Communications Convergence and Public Service Broadcasting

06.12.2010

Throughout the 1990s, convergence was the buzzword in telecommunications and media circles. A number of studies were devoted to the phenomenon; a good description thereof can be found in the Commission’s 1997 Convergence Green Paper, from which the following explanations are drawn. “Convergence” refers to the coming together of what were previously thought of as separate sectors, namely telecommunications, information technology (IT) and media, as a result of technological developments3 that enabled pent-up customer demands to be satisfied. The first
two were already converging since the 1980s (albeit mostly at the level of larger customers). Convergence is taking place at various levels. First of all, convergence can already be seen at the level of terminal equipment and networks. Nowadays, computers can be used not just for computing, but also for telecommunication and the reception of audiovisual media, telephones now have limited computing abilities and TV sets are following the trend. Similarly, networks originally conceived for telecommunications or broadcasting of audiovisual media (cable TV networks) can now be used for the other purpose, as well as for computing purposes (access to the Internet, etc.). Secondly, convergence is taking place at the service level, with the introduction — albeit later than foreseen — of new services which combine elements of telecommunications and media, for instance pay-per-view or video-on-demand. Thirdly, the industry itself is converging through cross-sectoral mergers (the epitome being the
TimeWarner/AOL merger), the most significant of which give rise to major competition law decisions, which will be discussed further below.

Most of the literature concerning convergence was based upon a vision of the evolution of the various sectors which did not materialize, or at least did not materialize quite according to plan. That vision foresaw major players in the telecommunications and media sectors upgrading their networks and equipment to bring the requisite amount of bandwidth and computing power down to customers, after which these players would begin to offer converged services upon these networks. Reality did not unfold as predicted. The costs turned out to be much higher than originally forecast, and the first trials showed that customer demand was not as high as it was thought. Accordingly, that vision is not yet realized, and it may never be.

At the same time, convergence did occur on a smaller, more incremental scale and in a way that was not foreseen at all: the Internet. The Internet is a converged network within the meaning of that vision, using the most converged terminal equipment — the computer — to deliver services that closely resemble the “converged services” which were forecast. Yet the Internet was originally narrowband, and it was not the result of single-handed competing efforts by a few large vertically-integrated firm along proprietary lines, but rather of the collective and co-operative work of small startups in an open standard environment. Those startups (to the extent they have survived the recent downturn in the sector) have now become large firms in their own right, or have been integrated into larger firms. It could be that future developments will come closer to the vision expounded in the 1990s, albeit with actors that grew out of or with the Internet wave. In any event, one cannot help thinking that the rise of the Internet might have had a very positive impact, among others, in providing a welcome “reality check” on the forecasts of industry gurus and avoiding that the existing industry structure be perpetuated. One can only wish that the future keep similar surprises in store, so as to foster dynamism and innovation.

The present article discusses first how convergence has been dealt with so far under EC law (I), before going on to examine what consequences this might have for public service broadcasting (II).

Authors: 
Prof. Pierre Larouche (CERRE & Tilec, Tilburg University)
top