was no Facebook when I was a lad; we were too poor for Facebook. That is no longer the case. Now all companies are spending their time on the web researching, reviewing who they should be speaking to, determining the best way to deliver their solutions, and looking to provide their solutions. We provide a front office solution which traditionally was always installed in a standard server environment in your office. You had to be this tall to get in. You had to have $30,000 to $40,000 in infrastructure internally. It was utilised about one percent of the time, but that is what you had to have to be able to run this sort of front office application and to then deliver this solution to your clients.

The solution we specialise in is staffing, time sheeting, rostering et cetera. This is the sort of thing that other IT companies in the Illawarra face—other IT companies in Australia face. They have smart solutions, they want to deliver them to a lot of people. The web is the ability to deliver these solutions to all Australians and globally and yet we are saying to them: 'You can only enjoy it in a horse and cart environment.' And as exciting as it is to go to the Royal Easter Show and watch Cobb & Co. race around the track, the truth is we only want to have that sort of transport infrastructure as a novelty and something we can reminisce about. I can still talk about the fact that only 13 years ago I had to run a piece of cable across my back lawn, cover the connector with a bucket so it wouldn't get wet, out to my shed where I was working running my home office—when, at the same time, I was then connecting to a server in Hong Kong and doing software work up in Hong Kong. We have moved on from that, surely.

Mr STEPHEN JONES: Have you got a bigger bucket?

Mr De Liseo : Yes! Now, fortunately, with wireless it is better. I will move on to the area of workforce planning. What is happening now, as you know, is that more and more people are casually employed or employed through agencies and are no longer directly employed by companies. As such, they need to be connected via the web to ensure they know where they are working this week—where they are due to turn up. I need to be connected to the web not only for my enjoyment of Facebook and other products like that but so that people who could utilise my skills know exactly where I am and can tell me where I will be this week and I can make sure my availability is known to them. This is growing: more people are employed via agencies today than via any other single employer. We need to understand that these people need this type of connectivity. Some of these people are very high value people—healthcare professionals, in-home carers et cetera. These people cannot work, or typically it is impossible for them to work, for one single provider. They have to work for multiple providers and need to make sure all these people are up to date.

If this were not the case, then people like my father, who needed in-home care, would not get the in-home care they needed because these people could not be connected to make sure they know where they have to go. We are now dealing with so many people it is just physically impossible for these people to ring around to speak to everybody. We need to use tools like Twitter to tell them, 'These are the people who need care this week; can you help?' or, 'This is our availability in terms of requirement; can you help?' That is one specific sector, but this has a huge value in terms of our whole economy.

This is an example of why providing this sort of solution through to the home is critical, because the weakest link in this is the individual healthcare provider, who is basically home based, turns up to where they are required and returns home. They do not have a central office. They do not want to come into a central office to get their roster for the day. If that is where they have to go to, we are just making it harder for these guys to stay connected.

The future of staffing then leads to this whole thing of whole of staffing. Professor Iverson was talking about health care and how the internet was going to provide solutions in terms of remote work et cetera. But we are also now seeing that some of these facilities are going to be able to make a request that these are the services we want to provide this week. Basically, they will be able to go to someone who can say, 'Based upon your service requirement you will need the following specialists, the following theatre people and the following staff, and we will provide them to you as a whole bundle'—so that the facility can specialise in the health care and leave the provision of technical people back to them to an external specialist as well.

But, again, unless this is happening with high connectivity we are not going to see this able to be delivered. This extends to OH&S monitoring, following up of staff who are field workers and all that sort of stuff. We need to make sure the connectivity is there so that if I am one of these field workers I can say, 'I am now at the University of Wollongong. These are the six people I have to visit to make sure they are okay. These are the OH&S checks I need to complete.' If that does not happen we are going to run the risk of having our workers disenfranchised, no longer willing to collaborate in this type of facility, and again we are not going to provide the final solution into our economy that we need.

Moving on to collaboration within the IT environment, as we said, over half of our staff are University of Wollongong graduates and most of them work for us directly, but a number of people we are seeing are saying, 'We would like to collaborate. Please pass up the work you want and deliver it to us. We will deliver it back completed.' This is how people are wanting to engage with us. There is no point us saying, 'We're not going to buy into that. You just turn up in my office. I can't deliver it to you in a timely fashion; you can't deliver it back to me in a timely fashion.' They are not going to want to engage with us and they are going to engage elsewhere. If the fact is that they can deliver work to the US in the same time frame that they can deliver it to me, they are going to work remotely to other organisations.

