Between the lines: Time to discover edge to business

It's a bi-polar kind of business world - either you get big, or figure out a way of becoming unique.

The observation belongs to Telstra Saturn's chief executive, Jack Matthews, who argued at yesterday's Telecommunications Users' Association conference that it is not only in business that the middle man is under pressure. Countries must either be big or discover their unique competitive advantage.

It was not mere whimsy that produced this observation. Mr Matthews has been a participant in some of the telecommunications industry's more bitter disputes.

Like many people who think about these matters, he regards a vibrant telecommunications market, with as many competitors and services as possible, to be a vital condition for New Zealand to exploit the paradigm shift brought by the internet.

Having already admitted that he was a life-long Democrat, it should come as no surprise that Mr Matthews has much less than the slavish devotion to the hands-off, free-market ideology that has been the dogma of the last 15 years.

Instead, he argues that the Government has a duty to set strategy and goals, and its telecommunications inquiry is a jolly good start to that.

Not only will its recommendations encourage new entrants, they will spur Telecom itself to provide better services, too.

Of course not everybody, least of all Telecom, agrees.

But the idea that the Government has a crucial role was reinforced by Advantage Group's managing director, Greg Cross, who said it must collaborate with business.

No longer simply an eftpos hardware supplier, Advantage has undergone a renaissance after storming into the internet services market, with a division that employed three people a year ago now boasting more than 300.

The internet is expected to account for half the company's $100 million revenue in the coming year.

But internet success requires a new mindset. A former marketing manager at BellSouth, Mr Cross lambastes New Zealand executives for their poor understanding of technology. If they want their companies to prosper, they need a clear vision of the internet and what it will do to pricing.

That will be dynamic. While auctions will drive prices down, margins will rise as costs fall.

Industrial relations must also change. The Employment Relations Bill is a non-issue to Mr Cross since the cost of hiring a Java programmer in New Zealand will soon be the same as anywhere in the global market - a lot, whether they live in New Zealand, India or Silicon Valley.

That will promote another form of bi-polarism, within countries themselves.

India, with its army of computer programmers, will have one of the largest and wealthiest population groups in the world, although many in that country will never know it.

And that is an issue that might well occupy the minds of policymakers here.