Commentary: Why Canada and other countries should consider a stimulus package for ICT

Governments are trying to save or create well paying jobs in a variety of sectors including auto manufacturers, construction and other industries. But where’s the government in attempting to save jobs or create new innovation in information and communication technologies (ICT)? Not a single major funding grant has been facilitated to keep jobs in the telecommunications, software or the hardware market space. Many point to the funding for rural broadband initiatives as a taxpayer funding program, but really they aren’t. It’s simply using taxes that the companies have already paid and getting a refund of sorts. Yet layoffs in the ICT sector over the past year outstrip every job lost in the finance and auto sector by a significant factor. Over two million jobs have been estimated to have been lost in ICT over the past 14 years in the United States alone. Many of these jobs pay as well or better than the auto sector ever has—and they paid more in taxes, yet no one has benefited from the government back loans or bailouts that the governments of United States and Canada has for the likes of General Motors, Chrysler, AIG, Bank of America or Citigroup. The Canadian government didn’t even blink when Nortel burned to the ground, once the crown jewel of high tech in the country. In 2002, the U.S. government didn’t even sneeze when MCI - Worldcom tanked and declared Chapter 11, eventually was acquired by Verizon at a fraction of its original value and size. Senators, members of Congress and parliamentarians around the world look at high tech giants like Cisco IBM, Google and Microsoft and simply say to themselves that the IT industry is in great shape; they don’t need any help. All four laid people off in the past 12 months, thousands of them. Why rural broadband isn’t enough The U.S. is planning to spend $7.2 billion in rural broadband, which will take years to implement and build—if it’s even built at all. None of the major players will likely participate since they have never been in those markets in the first place. Canada: $200 million through contributions that were collected by every telecommunications provider in the nation. This means competitors to the original big 10 telcos in Canada actually paid the big boys a premium subsidy ensuring that rural telephone services didn’t cost any more than large urban centers did. Those dollars ultimately were paid by customers, which is a bucket of money that isn’t taxpayer funded. United Kingdom: tax every telephone line 50 P monthly to fund construction of fibre to the home. These projects are not investments in ICT, they’re construction jobs that last a year—if that. How this fund will be distributed and used is not known yet. This is a pure construction play that has no long term sustainable development. It certainly will stimulate fibre manufacture and some hardware sales which ironically will all be manufactured outside of the U.K. This program won’t stimulate any new software development or application services in itself over the next year because of the length of time it will need to be designed, built and commissioned into service. In the U.S. alone, since 1970 the U.S. federal government has spent $1.404 trillian on bailouts, according to ProPublica web site. It will take years for programs like the U.S. and U.K.’s rural broadband program to be implemented. If government wants to stimulate the economy and create new jobs, getting experienced engineers and software developers along with newly graduated ICT students to work would be a significant step in that direction. Laying fibre isn’t going to do any good without applications, commerce security and telecom engineering services growing with new concepts and innovation. The counter argument has always been that other countries are cheaper to get ICT projects and solutions made and that’s where the jobs are going so lower employee costs or innovate elsewhere. But that doesn’t wash because the auto sector has the same problem and they decided to keep these companies going regardless if there was over capacity or cheaper labour elsewhere. There seems to be consensus within government that bailing out banks and insurance companies that created their own mess are more important. Forty years ago, the Internet was born by a U.S. government agency (DARPA) which has spawned incredible innovation and ideas. Is that what they are going to rest their laurels on? Government seems more bent on regulating ICT companies rather than keeping them profitable and maintaining employment. Doug Hanchard is the principal of Rapid Response Consulting, an advisory group for ICT solutions. This column originally appeared on the ZDNET blog.

Commentary: Why Canada and other countries should consider a stimulus package for ICT

Broadcast | December 17, 2009

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