I had to deliver a parcel of work to the US; it took us eight hours to deliver that completed work. Interestingly, it took me 12 hours to deliver it to my Brisbane server. When you consider that in terms of project planning, I have to allow for eight hours to physically deliver my work on site. All those things have to be incorporated. The fact that in one of these multistage projects I have to deliver this product multiple times at separate stages for review means we are looking at many, many days—sometimes a whole week is allocated in just delivering stuff. People forget that when you are delivering huge volumes of data it does not just happen. I have to allow eight hours for the data to leave Wollongong and end up in Brisbane. People often say: 'What are you talking about? Why don't you just stick it on a CD?' To think that it is 2011—maybe I should just put it onto a drive, carry it to the airport, pop it on a plane and fly it to Brisbane. It will probably get there faster. It is 2011 and the bandwidth of a 737 is still better than I can get to my home. This is where we are at and that is what is limiting us.

Last of all are training services. We now make up 30 per cent of our non-project billable hours in training. If the user experience is slow, we are being forced to deliver it face to face. That is just not possible. We do not have enough trainers and the cost of face-to-face training is very expensive. It is one thing for the university to talk about the fact that they specialise in face-to-face training but, really, they are one trainer training classrooms of people. We often have to provide one trainer to one student. It is a huge expense so companies are foregoing training. If they are foregoing training, the productivity of their staff is dropping.

CHAIR: Tony, is this training for your products and services?

Mr De Liseo : This is us providing training services back to them. I will get back to training for our individual staff. So what we are looking to do is provide online based training, be that on demand or real-time. We are a web based trainer. I am able to sit there and get through eight training sessions in a single day, all running for about 45 minutes, and then prepare for the next one, and I deliver training in that way. If I were to do this face to face I would get it down to something like three a day, maybe, and sometimes not even that, considering that yesterday I trained two people in Japan.

That is just too slow. If it is clunky and the screens do not refresh properly et cetera, people will just switch off, and they do. So we are looking at how we can ensure that we keep up to date. It is 2011, the 21st century, and the fact is that we are constantly being retrained, not only in the IT sector but also in other sectors. The sorts of products that we are working on now did not exist five years ago, so I am constantly being retrained. I recently signed up for some online training. The online training I chose over the in-house training provided a client site. It was something like about 60 per cent less in terms of cost and just physically turning up. But if I look at the cost in terms of loss of time from work, the cost of travel et cetera , it is about 80 percent cheaper to do it online. The problem was that I could not do it at home. It was too slow and I would actually have had to book time either to stay back at work or, having gone home and had my tea, come in to do the online training. That is another cost. To me it meant that, if I had another training course to do, I might not bother. So, then, you take in professionals. This is why we need it at the home.

We have always considered the Internet in terms of the soft or entertainment services. This is where I talk about people wanting faster broadband in the home to watch re-runs of MacGyver. There is nothing wrong with that.

CHAIR: We will leave that uncontested.

Mr De Liseo : It was either that or Magnum P.I. But now it is hard services that people want at the home. It is like this: I am married, a father of two children at school or university et cetera and I need to be retrained. My company will not pay me to take two weeks off work to get it done. I have to retrain, and the idea is that we will pay for the training course and you are going to give commitment by retraining yourself online at home in these hours. That is a fact of life in 2011 in Australia. Maybe the ideal scenario would be that I would be shifted off to do that. My company cannot afford that, and I am one of the senior people there. It is the same for other companies. So we need to face the fact that people are going to be trained and they will be retrained at home, and the web is the way we will need to grow that. If there is not a viable way for them to receive it they will switch off, and we will see a whole generation of people who will fail to keep up to date with their skills. Those were my six points; I hope they were helpful.

CHAIR: Thank you, Tony. It was fascinating evidence and I think you have painted a clear picture for us, which is tremendous for the committee because often the conversation occurs in terms of the theoretical, whereas you are describing to us a real experience. I am particularly interested in the point on which you started, which was about your own business starting up with just you and your wife at home. As we have travelled around the country we have had a lot of evidence that there is clearly a burgeoning home based business sector. As far as we can tell, it has not been surveyed by the ABS since 2006. We have had evidence from people who have been hesitant to identify themselves to local government authorities and things like that, which could just be around misunderstandings about development application processes, regulation of the sector and so forth. Do you have information from your own connections and networking about the home based business sector in this region and the challenges that you experienced or information you might know about the experience of others? You have obviously now gone up to employing 20 local people, which is a great story, but you started in that home based sector. Can you give us some information on that?

