Portable Everything

19^th may 2006
The Malta Independent - Friday Wisdom

 

Quality of life has improved in leaps and bounds when the human species invented easy and efficient means of mobility. The benefits of international trade would not have been possible if goods produced in one country could not be easily transported to another.

Take energy. As it so happens, natural energy sources are located in world regions far removed from the main energy users. The three industrialised blocks, USA, EU and Japan/China in the east, need regular importation of energy supplies from resource rich regions like the Middle East and Russia. Without oil tankers, LPG carriers, pipelines and other capillary distribution networks the division of labour and specialisation which has permitted so much efficiency and growth in productivity would not have been possible.

Mobility has also facilitated trade development because people could move easily from one place to another. Barriers have been brought down permitting people to move freely within countries and regions to resettle where economic efficiency could guarantee a better quality of life.

One of the best sources of new efficiency inputs which should help the EU to catch up with the higher economic growth of the US is the enlargement to include former communist states in central and eastern Europe which permits two way flow of economic resources. Investment moves eastwards to gain efficiency in lower cost environment while in due time eastern labour will move westward thus bringing a rough equalisation of living standards throughout the EU which will give it the same advantages currently enjoyed by the greater mobility among states in the US.
China’s stratospheric economic growth is only possible because a million or so people every month are migrating from the rural heartland to the sprawling industrial centres in the south and coastal areas.

Even where such labour mobility is illegal, one cannot deny the benefits host countries gain from the gradual integration of such new labour resources into the economic fabric. On 1 May, illegal immigrants in the US staged a one-day “strike” to prove that without their intervention America’s economy would slow down significantly. In fact, it is clear that the most effective way to fight illegal immigration is to promote accessible channels for legal and organised migration.

Once mobility has been achieved, probably to the boundaries of physical possibilities, the concept of portability has kicked in. We do not only need to travel or relocate freely but we need to stay in touch with everyone else all the time. So while travelling, people can still reach us on our mobile phones through telecoms’ roaming services. We can phone anyone while on the move and we can access our office facilities, email networks and all, and keep working as if we were in the office when is fact we could be on a tourist coach in some distant country.

Pretty soon we will be able to watch live digital TV on our mobile phones which are more and more becoming like a hand held PC.

Again, as hard physical portability starts approaching its physical limitations, focus will shift, indeed it has started to shift already, to soft portability. People need to be freed from being locked up with suppliers through invisible mobility barriers. People need to choose the best supplier, which could change from time to time as new and more efficient players come on the market, without being inhibited by such invisible mobility barriers.

Numbers portability in telephony is a prime example. Without numbers portability, users cannot freely switch from one carrier to another as the trauma of having to inform all contacts of their changed number far outweighs the benefits that a new carrier could offer.

It is necessary to transport such soft portability beyond the telecom industry. One area that is ripe for such development is the financial services sector with particular reference to mortgages or house loans. The wide usage of house loans and their long-term nature spanning up to 40 years make it an ideal candidate for a dose of portability in favour of the consumer, i.e. the borrowing customer.

Take a young couple that takes out a 40-year house loan with one of our banks. They are locked in whatever they agreed for the whole duration of the loan and they cannot benefit from more favourable offers that come on the market from different mortgage suppliers unless they actually repay the existent mortgage and take out a new one with a different bank. The cost, the hassle and the logistics of doing this are nearly insurmountable. The client is simply locked in with his original bank come hell or high water for the whole term of the mortgage.

Is it not time to think about portable mortgages? Can’t we device legislation permitting mortgages to be given in favour of a central registry rather than in favour of a particular lender and then the central registry will keep the mortgage interest in favour of any bank that the client desires, so that the client can switch mortgage lenders by a simple letter rather than by expensive contracts and registrations?

Portable mortgages? Portable everything – if it favours the consumer.