Digital convergence: Global trends in broadband and broadcast media concentration

Advances in the use of information and communication technologies (ICTs) have huge potential to offer better access to information and more freedom of expression. But these technology advances are also leading to unprecedented industry disruption along with consolidation and cross-ownership of electronic media platforms, built on the convergence of broadcast and broadband media. Satellite and cable TV broadcasters have become internet access providers, traditional TV channels are increasingly being delivered over broadband, and mobile operators are now often the gatekeepers of “free” content for the general public, and particularly the poor in developing countries. Combined with the ongoing analogue-to-digital broadcasting switchover, there are growing concerns that these market dynamics threaten to constrain the potential for media diversity and greater access to information.

To learn more about these issues and raise awareness about them, the Association for Progressive Communications (APC) has been supported by a grant from the Open Society Foundations which aimed to help foster local civil society responses in Latin America to digital media issues that have up until now been largely debated among industry representatives and governments, and mainly from within a broadcasting perspective. As the market evolves, there is increasing need for civil society and independent regulators to understand emerging national and regional policy issues, and institutional dynamics, relating to the convergence of the electronic media ecosystems of broadcast and broadband.

The general trend that is evident over the last decade is increasing global media industry consolidation, along with cross-ownership of electronic media content production companies with a diverse range of broadband infrastructure and telecommunication operators, as well as with some global retailers, equipment manufacturers and others.

Along with this, a series of corporate consolidations are taking place, which blurs the traditional industry boundaries of these players:

• Mobile and fixed network operators are merging

• Satellite and cable TV broadcasters are combining and have also become internet access providers

• Traditional copper cable voice operators now provide broadcast TV and radio channels over broadband

• Mobile voice operators increasingly provide high-speed broadband and are looking to provide content channels

• Broadcasters are buying broadband operators

• Broadband operators are buying content providers or launching their own in-house operations, as well as making a variety of deals to carry other content

• Most of these conglomerate media companies are expanding beyond their home borders.

Examples of the trends most common amongst the well-established US and European based “old media” companies include:

• Time Warner, a publisher and terrestrial TV broadcaster, buys into other content providers (HBO, CNN), buys cable TV distribution companies and satellite operators (DirecTV), merges with internet providers (AOL), invests in foreign networks, pay TV and popular websites, and becomes one of the largest multinational media conglomerates.

• Sky, a major satellite TV broadcaster, buys content providers and terrestrial networks, sets up broadband services and becomes a pan-European vertical operator with presence in New Zealand, Japan, Mexico, Turkey and the Philippines.

• T-Mobile, a German domestic mobile operator, establishes foreign subsidiaries, buys fixed networks, and becomes a regional broadband player and IPTV distributor across Europe and the US.

Many other companies have followed this model, often initially extending their reach among the traditional colonial country groupings, the most notable of which include: America Movil (Mexico), Univision (Spain), Globo (Brazil), Orange (France), Vodafone (UK), Airtel (India), AT&T (US), Telefonica (Spain), Digicel (Ireland), Cable & Wireless (UK), Comcast (US), Bertelsman (Germany), Vivendi/Canal+ (France), and Altice (Netherlands).

At the same time, a small group of “new media” companies have become global players over the last two decades, primarily originating from the US:

• The Google/Alphabet search engine service has developed multimedia channels (YouTube) and also invested in broadband infrastructure (handsets, fibre networks, data centres, “Loons” and drones).

• Global social network Facebook has partnered with mobile operators to provide content (Free Basics) and invested in infrastructure (satellites, drones, wireless).

• Online retailer Amazon has invested in content creation, cloud services and licensing content, and has become a major multimedia broadcast channel with over 50 million subscribers (Amazon Video).

• Netflix, originally a DVD renter, now with 75 million subscribers in 190 countries, has become the leading global broadband-based video and TV distribution channel, in competition with Amazon and Disney-ABC’s Hulu.

• Electronic equipment manufacturer Apple has diversified into a global audio, video, multimedia learning and TV channel distributor, and a payments platform.

• Operating system and office software company Microsoft has moved into cloud computing and created the popular MSN portal for shopping, news and money, email, search, and chat.

• New global audio streaming services, notably Spotify, Pandora and Rhapsody, are also now taking over from other forms of audio content provision.

Along with corporate consolidation and increased vertical integration of digital media, as well as globalisation and regionalisation of content and infrastructure providers, there are fundamental changes taking place in the way digital media is being produced and consumed.

Most evident here is that many more people are accessing different electronic media simultaneously – for example, the TV is on but attention is split between the TV, phone calls and web browsing or social media. This also partly explains the increasing asynchronous consumption of both traditionally broadcast media and new media – via services and access devices which allow the user to treat “live broadcast” content as “video on demand”. Combined with this is the seismic shift between generations in use of traditional broadcast services: while the older generations generally continue to watch “traditional TV”, the younger generations comprise a rapidly growing number of “cord cutters” who forego these services in favour of broadband/on-demand access.