Mr De Liseo : I have no figures other than what I can provide anecdotally from the people I speak to.

CHAIR: Okay.

Mr De Liseo : Over half of the ICT people that I speak to have the story 'we started from this sort of model', where it was from home. Even some very large organisations in the Illawarra and some specialist groups started from two guys who met at uni and then went off and did something. That is quite a common story. The reason for that is probably a good thing to touch on: the cost of entry and the cost of infrastructure for an IT company is almost zero. All I need are a couple of laptops and then, with an internet connection, for $500 I can set up a viable IT company because I am selling my services back into it. That is why you see a lot of that sort of thing. If you wonder, 'Why do fudge makers and jam makers start from home?' it is because for a $400 or $500 outlay you can be a viable, competitive jam maker can compete on the world market in jams—and that is a real business. And sometimes these grow into huge organisations and they make large contributions to our economy.

The IT sector is so special because the infrastructure costs are so low and then the dollar value of what we are selling can be very high. Pots of jam at $1.50 each—that is great, but that is a lot of jam. The fact is that graduates straight out of university can start billing their time at $70 or $80 an hour and be providing real, viable work. Because the technology changes so rapidly, these guys at 21 or 22 can have as much experience in two years as I have from my last 25 years on this one solution that the client is interested in. So, when they are comparing like for like, the fact is that this guy with two years, straight out of uni, can probably find a better solution than you can, even though you have 20 years on him. So we are going to see new companies constantly emerging in the IT sector, because they are going to surf the wave of whatever the new technology is. And this stuff is just flowing through. The fact is that, at 45, I am now an old man in this industry and realistically—unless I constantly keep retraining, and I am know getting too old to stay up-to-date—I have to now consider other options for us in this industry. That is why ICT is going to continuously produce lots of little companies, and they are going to start from that home or home base.

CHAIR: One of the major issues that we are looking at is economic development. If the infrastructure is not provided to the level required, what happens? Obviously, what happened with you is that you relocated to Sydney. Is that the common result, or do people not bother, give up and just go into non-innovative areas and take up a mainstream job? What you think we may be losing in that area?

Mr De Liseo : We are losing the innovation opportunity. People are going to take work with larger firms who say, 'We have an office space, we have a cubicle, we have high-speed internet.' Those are the sorts of things that these companies are selling. That is what I sell when I try to encourage people to come and join me.

With other people, it is the cost. If I wanted to have that four megabits per second to my home and I had to fork out $2,000 a month, that would scare me if right now I was looking at billing only $2,000 a month. So the situation is that people who want to break into this market are probably now going to see that as a barrier to entry. And then, rather than me trying with two guys who end up growing into huge firms, we have got companies in Wollongong that now sell software solutions to Google. Again, they were two guys and they had one simple sort of solution that went off. Geoff will speak later, and he can talk about his own example as well.

So I think people are going to miss out on opportunities because they are going to take standard sorts of jobs. They will miss out on the opportunity to provide some innovation, something unique, that Australia can actually manufacture and compete globally with.

CHAIR: Okay. Mr Fletcher.

Mr FLETCHER: Thanks, Chair. Tony, thanks for that. The connection that your business has now—what speed is that and what technology is it?

Mr De Liseo : It is still copper—it is not fibre—and we are getting around three to 3½ megabits per second.

Mr FLETCHER: What was it sold to you as providing—how is it branded? I do not need to know the provider. Is it an ADSL2+ service?

Mr De Liseo : I believe it is an ADSL2+ service.

Mr FLETCHER: From the business or small business arm of one of the telcos, I presume?

Mr De Liseo : That is correct.

Mr FLETCHER: In terms of your business, your preferred outcome would be to have a speed that was higher and pay less money for it, I presume.

Mr De Liseo : Yes. I happen to agree with that one; that would be a good deal.

Mr FLETCHER: Is there any particular speed that has some magic to it?

