Blue Mountains Open for Smart Business. Digital Connectivity for a globally focussed, knowledge intensive business community

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1 Blue Mountains Open for Smart Business Digital Connectivity for a globally focussed, knowledge intensive business community BRIEFING PAPER FOR THE HON. MALCOLM TURNBULL MP MINISTER FOR COMMUNICATIONS PREPARED BY BLUE MOUNTAINS ECONOMIC ENTERPRISE AND THE BLUE MOUNTAINS CONNECTED COMMUNITIES GROUP NOVEMBER 2013

2 BELL MT TOMAH MT WILSON MT IRVINE BILPIN BERAMBING MEGALONG VALLEY MT VICTORIA BLACKHEATH MEDLOW BATH KATOOMBA LEURA WENTWORTH FALLS BULLABURRA Blue Mountains National Park HAZELBROOK LAWSON WOODFORD LINDEN Blue Mountains National Park FAULCONBRIDGE SPRINGWOOD VALLEY HEIGHTS WARRIMOO BLAXLAND WINMALEE YELLOW ROCK SUN VALLEY GLENBROOK LAPSTONE HAWKESBURY HEIGHTS MT RIVERVIEW 2

3 Blue Mountains Economic Enterprise Blue Mountains Economic Enterprise (BMEE) is the peak regional economic development organisation for the Blue Mountains. Mission To stimulate economic development in the Blue Mountains through advocacy, investment and job creation, consistent with our competitive advantages. Vision BMEE will be the recognised economic development organisation for the Blue Mountains, delivering significant and measureable contributions to the economy through: Encouraging and supporting appropriate investment Opening the city for business Creating a sustainable and diversified business community The Board has identified four key strategic pillars which will be the focus of the organisation s activity over the next three years. The pillars are: Health and well-being (including aged care and disabilities) Creative industries Education World-Heritage Industry Development (including tourism) BMEE is a public company with an independent Board of Directors. The organisation launched in February 2013 and currently receives funding from Blue Mountains City Council. BMEE is developing a digital economy strategy for the Blue Mountains. Blue Mountains Connected Communities Group Blue Mountains Connected Communities Group is a grassroots, community alliance with a mission to secure high speed broadband connectivity for the Blue Mountains business community. Comprised of business owners, operators, educators and community members, Blue Mountains Connected Communities Group has undertaken extensive research into the city s connectivity constraints and requirements, is providing input into the development of a digital economy strategy and is advocating for the digital infrastructure necessary for the Blue Mountains to maintain and increase competitiveness in a range of sectors. Executive Summary The city of the Blue Mountains is taking a proactive and dynamic approach to economic development. With unique limitations upon the types of development it can attract to generate wealth, the world s only proclaimed city within a world heritage area must take a smart city approach. Digital connectivity is the most critical infrastructure required for The Blue Mountains to increase its competitiveness across a range of industry sectors. A consistent, high speed service is required that will perform within the Blue Mountains topographic and climactic constraints. Many line-of-sight wireless, cloud and fogeffected satellites are not suitable propositions for the context of the Blue Mountains. The current digital infrastructure is presenting significant challenges: increased failures on the aging copper line network under resourced Telstra technical teams leading to longer service outages significant delays in connectivity for new connections no option to switch to another ADSL infrastructure provider to expedite a service failure resolution no competition to provide Telstra with an incentive to perform in terms of quality of service or provision of new services current proposed solutions to business issues are uneconomic, non-viable or technically inadequate. Proposal It is proposed that: 1. The Blue Mountains be identified as a region of priority for the rollout of the Government s revised High Speed Broadband Network Policy. 2. The Government ensures Fibre to the Business Premises is guaranteed to all Blue Mountains businesses (including home-based businesses) at an affordable rate. 3. The Government supports the establishment of the Blue Mountains Smart Work Hub as an economic recovery driver and an open for smart business flagship project. 3

4 2,208 home-based businesses 59% of resident workers commute to work outside the LGA 34.8% tertiary educated 4

