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M A Y  2 0 0 4
Volume 1 Number 2

IPv6, Internet Leadership, and The Economic Olympics
by Alex Lightman

While the eyes of billions of people will be focused on the Athens (athletics) Olympics, a few tens of thousand others will be focusing on a different kind of Olympics, an economic Olympics, to see where the thundering herd of $25 to $50 trillion in liquid capital will be parked. Inflation is starting to rear its head after being scarce in Western economies for two decades, and interest rates are going to rise. 2004 is when a number of critical inflections will happen globally, and a key determinant of where the funds will go will be determined by how the top few tens of thousands of financial decision makers judge not only the wealth of nations but also the competence of governments. There are 260 countries, so in part they are looking at which governments seem as though they are going to be best able to adapt to new circumstances.

Business people look at ROI – Return On Investment – in comparing and contrasting potential investments, past, present, and future. Governments don’t use ROI nearly as much, but typically their militaries get the lion’s share of resources, and have the highest demands. Militaries use MEF – Mission Effectiveness Factors – to compare projects and to judge whether they succeeded or not. Part of the problem with America’s experience with Iraq is that no one has sought to find a Mission Effectiveness Factor that can judge the impact of the US on a week to week basis objectively. Perhaps America would get more credit if the value of the Iraqi dinar relative to the US dollar were a key MEF. The dinar fell from 3 to the US dollar to thousands to the dollar over the course of conflicts, but since the US occupation/reconstruction got underway the dinar has stabilized at around 1400.

Is there an MEF by which one can judge government competence, and thus have a Distant Early Warning system for governments that are ahead of the pack, with the pack, and falling behind? I think that the future will indicate that federal government mandates for transition to IPv6 are the single best proxy for government competence. Economically, the Internet has been the single most important technology in recent history, with estimates that during the '90s the Internet accounted for about 1/3rd to 1/2 of economic growth. Given that IPv6 will very likely result in improvements in mobility, security, and ad hoc networking over IPv4, it’s also very likely that IPv6 will result in accelerated economic growth, increases in stock values of key companies, and improve the ability of governments to deliver services.

At this moment, Japan is the top country in government competence, judged by IPv6 mandates. Both former Prime Minister Mori and current Prime Minister Koizumi of Japan have emphasized the importance of mandating IPv6 in speeches, as keystone of achieving its objective to be the #1 IT nation. I’ve seen more PowerPoints about the Japanese government’s focus on leading in IT outside of Japan than I have any other governments. (Google “Japan IPv6” or “TAKAHARA Kozo” to see the presentations, and let me know if any other government’s compares.)

Korea is close behind in its IPv6 focus, in part because it has cooperation agreements with Japan, but primarily because Korea’s government has exhibited tremendous vision and competence, including the early adoption of CDMA while hundreds of other governments, lemming-like, moved to TDMA (GSM). CDMA is the basis for 3G, and Korea uses, produces and exports more 3G phones per capita than any other country. Korea also has the highest per capita penetration of broadband, Wi-Fi hotspots, and online games.  Japan and Korea head up the first tier of IPv6-competent governments, the Class A group.

The Department of Defense has mandated transition to IPv6 by 2008, and is working hard to assist other US government agencies with their own IPv6 transition, primarily Dept. of Commerce, Dept. of Homeland Security, and the security parts of the Dept. of Transportation. At this point the US federal government would be well-served to mandate IPv6 for the entire government: and such an announcement would galvanize the business community and the media, allowing the US potentially to catch up with Japan and Korea. The early bird gets the billions: Qualcomm’s 70 year old founder CEO Irwin Jacobs announced that the CDMA pioneer’s profits were up 46%, as QCOM’s market cap was $53 billion. Think of that: a technology whose rough draft first patented (spread spectrum) by the first woman to appear totally nude in a movie (Hedy Lamar) inspired by piano playing in 1947 is updated for the same improvements as IPv6 is – security, mobility, and ad hoc networking – earlier in San Diego, and BOOM there are hundreds of companies that now trace their lineage (founders were employees at related companies) to Irwin Jacobs’ companies. Being a protocol pioneer is richly rewarded on this world.

