Sunday, October 24, 2010

Owen McShane: How High Speed Broadband gets People out of their Cars

Urban economies are now driven by their network connectivity more than by their size.

The combination of the internet, cellular computing-telephony, underpinned by High Speed Broadband, will drive the economic performance of cities through the 21st century mainly by hugely increasing the integration of urban enterprises with skilled labor markets throughout the region, and elsewhere in the world.

Curiously, many urban politicians remain convinced the internet is a plaything for teenagers, while Auckland’s urban transport planners steadfastly ignore the ability of High Speed Broadband to significantly reduce congestion on the roads.

Two major essays in the Project Auckland series have devoted much time to Broadband without mentioning its contribution to telecommuting.

Telecommuting is driven by Broadband – and the higher the speed the better.[1]

Politicians and planners love to tell us:

“We have to get people out of their cars and onto public transport.”

Forget about public transport. Companies like Sun Microsystems in Silicon Valley have long ago seized the Broadband opportunity. By 2008, 19,000 of their 34,000 employees worldwide (56%) telecommute. That’s a lot of cars “off the road”.

Oklahoma City telecommuters outnumber all public transport commuters by nearly five to one. San Diego telecommuters outnumber light-rail commuters by 22 to 1, and in Denver by 47 to 1.

Public transport enthusiasts insist that public transport’s host of benefits justify the massive extra costs, extra travel time and inconvenience.

But massive investments in public transport have had no impact on fossil-fuel consumption, greenhouse gas emissions, accident rates, air pollution, and general quality of life.

On the other hand telecommuting improves mobility, reduces air pollution, reduces accidents, reduces fossil-fuel consumption, increases “quality time”, home-life balance and leisure, and increases employment opportunities for the physically handicapped.

By telecommuting 2.5 days per week, Sun Microsystems’ workers reduced their energy used for work by 5,400 kilowatt-hours each year. They also saved US$1,700 a year in petrol costs alone.

Over the past six years, the company has saved roughly $387 million in reduced office space and utility costs.

One of the main beneficiaries of telecommuting are women who want to raise their children at home. They can continue to pursue their career by telecommuting – either full or part time.

Telecommuting reduces the costs of raising children – many who travel to and from work cannot afford school fees and books because of the money they spend on child-care and housekeeping services.

Certainly, spending two hours every day commuting in rush hour traffic, fretting and fuming, and wasting time and money hardly contributes to anyone’s wellbeing.

Typical telecommuters in America gain about three weeks extra leave a year in actual savings in commuting times. But telecommuters also save time by shopping at off-peak times and generally planning visits to doctors, schools, rest-homes, and other tasks to suit themselves.

The employers can put together the right teams for the job independently of their location.

A period of proven telecommuting ability is a big plus on a worker’s CV.

Telecommuters are also being assisted by the spread of Remote Office Centres equipped with the best communication gear, and with coffee machines and a cafeteria for social interaction. Remote workers can “commute” to their local office centre, just down the road, and then “telecommute” to the downtown office.

The leaders of the Auckland Council must ask themselves whether they see Auckland’s future as driven by nineteenth century physical networks or the electronic networks and systems of the 21st Century?

Do we invest in rail or in High-Speed Broadband?

For those who look to the future rather than the past, it’s simply no contest.

[1] See: The “The Quiet Success: Telecommuting’s Impact on Transportation and Beyond” by Ted Belaker, of the Reason Foundation, at


Anonymous said...

Good points, but the question I have is whether the government should need to spend $1.5 billion of taxpayers' money on "ultra-fast broadband" when that is the direction the industry was moving in anyway?

Anonymous said...

New Zealand's broadband connections are already capable of supporting telecommuting in most areas where it is feasible (Akamai shows average speeds in New Zealand are faster than those in Australia and Singapore, and not much behind those in Europe and North America, and we have one of the highest percentages of the internet population (71%)receiving speeds capable of supporting telecommuting-type applications in the world (i.e. over 2Mbps actual speed on average, which is more than enough for video conferencing and supporting HTTP-enabled web applications) - yet the percentage of telecommuters has barely changed over the past five years because simple economics does not support its widespread use.

It is not at all clear that telecommuting is a net benefit - with reduction in traffic congestion being one of the few positives to balance against many additional costs and sheer impracticality. Many service sector jobs cannot be delivered by telecommuting - I do not want my house cleaned by a 'cyber cleaner' or my hair done by a 'virtual hairdresser' - and the services sector is the fastest growing sector of the economy.
Also, there are significant physical economies of scale in having most commercial activities undertaken collectively - heating and lighting per employee in an office building, the transport and variety of goods and economies of scale in production and variety possible in a large centre (e.g. food preparation for daily lunches) to name just a couple.