5 Background The Blue Mountains Local Government Area (LGA) is a unique community of high value knowledge workers, self-employed professionals and micro-small businesses, operating in the world s only city located within a World Heritage Area. A place of great natural beauty and rich in cultural resources, the Blue Mountains attracts over 4 million visitors per year making it one of the top three tourist attractions in Australia. Location Comprising 143,000 hectares of land in the Greater Western Sydney region, approximately 70% of the Blue Mountains LGA is classified as World Heritage National Park. Only 11% of the total land area is in private ownership. The Blue Mountains is connected to the Sydney Metropolitan Area by Great Western Highway and the M4 Freeway along with a direct train service to Central Station, Sydney. Demographic overview KEY FACTS Steady population growth, currently 78,489 residents 34.8% of residents are tertiary educated, higher than Sydney average 56.2% of residents are employed full-time Unemployment is 4.1%, compared to Sydney at 4.9% 59% of the workforce commutes outside the LGA for work Home Based Businesses Census 2011 data indicates that 2,208 Blue Mountains residents work from home. This represents an increase of 10.5% from Census 2006 figures or an average annual growth rate of 2.1%. Home Based Business operators represented 6.3% of the total resident workforce in the Blue Mountains LGA in This is compared to 4% working from home in Greater Sydney. Source: Australian Bureau of Statistics, Census of Population and Housing 2006 and Income distribution 28.4% of resident workers earned in excess of $1,000 per week and 27.5% earned less than $400 per week. Residential Location of Workers Based on ABS Census data, 20,531 or 59% of Blue Mountains LGA resident workers travel outside of the area to work. TOP 5 BLUE MOUNTAINS RESIDENT WORKFORCE PLACE OF WORK RANK PLACE OF WORK WORKFORCE 1 Blue Mountains 14,142 2 Penrith 6,199 3 Sydney and North Syd 2,417 4 Blacktown 1,958 5 Parramatta 1,684 Source: ABS 2011 Census of Population and Housing, A.P. SHEERE CONSULTING Socio-economic ranking The Blue Mountains is ranked within the 9th decile and in 125th position out of 152 Local Government Areas in NSW. The Blue Mountains is ranked in the top 30 of all NSW LGAs above both Penrith and Parramatta City. Source: ABS 2011 SEIFA Index Top Employing Sectors of Blue Mountains residents Professional, Scientific and Technical Services (Knowledge intensive sector) is one of the top 5 employing sectors of Blue Mountains residents working within the Blue Mountains. This constitutes 45% of the total number of people employed. ABS Census Employment Top Employing Sectors (residents working within the Blue Mountains). Accommodation and Food Services (73%) Retail Trade (58%) Health Care and Social Assistance (54%) Professional, Scientific and Technical Services (45%) Source: ABS Census 2011 Blue Mountains A hub for Small Business with innovation and global reach Of the 5607 registered businesses within the Blue Mountains LGA in 2011, 97% are categorised as small business, employing less than 20 people each. 5

6 The Blue Mountains - open for smart business: Current connectivity Blue Mountains Digital Connectivity for a globally focussed, knowledge-intensive, business community With 5,607 businesses distributed across 27 villages that comprise the world s only city within a world heritage area, the Blue Mountains is a truly unique business environment. Less than two hours from Sydney s CBD, with competitiveness in the professional, scientific and technical, creative industries and education sectors, the Blue Mountains has critical connectivity needs. With innovative businesses exporting high-level knowledge, expertise and services, the Blue Mountains requires world-class digital infrastructure in order to maintain and increase its competitiveness. Industry engagement The high knowledge industry sectors underpinning the economy of the Blue Mountains are undertaking a collaborative approach to industry development through the economic development platform of Blue Mountains Economic Enterprise (BMEE). One such initiative is the Blue Mountains Creative Industries Cluster. The cluster represents a broad cross section of sectors including but not limited to; Advertising Built Environment Design (including fashion, industrial and graphic design) Visual Arts Music Performing Arts Publishing Screen (television, film, electronic games and interactive entertainment) Radio Creative makers (handicraft, jewellery, furniture, ceramics, design pieces, etc.) A Cluster Manager has been appointed, the critical mass of representation has been achieved within the Blue Mountains Creative Industries Cluster and community support is extremely high. There is an imperative to harness the vast and dynamic engagement and encourage regional and industrial competitiveness. The Cluster is increasing the productivity and competitiveness of this industry and is further diversifying the local economic base of the Blue Mountains. A majority of these businesses are home-based. High speed broadband connectivity is a critical aspect of this industry development initiative. Case studies: The Blue Mountains is a globally focussed, knowledge-intensive, business community In developing the regional digital economy strategy, Blue Mountains Economic Enterprise (BMEE) identified a broad range of case studies that illustrated two consistent, critical issues: 1. The Blue Mountains business community, representing a range of industry sectors requires state of the art digital connectivity to improve competitiveness in existing and emerging markets. 2. The existing infrastructure (Telstra hardware/bandwidth and copper lines) are degraded, not sufficiently available, poorly maintained and under-serviced. Evidence exists for this having a direct impact on the economic competitiveness of the Blue Mountains. 6

