Opinion: Local clouds need big ideas

Building a domestic cloud computing industry wasn’t an election promise for either of Australia’s two major parties heading in to the last election, but over the last few weeks you could be forgiven for thinking otherwise.

Senator Kim Carr presided over the launch of a Macquarie Telecom-sponsored report [pdf] authored by Lateral Economics, which discussed the potential for Australia to become a ‘cloud computing hub’.

Senator Conroy’s office also expressed an interest in the issue - The Australian reported the Government would consider exempting data centres from the carbon pricing scheme in reaction to [some rather unfounded] fears the legislation would kill off the local data centre industry.

This unprecedented political interest in IT no doubt stems from the Gillard Government's enthusiasm to promote the benefits of the National Broadband Network project.

But I wonder what the Australian Government could possibly do to encourage the development of a regional cloud computing ‘hub’ in the face of our competition elsewhere in the Asia Pacific.

Our distance from the rest of the world makes our services a far less compelling option for export from a network latency perspective – the first of several reasons Singapore and Hong Kong have attracted most of the global investment so far. The NBN, which is primarily concerned with our domestic access network, can’t address that issue directly.

The Lateral Economics report suggested a few strategies for consideration. One, it recommended the Australian Government be an anchor tenant for domestic cloud services. (I imagine any directive to do so will meet howls of disapproval from those that stand to benefit from the US Free Trade Agreement.)

Singapore, by contrast, has a long-term plan to become a subsea cable and data centre hub. And the Singaporean Government is offering subsidies for domestic use of cloud technologies.

And that isn't the half of it - these are just the incentives the government of Singapore is happy to publicise. Singapore's efforts to stave off competition from Hong Kong in particular have led to an offer of tax incentives for foreign companies setting up cloud infrastructure.

Some of the major cloud computing providers to establish themselves in Singapore were even offered government assistance with the purchase or lease of real estate, the one requirement that would otherwise be prohibitively expensive.

Could you imagine an Australian politician taking more than a passing interest in subsea links? An elected member offering up land to foreign nationals building data centres?

It is clearly going to take some radical ideas to attract the scale of investment warranted to build a cloud computing ‘hub' in Australia.

There were a few gems within the Lateral Economics report.

I particularly like the recommendation that Australia market its “intangible infrastructure” – our political stability, regulatory integrity, and the maturity of our domestic consumption of IT services.  

In other words, we need to promote “Brand Australia” as a safe and mature place to do cloud business.

The report recommended that our lawmakers “pioneer a careful separation between the regulation of local supply and export so as to exempt foreign purchasers of Australian cloud services from any regulatory requirements that exist in Australia solely to protect Australian users”, with a clause that also allows foreign purchasers of domestic cloud services to “opt in” to that regulation if it suits their marketing mantra.

It would be a great achievement to see a foreign company advertise that it hosts data “to Australian standards” as a mark of its commitment to customer privacy, for example.

We’re going to need plenty more big ideas. What’s yours?