As it is, US adoption of IPv6 is roughly matched by Spain, Sweden, Finland, Belgium, Switzerland, Austria, Taiwan, and Singapore. Australia is close to this second tier or Class B group, but suffers from outspoken IPv6 detractors. The European Union, through its $100 billion R & D arm, the European Commission, has tried to mandate IPv6, but doesn’t have the power to compel that national government organs do, but the EC’s efforts are a key reason that Europe is still in the technology game at all, given the fierce competition with the US and East Asia in Internet-related products and services.In the third tier are India, Canada, Germany, and the UK – about a year or so behind the second tier. Malaysia and Singapore are close followers, with governments that are in a great position to mandate IPv6 as a support for their national champions.

China puts on a good show about IPv6, but has limited institutional capacity, R & D, and software design capabilities. National router champ Huawei is a shameless copier of US technology rather than a pioneer, and shutting down 8,700 Internet cafes isn’t the sort of action of a government serious about leading in the Internet takes. China has three big assets: 1. CNGI (China Next Gen Internet initiative, a $170 million project that is intended to advance IPv6), 2. An alliance with Japan and Korea, which will probably enable China to save hundreds of millions in R & D, and 3. the biggest mobile phone market (25% of the world’s 1.3 billion mobile users), who can be switched into a 500 million mobile Internet smart mob by 2006. This is a huge market, and only the top mobile IPv6 companies will have a shot at this business.
There is surprisingly little effort on the part of other governments outside of the first three tiers and China. Sometimes even one visionary leader can create an Internet oasis. Sheikh Maktoum bin Rashid Al Maktoum, UAE Prime Minister and Ruler of Dubai, has a personal interest in IPv6, and even provided $250K to organize an IPv6 conference there 26-28 February 2001. Dubai has been running IPv6 since 2001.

Governments should mandate IPv6 if they plan to compete with the leading economies of the world. While proclaiming that “IPv6 will end the digital divide” is politically correct and is pleasing to transnational government agencies, national governments need to look out for their own interests first. Perhaps there will be an athlete in Athens who has the potential to win his or her event who will slow down so that instead of winning, all the competitors can have a tie. Perhaps the Olympic Gold medal can be divided into multiple pieces, and we can give equal media attention to many co-winners. No one should bet on this, though, and investors would be equally foolish to bet on equal visionary leadership in the next generation Internet from many governments. Three will win the world, just like in an Olympics, and the rest will pay them homage. The winners in IPv6 find themselves invited to lead in other trillion dollar markets – 4G wireless broadband, digital media distribution including education, consumer electronics, television/radio content, ecommerce and online security, and medical monitoring, among others.

In the real world, the winners in technology adoption get to add jobs instead of outsourcing them. They improve their productivity, increase their stock wealth, and reduce inflation. People around the world should envy Japanese and Koreans for having governments that focus on Internet leadership. Personally, I want the US to be the Internet leader. The key step is for the federal government to resume its historically successful role as FBC (First Big Customer) for IPv6, starting with mandating IPv6 for all federal agencies, and then encourage states and cities to do the same, using hundreds of billions in transfer payments to offer incentives. For every White House speech that mentions outsourcing or job creation or broadband, two speeches should mention that the US needs to lead in IPv6 implementation, because the issues are as related as DNA strands. This federal mandate is essential to stay in contention for the Gold medal in the Economic Olympics.

If the US doesn’t want to lead, there are a few hundred other countries that would be happy to extend their lead, or to catch up. Mandating IPv6 is the single best way for the US, and any government, to signal that it can see beyond the day to day drama and improve the ultimate infrastructure that enables everyone to be ever more productive and connected.

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