7 Case study 1. Tourism Scenic World (Australia s most visited private tourism attraction) Scenic World attracts over 890,000 visitors a year, making it the most visited private tourist attraction in Australia and the third most visited in NSW after the Opera House and Taronga Zoo. Scenic World is a significant contributor to the economy of the Blue Mountains and the largest private employer in the Blue Mountains, with 125 staff. According to David Hammon, Managing Director of Scenic World: Due to the state of the copper stage of the network, Scenic World experiences significant loss of service or poor quality connection. This represents a substantial operational issue as all our EFTPOS runs on a broadband portal. When the broadband connection slows significantly or drops out we can have 2,000 people on site that can t use their credit or debit cards, seriously impinging on our operations. This creates significant operational delays and limits capacity onsite, as well as damaging the brand and the Blue Mountains experience. Telstra s only proposed solution for this was for us to pay for a fibre connection between Scenic World and the exchange at a minimum cost of $30,000 plus $2,500 per month for service. The other significant challenge faced by Scenic World is obtaining off site back up of data. Due to the low upload speed on the current Scenic World connection, it is currently unfeasible to back up our data offsite and therefore utilize affordable existing data storage solutions. The solution that was implemented was an $80,000 onsite micro data centre, however due to the environmental risks that our site presents, establishing an offsite backup is a priority. Scenic World has been in negotiation with Telstra for 18 months to install our own infrastructure at the Katoomba exchange to establish a reliable fixed line, without success. These limitations, costs and unreliability make the development of technology and social media based activities impossible which puts Scenic World at a competitive disadvantage to other attractions when attempting to cater for repeat visitations. Case Study 2: An innovative Blue Mountains business with global reach 2000ft Design Studio / 2000hz Music + Audio 2000ft/2000hz is a collaboration of two creative enterprises that comprise Architectural Design and Consultancy along with Music and Audio services. The businesses are located in Woodford on the Great Western Highway, 400m from the Hazelbrook exchange and connects via Telstra Business Broadband ADSL2+. This organisation has markets throughout NSW and internationally, across a range of sectors. This boutique studio is an ideal example of high-level knowledge export services, based in the Blue Mountains contributing to Australia s competitiveness globally. 200ft Design Studio Design and architecture services: Offers design consultation and master planning services for the development of a range of projects, residential and commercial. 2000ft Design was engaged as a specialist consultant in the design development of Tektum's Pre fabricated housing solution SPACE2.0 and the master planning of Kevin s Corner mining village to house 1200 workers in a fly-in, fly-out (FIFO) Alpha Qld for Hancock Galilee Pty Ltd. The Kevin's Corner project has been identified as a benchmark model for the design of a triple bottom line mining village at the Parliamentary Inquiry into the use of FIFO workforce practices in regional Australia and at a range of industry conferences. 2000hz Music + Audio 2000hz works with internationally renowned clients such as Ministry of Sound, Sony Music and Universal Music to compile, master and deliver all electronic dance music product to manufacturing and digital distribution as well as specialist production services for TV and film. Digital connectivity impacting on the competitiveness of a growing business Much of the output of this business is transferred via the internet through shared, secure network resources with clients or bulk upload/download via ftp. The files sizes are usually 800mb 1.5gb and timing is critical to the distribution chain. 7