Furthermore, if I telecommute (i.e. work from home)I must have a bigger house (I won't work at the kitchen table) so have to move further away (e.g rural)to be able to afford the additional space for the same budget I have for my city residence, making the trips I do have to undertake on average longer than those I make for a daily commute(noting that telecommuting is a complement, not a substitute for working in a central location, as I do have to make some trips to other places to meet with colleagues for essential joint activities). Property prices will rise overall as we all need larger houses (crashing up against the problems of planning consent processes that Mr McShane has written extensively about)and exacerbating the problems associated with getting viable public transport stretching out even further into the rural areas than it now does. Not to mention the costs of having to make lots more trips the other way to ship all the things I already buy in the city to my residence or smaller nearby centre.

The reality is that telecommuting is a luxury reserved for the higher-paid managerial classes with sufficient flexibility in their work programme to undertake it (i.e. their routine tasks are individual-specific, and require minimal physical interaction with other individuals or processes) and with sufficient discretionary resources to be able to maintain the more costly lifestyle that it imposes. The evidence is there already - the 'telecommuting zones' of Auckland and Wellington (Clevedon, Hibiscus Coast, Wairarapa,northern Kapiti Coast) are the preserve of the professional lifestyler classes.

(Note - I 'telecommute' one day a week - for the simple reason that as a manager, I need to get away from the constant interruptions arising from being in the office (and at the at the beck and call of all the staff and clients) in order to put the concentration necessary into those of my tasks that require it. Ironically, on my 'telecommuting' day I switch off all the external contact devices - cellphone, email, skype etc. except for when I need them specifically to support the task I am undertaking.)

Unknown said...

As an rule of thumb any investment done by govt and local authorities is wrong or could be done better privately. Therefore if the govt spends on fibre optic cables to provide high speed broadband then that will be the wrong option and wireless would have been the better option.

If govt decides roads are better then rail then roads to knowwhere will be built.

If govt decides rail is the way to go then uneconomic commuter rail will result instead of investment in say the more viable long distance haulage of freight and rail link to Marsden Point.

The reason for this ineptitude is contained in the writings of the great social scientist Northcote Parkinson. Bureaucracies grow and expand due to an internal dialectic divorced from reality. Empires are built, union workers are hired, programs are erected, vote buying projects are pushed through, and heart-warming rhetoric or 'end of the world' scenarios are announced. All to feed the beast. Taxes and regulations increase and real job creation, innovation and even the ability over time to provide basic welfare and public services will decrease. In order to manage the peasant the regulating bureaucracies acquire ever more power and control.

Anonymous said...

Very good points Owen and one the green peril preaching socialists do not mention (but then, they don't like good news stories!).

Your comments reinforce the view that demand for public transport will decline as communication and connectivity gets better (as it surely will through innovation and private and public sector investment). Cars are also becoming cheaper (eg Indian motor company developed the cheapest car in the world - about NZ$2500 if I recall correctly and one in China now for about $600 I am told), more reliable (certainly more reliable than the Wellington train service!), and cheaper to run (despite Nick Smith's efforts to make it more expensive!).

We can therefore expect demand for public transport to decline over time (or have relative lower demand), and not increase as the alarmists would wish us to believe. Demand for public transport may well go like demand for postage services.

Anonymous said...

I repectfully differ with some contributers.
Telecommuting expanded to optimum levels does not cancel the need for efficient and affordable public transport.

Decades ago some cities (and I am thinking of Swiss cities in particular) made the decision to construct public transport systems - they took the long term view. On a suburban Copenhagen train I saw some locals alight and then transfer to a waiting bus which would take them closer to their homes. Yes, they actually had a system.

I live in a small South Island city and recently visited a larger city. The streets in the inner city seemed clogged with cars most of the time and when one wanted to walk across town a good third of the time seemed to be spent waiting for a green light to cross the road. (Of course, not everyone waited!)

I say that cities are for people not for cars.
Cars stream into the city and then of course their owners have to find a place to park.
The next time you are waiting for a bus make a note of how many passing cars have just one occupant.

Owen McShane said...

A car with only one occupant is 25% loaded. Note how many buses are running near empty.
IN fact whole of day use of the average car is about 40%loaded.
The whole of day use of the bus is about 16% loaded.
Buses start out empty and only reach a decent loading towards the end of their journey. And they stop and start. Hence public transport is less energy efficient over the whole of day pattern that the private car and the car performance is improving rapidly.
Of course we need transport for those who cannot drive and where public transport makes sense. Taxies in NZ are efficient and shuttle buses do an amazing job for tourists and neither requires subsidy.

As the population ages the demand for "public transport" will grow but it will built around driverless vehicles (public or private) or the Avego type system which converts the private fleet into a public on demand resource.
Anyhow telecommuting is not primarily a public/private transport argument. It is about people having another option about their work life management - an option which is hugely beneficial to women which is why so many male managers are instinctively opposed to it.