Mr De Liseo : In this industry, size does matter. It really is the best I can get for as little as possible. There is no way of quantifying it. There are some times during the day where we are looking to download some work from somebody and it is slow, and I have to ask, 'Who's doing what?' I then have to throw people off and sometimes I start downloading something at 10.30. It is quarter to 12 and suddenly everything goes slow. I go around and somebody is downloading a video of their favourite game or something that was on sports US last night. I have to say, 'Mate, you have to put that off. I'm getting something finished'—

Mrs PRENTICE: Or MacGyver reruns.

Mr De Liseo : Or MacGyver reruns. I could go round and say, 'Guys, only download business stuff during the day' but the truth is I am providing an environment for my guys to work in and that includes access to the internet because they want to watch videos on YouTube during the day while they are eating their sandwich at their desk.

Mr FLETCHER: Is it fair to say that one of the problems that we have right now is patchiness and inconsistency—in other words, you never know if you happen to live in one block, what speed you are going to get as opposed to living five blocks away because you are now three kilometres from the exchange, not one kilometre.

Mr De Liseo : Here is another analogy for you. Where I live in Figtree, I do not have mains water. I do not have sewerage. I have to go out the back and pull water out of a well. I have to pedal a bicycle to power my lights. There is no kerb and there is a very bad gravel track and I need to buy a specialised four-wheel drive to get home every day. If I come two kilometres down the road: paradise. The birds are tweeting. I have gutters. I have sewers. I have mains water and I have electricity. You would not consider living at home in 2011 without those other infrastructures to that standard. They would have to have sewerage. We introduced sewerage into the home to eliminate disease; to minimise that sort of stuff. We put in running water so people would wash their hands frequently. We are not necessarily seeing what the internet is not providing us because we have not been given that. I would go from—

Mr FLETCHER: Can I take it from that, Tony, that you agree with the proposition that one of the problems with how broadband operates in Australia right now is that it is patchy?

Mr De Liseo : Yes.

Mr FLETCHER: Another policy objective presumably is ubiquity—in other words, to the maximum extent possible you know that wherever you are you are going to get a certain speed.

Mr De Liseo : I think that one of the benefits of being an Australian is that we are all ubiquitous.

Mr FLETCHER: Would you agree with the proposition that those are distinct benefits from speed—in other words, there are different dimensions by which to think about this problem? One is the speed that is available, another is the ubiquity of the network and another is the reliability or the uniformity of the servicer of the network.

Mr De Liseo : They are all things we should be aiming for, and we should be aiming for the max otherwise we are going to create this concept that people have talked about of the digital divide. If I am to guarantee being able to participate in my online training solution, it is still better for me to drive in my car 15 minutes, get to my office and participate in the training solution there or the web seminars et cetera, then we are now saying, 'I can't live here because my whole life revolves around information.'

Mr FLETCHER: Would you support legislation which made it illegal for any player other than the NBN to build a network to serve you?

Mr De Liseo : I do not think I am qualified to answer that. I have not done enough research on that specific question.

Mr FLETCHER: I do not have a view as to whether—

Mr De Liseo : If you provide me with some more time to research that specific question, then certainly I will happily answer that for you.

CHAIR: You are welcome to come back to us with a comment if you like.

Mr De Liseo : Thank you.

Mr HUSIC: What struck me in terms of the presentation you gave is your focus not just on download but upload based on the fact that your business needs to be able to get large volumes of data. I was particularly struck by—can you just clarify because I need to get a handle on the hours. You mentioned that it took eight hours to send a package of data over to the States and 12 to Brisbane—perhaps it was eight to Brisbane. Is it 12 or eight on average?

Mr De Liseo : In that example, it was eight to send that to the US and about 12 to send a similar sized data package to Brisbane.

Mr HUSIC: The other question that I want to ask is in relation to the online training that you provide. How much of your training to enable your customers to use your product is provided online? If I understand it correctly, this is software support for HR departments of large international corporations and for staff recruitment. How much of that training do you deliver online? Is it the bulk of it? Is that your preferred method?

Mr De Liseo : That is our clients' preferred method, because of costs.

Mr HUSIC: And what is the cost differential? Did you say that there is an 80 per cent differential?

Mr De Liseo : It is 60 per cent just in fees, but it is 80 per cent when you incorporate other costs, such as time off work et cetera. That was for us buying training services. In terms of providing them to our clients, there would again be about a 60 per cent cost difference in terms of participating in online training as opposed to face-to-face training.

Mr HUSIC: And your clients would overwhelmingly demand that online option?

Mr De Liseo : That is what they are going to, yes.