8 According to Noel Burgess, Managing Director 2000htz: The business required 10 service visits and several sets of copper pairs during After 2 years of the joint being embedded in mud, the pit was reestablished following 6 months of continuous requests and liaison with Telstra. Following the replacement of the pit, multiple outages and critically dysfunctional connectivity has continued, including a 4 week outage in Feb The copper network and the upkeep of the ADSL2+ servers are far from keeping pace with the current service commitments Telstra has made, let alone keeping pace with the increasing demand for broadband connectivity in the region. Our business requires weather-proof continuity of connection and capacity to facilitate viable expansion of the business conducted from this premises. Case Study 3: Innovative Research and Development Software Engineering Company, with a teleworking workforce. Give Them A Go Group Give Them A Go Group is a new Research and Development Software Engineering Company based in the Upper Blue Mountains. This innovative organisation is developing exportable software and creating telework opportunities for a team of developers, previously commuting over four hours each day to Sydney. While teleworking and a virtual office has brought tangible benefits to aspects of the organisation, the limited ADSL bandwidth is a growing impediment to communications. According to Give Them a Go Managing Director, Hereward Dundas-Taylor: With up to 10 participants per meeting we must continually deal with audio dropouts and audio artefacts making vocals garbled and indistinguishable. A one-hour team meeting becomes two hours and is much less effective for the confusion. Even with three participants the video must be dropped, but this impacts on visual demonstrations that then have to be handled outside the meeting and uploaded in cue with other large files. Case study 4: Historical icons at risk due to poor digital infrastructure The Woodford Academy The Woodford Academy, A National Trust Property and the oldest building in the Blue Mountains, represents a critical cultural and historical asset for the community and the economy of the Blue Mountains. For two weeks in October 2013, the building was without a fire panel due to a failure of the Telstra phone line. Despite extensive lobbying from the Trust s Management Board, the issue was not solved in a timely manner. The end result was that during the October Blue Mountains Bushfire Emergence, this irreplaceable building of national significance was off-line to the Fire Department. Blue Mountains Connected Communities Survey A comprehensive survey was conducted in 2013 to gain insight into the digital connectivity requirements of Blue Mountains residents and business operators. Key findings include but are not limited to: 48.24% respondents stated that their primary use of the internet was for a Home Based Business. 58.9% of respondents indicated that they have the ability to telework if suitable broadband connectivity was available to them. 45% of respondents rated their current broadband connection as unreliable or worse. Full survey results available The ADSL service fluctuates regularly from slow to has it stopped? and all while the clock ticks. Some of our developers interstate and overseas already have fibre optic but the bottleneck exists here in the Mountains. This is seriously impacting on the budget and adversely affecting our ability to export our product on schedule. 8

9 An opportunity: The Blue Mountains Smart Work Hub. Digital Connectivity for a globally focussed, knowledge-intensive, business community GLOBALLY CONNECTED; A TERTIARY E-CAMPUS; A DYNAMIC CO-WORKING HUB FOR LOCAL BUSINESS; A SATELLITE HUB FOR STATE AND FEDERAL GOVERNMENT AGENCIES; A WORLD HERITAGE RESEARCH HUB; A BUSINESS INNOVATION INCUBATOR; THE BLUE MOUNTAINS ECONOMIC DEVELOPMENT CENTRE; AN E-HEALTH HUB; A TRANSFORMATION. Blue Mountains Economic Enterprise (BMEE) is developing a business model for the establishment of a Smart Work Hub in the Blue Mountains. A site has been identified and is under formal consideration by the Blue Mountains City Council to be provided for this purpose as an economic recovery driver. This project is proposed as a lighthouse project for Third Spaces Group s concept for a national network of Digital Work Hubs. The network will meet the needs of people living in the more affordable outer urban and peri-urban areas of cities such as Sydney, Melbourne, Brisbane and Perth. What will it look like? The Blue Mountains Smart Work Hub will be a multi-faceted digital business and government centre which will have a number of elements: 1. GOVERNMENT AGENCY HUB. NSW State and Australian Government Agency employees will work from the Smart Work Hub in a secure, networked, collaborative environment. 2. CO-WORKING HUB. Based on the highly successful Hub Melbourne, Hub Sydney and Fishburners models, the Co-Working Hub provides a dynamic, secure, work environment for freelancers, small professional firms and agencies, home-based businesses making the transition, transitory professionals (on the road Government workers, sales representatives, construction coordinators, etc). The Hub provides flexibility to allow for workers to engage in a collaborative or private work environment. The Hub is hosted by a concierge who networks individuals and the building to ensure productivity and efficiency. The Hub provides state of the art teleconferencing facilities, large meeting spaces, private work areas, printing, scanning, faxing, outdoor retreat areas and social networking pods. 3. SATELLITE UNI HUB. A tertiary facility that combines digital connectivity with high quality face-to-face interaction would become a drawcard for the Blue Mountains region. Based on the Future Campus model by the University of New England, with its distributed learning centre in Parramatta, The Blue Mountains Smart Work Hub will be a future campus for tertiary students who are currently required to travel outside the region for undergraduate or post graduate studies. 4. E-HEALTH HUB. The Smart Work Hub will serve as the Blue Mountains E-Health Hub. The Blue Mountains is the ideal location to maximise the use of digital technologies to support telehealth services. This would reduce the demand on hospital and aged care services and enable the remote monitoring of chronic health conditions, reducing escalation to inpatient situations. Tele-health services, which make use of digital connectivity, e-health records and point of care devices, is an important part of the Government s shift in priorities from the funding of aged care facilities to ageing in place, with more funds going to home care services. The Blue Mountains has an ageing population, which will create an increased demand on the health system. 5. REGIONAL ECONOMIC DEVELOPMENT HUB. Blue Mountains Economic Enterprise (BMEE), Blue Mountains, Lithgow, Oberon Tourism (BMLOT), Business Enterprise Centre (BEC), Enterprise Connect, Biznet Blue Mountains, Blue Mountains Creative Industries Cluster, Publish! Blue Mountains, local Chamber of Commerces, and many other stakeholders will co-locate in the Smart Work Hub, creating a collaborative regional development powerhouse, increasing the competitiveness of the Blue Mountains. 6. RESEARCH HUB. The Smart Work Hub is the ideal location for the Blue Mountains World Heritage Research Institute (WHRI). The WHRI brokers and facilitates research and community engagement that supports conservation and management of the Greater Blue Mountains World Heritage Area. 7. BUSINESS INCUBATION HUB. The Smart Work Centre provides the opportunity for entrepreneurs to collaborate with other enterprises, government departments, regional development agencies and social enterprise initiatives, assisting in the development of new start-up businesses. 9

