Telecom regulators are carving a new media landscape
Telecom regulators around the world play a pivotal role in shaping the new online media landscape. Here’s a look at how recent decisions in the US, Europe and Australia are affecting consumers and industry players.
April 24, 2015 will probably be remembered as the day regulators the world over made a forceful comeback in the entertainment business. The US Federal Communications Commission's (FCC) negative outlook on the Comcast-Time Warner Cable merger pretty much killed the deal, and Comcast announced that they were walking away.
The FCC’s February ruling on net neutrality also highlights the importance of regulatory bodies that have been taken for granted by both the public and the industry players.
The conventional wisdom of the past two decades had been that regulators worldwide were sticking to a "laissez faire" attitude, as the film and television industries were shifting into the 21st century’s ‘Always On, Always Connected’ world. A number of these regulatory bodies, like the FCC, have been bucking the trend by demonstrating a more forceful attitude in their mission.
The FCC’s latest decisions under Chairman Tom Wheeler signal that the regulator is going to carry its mission to the letter, which is to “make available so far as possible, to all the people of the United States [...] rapid, efficient, nation-wide and world-wide wire and radio communication services with adequate facilities at reasonable charges."
Chairman Wheeler struck a decisive toneat a cable industry conference on May 6, telling attendees: “You are no longer the ‘cable’ industry. You are the leading association of leading broadband providers. [...] You don’t have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video.”
The FCC recognizes this new state of affairs and, for the time being, seems bent on using its mandate to ensure that the market remains as fair as possible to consumers and to suppliers of the cable and broadband industry. The other upcoming convergent deals, such as AT&T and DirecTV, as well as the possible merger of T-Mobile and Dish, will also be examined with the consumer’s interests at the core.
The situation in Europe has been particularly interesting due to increasingly louder calls for a Europe-wide regulation for the telecom as well as the content and cable industries. The European Union (EU) has already put in place a single roaming market for mobile telecoms. Also, the arrival of global over-the-top (OTT) video players such as Netflix and Amazon Prime on its shores is sparking a movement towards regulation.
Currently, there is a hodgepodge of regulators in Europe, from France’s ARCEP and CSA to the UK’s OFCOM and Germany's BundesNetzAgentur (Federal Network Agency). The particular challenge here is the potential layering of national and European regulation and legislation policies for the entertainment and telecom industries.
Some specific regulators, such as Sharon White, who heads OFCOM, have started to mull possible deregulations in their market. The ongoing cooperation between these national institutions and the European-level regulator-to-be will understandably be fundamental.
Through a leaked document, it is reported that Günther Oettinger, EU Commissioner for Digital Economy and Society, has called for a central “EU-wide body” to monitor platforms' use of data. This call came in the wake of a push for new privacy rights. This could prove pivotal to the larger telecom and broadcasting regulations in place.
Telecom and broadcasting convergence is now a reality, accelerated in Europe through very affordable triple or quadruple play bundles. Over-the-air broadcasting is decreasing in favor of OTT web-based video. The time is therefore ripe for a single regulatory body to set a common agenda and market parameters, despite the fact that uniting 27 countries and their multiple regulators is a herculean and complex task.
On May 6, the EU introduced a 16-point plan for a Digital Single Market (DSM), but it has not elicited much positive excitement, as many questions remain unanswered. The plan describes a single market “in which the free movement of goods, persons, services and capital is ensured and where individuals and businesses can seamlessly access and exercise online activities under conditions of fair competition, and a high level of consumer and personal data protection, irrespective of their nationality or place of residence.”
Given that “ending excessive geo-blocking” is a stated goal of the DSM, this could potentially mean the end of territory-by-territory rights for the television and film industries, thereby endangering the financing of European content.
The industry’s fears were ably summed up by a producer quoted in Variety:
"The key thing is that I must be able to optimize the value of my digital rights at a time when other revenue streams, like home video and TV, are drying up. [...] Frankly, I have not understood yet whether the new EU rules will favor, or hinder that. Or whether, instead, they will just help Netflix.”
Günther Oettinger came to the Cannes Film Festival on May 17 and indicated that the EU was considering excluding three key areas in the set-up of the single market: sports, broadcasting and film. This could therefore mean that there will be a delicate balance between preserving Europe’s content production and the goals of a single digital market.
Even though the European Union authorities have been forceful with them, as attested by the 2004 settlement with Microsoft and the recent formal anti-trust complaint against Google, US-based digital giants have started to publicly back the single market.
Following Facebook’s Mark Zuckerberg’s positive statement in May, Google’s executive chairman Eric Schmidt has expressed Google’s support for the single digital market: “To succeed globally, Europe needs a single digital market.”
Down Under, the Communications & Media Authority (ACMA) has been attentively monitoring the arrival of US streaming giant Netflix. Many Australians were already using the service prior to its official arrival through the use of Virtual Private Networks (VPN). As indicated by leaked Sony communications, this trend was raised by US studios as an issue to be remedied.
ACMA has also been active in pushing for an anti-piracy code that Australian Internet Service Providers could be compelled to enforce in the fall of 2015. It remains to be seen if VPN usage could be included as a piracy offense.
The important role of regulators
Regulators around the world have a key role to play in helping to organize a converging world between the traditional facets of the entertainment business and the telecom industry. The recent deal between US telecom carriers Verizon and AOL demonstrates the speed of the convergence between content and distribution.
Regulators must therefore be well equipped when facing increasingly global players like Apple’s iTunes, Google Play and Netflix that are becoming worldwide hubs of content distribution. Netflix’s accelerated practice of concluding world rights deals with content producers, most recently demonstrated with Brad Pitt’s film War Machine, is also going to create opportunities as well as a re-ordering of the market.
In the end, regulators must strive to maintain the delicate balance between the consumer’s interests and those of the industries they regulate.