By the numbers: battle to the Finnish

By the numbers: battle to the Finnish

Summary: Based on the world's top 250 ICT companies, Finland created $56.3 billion in revenue in 2009, compared to just $19.5 billion in Australia.

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TOPICS: CXO
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It's going to take more than the National Broadband Network (NBN) for Australia to become a significant player in the ICT sector. In fact, it could be more of a hindrance than a help.

There's little doubt that Finland is a world leader in ICT. It keeps many people gainfully employed through those dark, winter days. According to OECD figures, 9.3 per cent of Finland's business sector is employed in ICT, compared to just 4.9 per cent in Australia. In fact, we are a long way down the list of OEC countries, with only a handful of nations beneath us.

(Credit: Phil Dobbie/ZDNet Australia)

Based on the world's top 250 ICT companies, Finland created $56.3 billion in revenue in 2009, compared to just $19.5 billion in Australia. Canada, an economy often compared with our own, created three times our revenue from the ICT sector. On a per capita basis, ICT revenues are more than twice our own in the UK, 4.4 times more in the US and eight times in Japan.

The US and Japan dominate innovation, too, accounting for almost half of all ICT patents filed in 2009. Australia put forward just 0.9 per cent of the OECD total. Finland might be losing its edge, though — it took out just 1.2 per cent of ICT patents filed. Still, that's more than us, from a country with less than a quarter of the population of Australia.

So, is there anything we can pick up from Finland? Are cold nights and dark days more conducive to deep thought? Interestingly, the Finnish Ministry of Transport and Communications has a different explanation. The ministry believes that the country's ICT innovation comes from the absence of a state monopoly in post and telecommunications. Now, that has to be music to Malcolm Turnbull's ears.

Topic: CXO

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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6 comments
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  • Unless we can create a Nokia or an Ericsson out of thin air, the only way to increase the size of the ICT sector is to improve the depth and efficiency and encourage new entrepreneurs to service world markets from home. Surely this is the best reason possible to implement the NBN? I can't believe the Liberals are against this!

    The ICT sector in Australia already employs over 550,000 and, at 8% of GDP, was larger than the mining sector until the recent resources boom. You would never guess this from reading the press.
    Please refer to the Australian ICT Statistical Compendium 2011, which is produced by the ACS (www.acs.org.au/2011compendium).
    therring-11fa3
  • The international comparisons in Phil's article are interesting, but his opening statement "In fact, it (the NBN) could be more of a hindrance than a help" and his concluding statement "The ministry believes that the country's ICT innovation comes from the absence of a state monopoly in post and telecommunications. Now, that has to be music to Malcolm Turnbull's ears." both seem a bit bizarre.

    A key part of the Australian government's NBN strategy has been to DISMANTLE, not prop up, the Telstra vertical monopoly of fixed line telecoms in Australia, which most of us in the industry knew (and the Productivity Commission eventually confirmed) held back private sector investment in broadband infrastructure for more than a decade.

    And anyone who thinks that the NBN's collection of 121 separate access network building blocks, for wholesale use only, amounts to a new national monopoly of Australian telecommunications, let alone one that will somehow hold back ICT innovation, is surely taking its critics' persiflage far too seriously. Most Australian entrepreneurs, especially those wanting to work in regional areas (or even in the current outer suburban broadband 'black spot' areas), look forward to the NBN infrastructure (and its dozens of competing retail service providers) giving them far greater choice as to where they can live and work using high speed access to their customers, suppliers and collaborators.
    Peter Gerrand
  • It might be a good story if only the numbers were correct, but they aren't
    Story - Aus ICT revenue $19 billion Fact- ICT revenue $82 billion
    Story - AusICT contrib to GDP 4.9% Fact ICT contrib to GDP over 7.7%
    The author appears to have assumed that the ANZSIC statistical sector Information Media and Telecommunications is the whole of the Australian ICT industry when, in fact, it is less than half, with much of the rest in the ANZSIC class Professional, Scientific and Technical Services, in the subgroup Computer Systems design, and is either misquoting an ABS statistical paper published in 2003 re the economic contribution, or is quoting from someone else misquoting the same data.
    Finland uses a different industry categorisation of ICT, which includes the software sector as well.
    I suggest someone send the author a copy of the ACS ICT Statistical Compendium. downloadable from the ACS website.
    It would be nice to see a story that, correctly, identifies that Australia actually has an ICT industry some 30-40% LARGER than Finlands, on both employment and revenue measures.

    And, of course the tenuous link to NBN as some sort of disenabler is incorrect. Any competent economist will confirm that improved technical infrastructure enables growth, not the other way round, regardless of any legitimate questions as to NBN costing and ROI.
    Ian Dennis
  • Am I in the middle of a dark Non-Sequitur cartoon? Irrelevant downward-trending chart, angels at the north pole, sonorous predictions of doom for the south.

    Certainly you have stirred the beast with a morsel for the ravenous ZDNet advertisers.
    But they need meat, mate!

    Global agggregated charts of dubious 2008 data don't support any of your rather questionable opinions.

    There is plenty of meat out there on other sites about NBN and its genuine value propositions, not just for the ITC sector but as essential infrastructure for the Australian economy and society as a whole.

    Join that debate and you, your readers and your advertisers will be more than satisfied.
    Graham Shepherd
  • Stirring the beast indeed Graham.

    Ian the comparison comes from the OECD data linked to in the article (download graph number 13). The revenue figures, as stated, are based on the world's top 250 ICT businesses, not the entire sector. It was the closest I could get to a like for like comparison. I assume OECD compiled the list so all companies met similar classification criteria. Because we're dealing with just the to 250 companies, figures for all countries will be less than the true total. If we have less multinationals we will be unrepresented.

    The story does not say, as you claim, that Aus ICT contributes 4.9% to GDP. The chart which has 4.9% represents, as the title indicates, ICT's share of employment. Again follow the link to the OECD site and download graph 10c.

    If Australia has, as you state, an ICT industry in absolute terms 30-40% bigger than Australia's that demonstrates the concern. They have a population a quarter the size of ours, so on a per capita basis they are seriously outranking us.

    Whether the NBN is a disenabler (?) is a matter of opinion - and economists are divided on this. It depends on whether you believe government investment in the project hinders the development of a private sector alternative, at least in part. I didn't say that was the case, I just said the Finnish example would make Malcolm Turnbull smile. I didn't say it was right. Let's remember, they also tax heavily and spend big on education.
    phildobbie
  • Of course, I meant to say "If FINLAND has, as you state, an ICT industry in absolute terms 30-40% bigger...." in the above comment.
    phildobbie