1. Resetting EU policy frameworks for a converged world

Resetting EU policy frameworks for a converged world

Media convergence

Earlier this year, the European Commission – or more precisely DG Connect – released its convergence green paper, ‘Preparing for a Fully Converged Audiovisual World: Growth, Creation and Values’.

The topic of media convergence in policy circles seems to find its way back all the time. In just the last two to three years, a number of policy makers in different countries have looked into the very same issue – in Australia, Canada, South Korea, Taiwan, Singapore, Hong Kong and Malaysia just to mention a few.
Convergence is a technologically driven process; digitization acting as the prime driver while the network is the prime enabler.

From a business perspective, convergence changes markets by transforming industry sectors, blurring historical market boundaries, changing the composition and range of possible market offerings, and challenging the robustness of previously successful business strategies.

So what is the policy-fuss all about? From a policy perspective, media convergence puts a range of very different regulatory traditions and philosophies on a collision course . These are:

• telecommunications regulation, which has been concerned with operation of the physical network and access

• the film and video industry, where control has been exercised through classification, censorship and copyright

• broadcasting, where licensing has provided the basis for regulation on political and cultural criteria

• publishing, which has been shaped by principles of a free press, libel and copyright

• the computing industry (including the internet), which has been left to develop largely unregulated, apart from general competition law.

While convergence is forcing the industries to move toward more coherent policy and regulation, as well as the integration of regulators, reconciling the different regulatory traditions and philosophies involved is no trivial task. In this process, “the central question is not how to regulate convergence, but how regulation should (and must) change in the face of convergence”.

From an economic perspective, convergence enables increased demand-side and supply-side substitution by lowering entry barriers that ultimately enables more consumer choice, lower prices, more competition and new innovation. Ultimately, this is the outcome at stake in the hands of policy makers; for example, how much a society can gain from the convergence process.

Any tips down the road for policy makers to consider? This non-trivial reconciliation exercise requires that policy frameworks are revised, key policy goals and outcomes are harmonized and remedies are applied equally across converging sectors, such as:

• Establishing cross-sector, overarching, long-term policy goals regarding market freedom, innovation, competition, affordability and availability, including the formulation of lowest-common-denominator standards.

• Ensuring a balance between investment protection and consumer interest, including for example, the balancing of consumer protection and investor protection against long-term market viability. This balance should be given equal treatment across all converging sectors.

• As far as possible, harmonize and align the desired objectives of economic policy with those of public interest policy. Minimum economic distortion principle (both in terms of magnitude and symmetry) should apply where public interest policy objectives are justified to surpass economic policy goals.

• Public interest policy, such as elements of key media-policy (film, cinema, and broadcasting) regulation should be applied in a technology-neutral way. In a converging and multi-platform environment, the same rules/standards should apply to all technologies and distribution platforms. This should not be interpreted as a one-way street option – for example, increasing regulation of new platforms, but also considering deregulating incumbent platforms.

• Specific rules governing public interests such as those concerning the use of state aid and national subsidies (for example, public service broadcasting, cinema and film subsidies, and application of VAT rates) should minimize distortions in the market. Once again, a technology- and platform-neutral approach should be one of the key governing principles.

The above mentioned reconciliation process of different (sector-specific) regulatory traditions in an ongoing industrial and technical convergence necessitates that a new policy framework not only assumes a more holistic perspective across all relevant sub-sectors and value chain activities that are converging, but also adopts a horizontal policy framework approach.

This is easy to say but very hard to implement.

Written by Rene Summer

Director of Government and Industry Relations Rene is responsible for policy, formulation and promotion research in the areas of telecom regulation, TV-broadcast regulation, media regulation, copyright, advertising, state aid and consumer privacy.

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