The other key developments here are:

• Digital media delivery is now starting to take full advantage of the interactive features that can be provided, offering greater customisation of content for the end user, and ever more marketing and impulse-buying opportunities for advertisers.

• Social media, blogging and gaming are not only absorbing much larger proportions of the discretionary time previously taken up by TV and radio, but are also disrupting the traditional news, entertainment and information delivery systems – the public has become a source of “news”, not only for their social media associates, but also for traditional news outlets which now use social media sources extensively on their channels.

• Information and entertainment are being accessed via a much wider range of devices with different capabilities, ranging from tiny smartphones to “monster” home entertainment systems. Of note here is the high willingness of the public (especially the youth) to engage with perceived lower-quality digital media on the small screens of their handheld devices.

Aside from concerns that horizontal and vertical integration in the electronic media sector limits the diversity and independence of information sources, while restricting the means of distribution to just a few global or regional players, the trends described above are of particular concern for civil society and public policy making for two additional reasons.

First, there appears to be a much more diminished role for public service broadcasting in the new electronic media environment: of what benefit are local content requirements and state-sponsored programming when there are rapidly increasing numbers of “cord cutters” who are less and less likely to access such content? Developing strategies for being able to reach these groups with public service information is becoming an increasingly important priority.

Second, there is increasing stratification and inequality in service provision and viewership, which leads to isolation and makes it more difficult to reach all of the public in a uniform manner. Currently three major “content distribution islands” are evident, each accessed by different demographic groupings and supported by different business models:

• Traditional terrestrial analogue TV/radio broadcasts, which are slowly switching to digital transmission

• Satellite TV/radio

• Broadband internet-based services.

Ultimately, it is expected that broadband will be the dominant transmission channel for virtually all electronic media, but the timeframe for this depends on the country and could be anywhere from five to ten years for ubiquitous access to be reached. This highlights the need to develop forward-looking policies which take into account the short term (current) situation while planning for a converged future, as well as ensuring widespread availability of affordable un-capped broadband services.

In this environment there are many challenges and questions for those setting policy goals to ensure sufficient diversity, independence and accessibility of electronic media. The most significant of these are:

• Technology change is so rapid that the policy and regulatory environment often cannot keep up. Of particular importance here is the need to update traditional regulations on broadcast content. Are these regulations applicable in a broadband/interactive environment?

• Social media and blogging channels create needs to define who is accountable for the content hosted on the social media platforms, and how the need for anonymity should be accommodated.

• With so much electronic media now available from outside the country, is it possible or desirable to regulate it from a regional or national point of view? Are there needs for establishing global strategies for developing norms and standards for delivery of these types of content?

• Traditional media business models are being undermined by “new media” – and this is often a justification for the common cry of local big media, “We have to consolidate to survive.” What is the role of national policy in the adoption of new business models vs protection of the interests of the incumbents? This is not just an issue for mass media, as the Uber debate has highlighted so well.

• Big media has much deeper pockets than civil society, policy makers and regulators, which leads to the potential for big media to “over-power regulation with lawyers”. How can institutions responsible for policy making and regulation be strengthened to ensure regulations are enforced? How can regional and global collaboration support this?

• How should universal service obligations and levies be applied to vertically integrated multinational conglomerates providing both local and international infrastructure, as well as content and application (including banking/payment) services?

Some of the existing and new policy and regulatory mechanisms that are being discussed which have an impact (good and bad) on the above trends and challenges include:

• Intellectual property rights on content distribution – regional copyright licensing strategies such as the “License for Europe” programme.

• The Trans-Pacific Partnership (TPP) which affects the accountability of large corporations and the use of intellectual property in Peru, Chile and Mexico.

• Significant market power (SMP) designations which can be used to limit dominance of incumbent service providers.

• The analogue-digital switchover (DTT) strategy and use of the “digital dividend” radio spectrum that will be made available by freeing up the wavebands from analogue transmissions.

• Shared and dynamic spectrum management policy frameworks, for example, to allow immediate sharing of the allocated but currently unoccupied analogue TV wavebands.

• Local content requirements for local vs international channels.

• Net neutrality policy frameworks covering cross-ownership and business relationships between infrastructure providers and content producers.

• Over-the-top (OTT) regulation policies proposed by infrastructure operators to address loss of voice revenues to VoIP providers such as WhatsApp and Skype.

• Limitations on intermediary liability to protect third parties providing social networking and blogging platforms.

• Taxation of communication services and ICT equipment, which many countries have adopted, while many others have not, or have even eliminated or reduced such taxes.

In conclusion, the coming years are going to be a critical period in redefining a now rather old concept: “the new world information order”. Groups supporting the public interest will need to work together to help ensure that the promise of ICTs in supporting universal access to information, communication and freedom of expression comes to fruition.