Mr HUSIC: On another aspect, which the chair touched on, in terms of home based work, how many employees do you have here in Wollongong?

Mr De Liseo : About 20. But at any one time about 25 per cent of our staff can complete work from home. I can refer to my MD for additional clarification on that if you require.

Mr HUSIC: That is fine.

CHAIR: Could you come back to us with a short precis of how your staff are employed and their placements?

Mr De Liseo : Sure.

Mr HUSIC: An impression has been left upon us from our other committee hearings is that to get companies to embrace the concept of home based work requires a cultural or attitudinal shift. Has that been something that your firm has encouraged from day one? What were some of the things that you did to build this notion that home based work can feature within your operations quite strongly?

Mr De Liseo : It is pretty important to note what roles can and cannot work remotely. We have some roles that cannot. Some people need to have face-to-face contact—some of the junior people. But most of our senior people use that as an option to deliver stuff. Some of our guys work way into the middle of the night trying to get work completed, because we have to work in with the availability of the resources of our clients so that we can use their down time without cutting into their production time. They will work in a scenario in which they will say, 'I will not turn up to the office today, because I can initiate work at four pm and work through until two am in the morning and do so from my home.' That saves them from travelling to our office and back. It is a lot safer for them and for us. That is one of the things that we do. Over 50 per cent of our work force are women, and a lot of them do not want to do those late hours in our office. That is one of the additional benefits of working from home. A lot of the women who work for us—three of our professionals—have recently had babies and they have been able to use that to tie in with some of their—

Mr HUSIC: Flexible working arrangements.

Mr De Liseo : Yes. So we have offered them flexible work performance agreements to do that. One of our most senior people, how has been with the company for 12 years, has three and half days in the office and the rest of the time she works from home. That makes her more available for her family, and that is the sort of thing that we need to encourage.

Mr HUSIC: What proportion of your customers are offshore? Has your firm done any modelling or gotten any estimates about the amount of extra work that you would be likely to secure if you had access to a more capable network, particularly in terms of the upload?

Mr De Liseo : Over 20 per cent of our clients are offshore at this stage, but then incorporates people who are serviced by our Hong Kong team. Interestingly, our Hong Kong manager is a University of Wollongong graduate who worked for us here and then we relocated him to there. It is about 20 per cent, I believe, but I would need to clarify that. In terms of how much additional work we believe that we would be able to do offshore, I cannot tell you that, but we have certainly looked at our costs. We would be looking at between 10 per cent and 15 per cent in savings because of the amount of time that it takes for us to deliver items overseas and stuff that we just cannot do here. More importantly, we are competing with firms in these markets—Hong Kong, China et cetera—whereas we should be able to do the work here and deliver it for a much cheaper rate. Those are probably the areas in which IT companies would benefit through having better internet services. And it would provide a big reduction in their costs.

Mrs PRENTICE: Tony spoke passionately about people using the internet to provide new businesses. You spoke of jams. Obviously the people purchasing those jams need to be connected as well. We were disappointed in Scottsdale, one of our trials in Tasmania, where there just has not been the take-up. Where do you see the role for promoting that? Is it one of your cluster roles in this area to promote take-up by the wider community?

Mr De Liseo : It is interesting to see, and I would need to refer to an article I read a while ago that looked at the demographics of where online shopping is done on, say, some of the large online auction sites. The major shopping is still happening in the major cities rather than in the remote areas, so it is people who are complementing their store based shopping with online shopping or looking to leverage prices. I would have to go away and do some research on that, but I do believe other people have talked about the fact that more online shopping happens in the big cities than in remote areas, especially compared with the US, where they have a bigger mail-order history than Australia. We have not traditionally had a very strong mail-order focus, and I would need to look at whether online shopping is seen as an extension of that and if there is some sort of hesitation towards it and lack of trust of it. the auction sites do most of their business in the cities.