10 43% use internet for home-based businesses 58.9% would telework if they had reliable broadband 45% said current broadband was unreliable 8. INDUSTRY CLUSTER HUB. Industry hotspots will engage in collaborative initiatives at the Smart Work Centre. 9. BUSINESS ASSIST HUB. The Smart Work Hub will provide business development services to help small business develop the skills and capabilities they require to take advantage of digital connectivity and Cloud based services. Productivity, efficiency and marketing programs will be conducted from the Smart Work Hub. The Centre will serve as a hub for industry development initiatives and community organisations. The Smart Work Hub will be a hotspot for social impact investment and social entrepreneurship. 10. FUTURE CONFERENCE HUB. The Smart Work Hub will feature a world-class Tele-presence centre that provides the highest quality video conferencing for global connectivity. 11. FAMILY HUB. The Smart Work Hub will feature state-of-the-art crèche facilities. 12. GLOBALLY CONNECTED. The Smart Work Hub will provide High Speed Broadband connectivity with world-class download and upload speeds. Preliminary discussions with Telstra have indicated that where a Smart Work Hub is located close to a Telstra Exchange, there will be no capital cost on running a high speed cable to the premises. The proposed site of the Blue Mountains Smart Work Hub is immediately adjacent to the Telstra exchange. Full briefing sheet available - BMEE 10

11 Top: Blue Mountains Smart Work Hub concept design, Studleigh Pl, Katoomba, NSW; bottom: Smart Work Hub site cross section. 11

12 Summary Blue Mountains Economic Enterprise and Blue Mountains Connected Communities Group welcome Minister Turnbull s holistic approach to reviewing national broadband requirements, with a focus on service level delivery. The Department of Communications faces the unparalleled challenge of delivering technology infrastructure in a rapidly changing context. A cross-departmental and innovative approach is required to ensure Australia s digital economy becomes competitive and we applaud this approach. Similarly, the city of the Blue Mountains is taking a dynamic and proactive approach to economic development through Blue Mountains Economic Enterprise. Digital connectivity is the most critical infrastructure required in order for the Blue Mountains to increase its competitiveness across a range of industry sectors. Proposal 1. The Blue Mountains be identified as a region of priority for the rollout of the Government s revised High Speed Broadband Network Policy. 2. The Government ensures Fibre to the Business Premises is guaranteed to all Blue Mountains businesses (including home-based businesses) at an affordable rate. 3. The Government supports the establishment of the Blue Mountains Smart Work Hub as an economic recovery driver and an open for smart business flagship project. We urge the Minister to support the following proposal, which will underpin economic development initiatives. This is a once in a generation opportunity to create a sustainable legacy of economic development and competitiveness for the Blue Mountains: T: +61 (0) F: +61 (0) E: W: Supported by: PO Box 538, Katoomba NSW 2780 Economic Hub, 2 Civic Place, Katoomba NSW 2780 Australia

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