Mr STEPHEN JONES: I am interested in some of those connectivity issues and access issues that are hampering economic development in the region, particularly the southern areas of the Illawarra. Do you have any evidence that you can give the committee in your representative role for the ICT on where they are—

Mr De Liseo : I am glad you asked that. One thing about connectivity that I did not touch on earlier on was that we actually had three clients in WA who stopped using our service because of connectivity issues. They were physically logging in to our environment and it was dropping out because of the connection. The same sort of thing goes when we offer test environments to our clients from our office. We have this public hosted space in a very high-value data centre in Brisbane with ultra-high connectivity, which is costing us a lot of money. Sometimes when we want to deploy test environments or examples, physically we cannot get the return from deploying it there and then making it available, so we have to do it from our office. Clients have to come in via a virtual private network, some sort of security stuff, but because the connectivity to our environment is the weakest link from the exchange back into our office, their experience is not good or they are dropping out, and they are using that as an example to say, 'Your solution is not delivering what we require.' That is the sort of thing other companies in the Illawarra have, and that is adding to costs for us, because either we have to spend more time deploying stuff to these high-value environments or we are just having to come up with some of these areas where we are being asked to prototype or develop something new, and we are saying, 'We physically cannot do that in this environment; we have to look at a different alternative, and sometimes we are bearing that cost.

Mr STEPHEN JONES: Are there some suburbs in the Illawarra region that you know to be better or worse than others when it comes to connectivity?

Mr De Liseo : I can say only with experience that Fig Tree is disappointingly bad, even with the fact that it is so close. That is the only one I know of personally. I could ask some of the members to return some comments on their experiences.

Mr STEPHEN JONES: That would be very valuable, actually. My final question goes to the employment and capacity of the ICT sector and what NBN can contribute to that. When a manufacturing business comes to town it is very tangible; you can see it. There is a big building and lots of cars parked out the front. It is less so with the ICT development within the region. Can you give us some metrics on what the size of the ICT industry is here in the Illawarra and where you think it can go, given that you have made some pretty big statements in the document that has been presented to the committee on where you see the future potential of ICT in this region?

Mr De Liseo : The document I can refer to you is the Advantage Wollongong case study which was part of regional industry and investment. I think some of you have a copy of that. There are some figures looking at that. In terms of where it can go, as we say, something like 400 or 500 people working in the IT industry sectors commute every day from Wollongong, and there is no reason that those people could not be doing that work from here. It is cars on the road, seats on the trains and all those sorts of things. So, as far as our capacity to employ thousands, it so easy to see how that can be done. The way our nation has been shaped, with infrastructure being concentrated in our major cities, we have to think intelligently about how we can minimise who has to be there. I am not saying that it should be like Singapore, where you can only drive into Singapore if you have a special pass and only limit the cities to these sorts of things. We are saying that we have to think intelligently and say that we cannot just assume that everyone is going to be able to come into the city—be it Sydney, Melbourne, Brisbane or whatever—to get their day's work done. Everyone has to be smarter about it; otherwise, the costs are just going to rise. What will happen if costs rise and companies do not make the big decisions to start pushing their workforce out, they will not be competitive—and if they are going to push them out of the city they may as well push them out of the country.

Mr STEPHEN JONES: The cost to capital for start-up is very low, as you have already identified. Are there any other gaps that would prevent realising the vision? You have mentioned the skill gaps.

Mr De Liseo : The skill gap is a really important issue. I have had five careers. I have been in IT but I have had five careers because the stuff that I worked on 20 years does not exist now. I could not get a job because that technology has gone. So I have had to constantly retrain. The problem is that now I am at this age I am thinking, 'Do I keep retraining?' That is the sort of decision lots of middle-aged people are thinking about. My daughter says that I am not middle age because I am not 50 yet, but I told her that not everyone makes it to 100. Middle-aged people like me have to retrain—and maybe I am not, so I am now looking to possibly leave this industry. That is a decision other people at my age in the IT sector are looking to make.

With an accountant, for example, you can put him through four years of university and hope to have about 40 years of viable GDP producing work out of the guy; whereas IT people have 20 years in the industry. We have to keep in mind that these people need constant retraining and we have to make it cheap and easy for them, or we have to constantly keep feeding that lower end of the machine to make sure we have the IT professionals coming along. IT does not have the traditional sort of management paths that necessarily lead on for us. If I do 15 years in accounting I can end up being a company management. IT does not necessarily work that way. Fifteen years of programming may just mean that I have more programming years ahead of me. So the one gap for us is going to be skilling our people. We need to make sure that Australians have access to good skills and the ability to get trained and retrained constantly so that we can constantly keep delivering in this market sector.

Mr SYMON: I have a couple of questions that really go back to travel. I think you mentioned earlier in your submission to our us that you have four staff to come down from Sydney each day, against the flow of traffic. What would it take in terms of an NBN connection for them to no longer have to do that trip?

Mr De Liseo : If there were the ability to have that sort of connectivity speeds we are talking about, they would be in their office at home. That would be a decision that they would want to make. The benefit of video-conferencing technology and some of that free available over the internet will mean that it will be easier for us to collaborate. The whole aspect with the IT environment is that a team of people need to work on individual chunks of work and deliver it into the central pool to be able to deliver the solution outwards.

There are lots of opportunities for us to communicate, to look at what they are working on and to constantly guide them. We obviously put a lot of effort into writing specs but there is a lot of interpretation involved with those, and that is only done by talking and communicating. It is facilitated by face to face because it is not easy for us to have that sort of video conferencing. For some of our guys English is not their first language, and we need to make sure that we have good communication with them. Right now, if I say to them that we are going to try to communicate via video Skype and that we will get them to do some other work, it is sometimes not possible. That is the sort of thing that we need. It will facilitate communication. It means that when they want to grab a packet of work to work on, they can download it in about 10 minutes rather than waiting an hour. I would love it to be minutes—one or two. That is the sort of thing we are talking about.

Mr SYMON: From a business and recruitment point of view it would be a great tool I imagine for an outfit such as yours to be able to advertise employment as Sydney based without having to pay $1.50 for petrol and spend countless hours a week commuting, whether it be in or out. Does that give you an advantage over other businesses?

Mr De Liseo : It gives us an advantage over other people's businesses, especially throughout the region and especially in Sydney because of the size of our homes. Even in small apartments in Sydney people still are able to dedicate space to a home-office environment. That is not the case in the UK and in Hong Kong. We could be talking to people and say, 'Okay, here is the $60 a month I am going to give you to get one gigabit into your home for internet connectivity and you can work from home as if you were in my office. You do not have to travel. You do not have to get out of your pyjamas, but we recommend that you do!' It is those sorts of things that benefit.

Mr SYMON: With video of course.

Mr De Liseo : Make sure you are not wearing pyjamas. Those are the sorts of things. They are real things. It is ten o'clock in the morning and I have had a bike ride and have come back and I have a conference call with someone. I am thinking that I will quickly have a shower and I will come down wearing a bathrobe and I just start talking. If I leave the video on then the conference call goes ahead and it is all professional and then towards the end they say, 'Are you working from home mate?' I say 'yeah' and I am thinking that the video light is on. It does happen.

Mr SYMON: The point you make is very valid, because the cost of the connection is really a day's worth of petrol. There is not much difference.

Mr De Liseo : That is the connection cost for a month. It also means that I could employ a staff member who wants to work only three days a week because she wants to focus on the work-life balance—you talk about doctors wanting that, but IT professionals want that. Oh, for the good old-fashioned days where everyone worked 80 hours a week and did not complain, and all they had to provide was coffee and biscuits. That is what it was like.

CHAIR: You mentioned that you have a northern and a southern hemisphere office. One of the things that has been raised with us as an advantage Australia has concerned Rising Sun Pictures in Adelaide, who are able to upload overnight so that the data arrives at their northern hemisphere clients in the morning, and they look at it and work on it over the day. It is actually a good advantage. Have you experienced that, as well.

Mr De Liseo : The company I work for is an international company listed on the UK stock exchange. We have offices in the UK and the US. In Australia there is a principal office and some other smaller ones. There have been times where we have done remote work on some of the other projects. In some of those instances we have remotely connected and have not actually physically downloaded large chunks of data and pushed it back up. Where we have to upload data to the UK the problem is that their work day starts as ours ends. It is better to the US, because we do have a bit of a gap in that instance. But we have had a benefit from them where they have done some work in their daytime and parcelled it up and sent it back to us, so it has arrived here for our work time.

CHAIR: I am conscious that for stock exchanges there are some southern hemisphere advantages, as well. Would you agree that it is a structural advantage for Australia.

Mr De Liseo : It is a structural advantage for Australia, definitely going to the east. Going to the US is more advantageous for us than going to the UK.

CHAIR: Thank you for your evidence today. It is good to hear some real-life examples of what it is we are trying to come to terms with. If you have undertaken to provide any additional information—I think there were a few points there—please forward it through to the committee secretary. You will be sent a copy of a transcript of your evidence. You can make corrections of grammar and fact and it will indicate to you where you have given commitments to provide information.

Proceedings suspended from 11 : 54 to 12:09