Each April, those in the media environs gather for the National Association of Broadcasters (NAB) annual convention. Much like the telecommunications industry as a whole, the broadcast industry has evolved from local mom-and-pop stations to national broadcasters to multi-national media companies. Attention and interest in broadcasting services has also evolved from traditional, over-the-air, mass media programming to specialized, user-selected programming that covers multiple networks. In our multimedia future (where voice, video and data are delivered on all-digital networks), competition will increase and regulatory structures and policy challenges will certainly intensify. So much so, in fact, that the traditional regulatory classifications for broadcasting versus telecommunications services have already blurred, and will continue to do so.
No longer are broadcasters necessarily viewed as those who control information to the general public. Nor are telecommunications companies limited to two-way voice/data services. Moreover, the networks delivering those services are no longer restricted to one provider type. In fact, one of the most sensitive bastions of sovereign control and cultural identitycontentis driving much of the change. No longer is the view that owning the pipe gives one market power and leverage. Rather, s/he who owns or controls the content is kingwell, maybe not king, but certainly more powerful.
As satellite companies consider new services and alliances with other providers to offer technologies such as IPTV (Internet Protocol Television), they are well advised to remain informed of the regulatory challenges facing these sectors. If all participants are not mindful, they may find their snappy new service has unwittingly fallen within a regulatory classification that exposes it, and the provider, to significant regulation and/or constrains their ability to fully realize the benefit of that investment.
This column reviews the regulatory underpinnings of broadcasting and telecommunications as it affects IPTV services. This issue is pressing, as reflected in the recent news of increasing activity in IPTV initiatives involving partnerships such as; BBC and MySpace; Orange aligned with video-sharing site DailyMotion; Microsoft partnering with the South Korean firms Daum Communications and Celrun, to name just a few.
Furthermore, we are witnessing increased activity among regulators. South Korea has issued new legislation to permit that countrys three largest telecom operators (KT, Hanarotelecom and LG Dacom) to provide live broadcasting, streaming Internet and interactive services. These telecom companies have been hampered for more than four years from implementing full IPTV services (they were limited to pre-ITV services such as VOD), due to a dispute between the authority that regulates broadcasting (the Korean Broadcasting Commission), and the agency that regulates telecommunications services (the Ministry of Information and Communications).
The broadcasting and telecommunications sectors, and the regulatory regimes and policies governing those sectors, evolved separately and are based on completely different assumptions and premises. Prior to delving into these distinctions, a brief review of the theory underlying all regulation is in order.
Regulation is intended to serve as a mechanism for managing the market if, and to the extent that, market forces cannot achieve that end. In theory, there has been a market failure that has required regulation to step in and address the situation. For instance, if there is a monopoly, regulators regulate to make certain the public is not disadvantaged by, lets say, receiving poor quality service, paying excessive rates, or being closed out of service altogether. As a market becomes competitive, the need for full-scale regulation should diminish as market forces will step in and ensure diversity of services at acceptable quality and reasonable rates. I believe it is important to bear in mind the entire rationale for regulation when determining whether, and the extent to which, a service or industry should be regulated.
Lets briefly review the underpinnings of broadcast versus telecommunications regulation. Regulation was viewed, principally, as necessary to protect the public because broadcasting, by definition, was ubiquitous. Radio signals blanketed large areas. The consumer did not have a means of controlling the content delivered to their geographic region. Further, the power of broadcasters to disseminate information to a nations citizens was recognized as potentially damaging, particularly during times of war.
Broadcasting regulations, then, have been focused on regulations that manage a number of elements:
- Control the ownership of such networks (and where foreign ownership limitations are found in many countries)
- Limit the number of different media outlets that can be owned by a single person or entity (which can impinge on the type and variety of information made available to the viewing public)
- Control content (such as time of day restrictions to protect our children from inappropriate content at times when they are likely to be watching television)
A common carrier provider receives heightened scrutiny and regulatory oversight; private carriage receives less regulation as the consumer has the power to decide which provider to use and whether to contract for the given service. Information services were viewed as those that did not fall within a regulated category of service, as the services encompassed a change in form or content of the transmissionrather than the dumb pipe of a telecommunications network. Over the past decade, structuring providers as information rather than telecommunications has been a priority, a move to get out from under regulation of the telecommunications regulatory basket.
Regarding the Internet, many regulators were forced to consider whether their respective statutory mandates gave them jurisdiction over this arena. This is one reason many took a hands off (or at least reduced) approach to their enforcement. Further, in trying to shoehorn the Internet into existing regulatory concepts, officials predominantly classified Internet services as telecommunications. Regulators tended to give the Internet a light touch to prevent distortion of the natural evolution of this technology. Therefore, the Internet has largely been unregulated, save for certain content-based laws in some countries.
Here comes IPTVthe epitome of convergence. While there are varying definitions of IPTV, it is broadly viewed as video and ancillary services (audio/text/data) provided over Internet Protocol for television set viewing. However, the delivery mechanism used to deliver such services is irrelevant to the consumer. A cable TV provider, a telecommunications operator, an ISP, or a combination of those aforementioned providers, could provide IPTV. How IPTV services are provided may dictate the regulatory treatment. IPTV can be linear or non-linear.
Linear programming is the traditional, one-way delivery of programming on a set schedule. Linear services are subjected to broadcast-like regulations in many countries. Non-linear programming consists of programming subject to the preferences and actions of the consumer, such as video-on-demand (VoD). Non-linear programming tends to receive less regulation.
But here is the first of many conundrumscan we continue to distinguish between linear and non-linear when new devices and services give the consumer the power to choose when to view programming and can interact with the programming over return paths? Granted, this may occur over a separate network that is irrelevant to the client. Consumers can store, process, and transfer programming; create their own programming; as well as chat and blog during programming. No longer is content necessarily produced by, or under the control of, the service provider. Therefore, the very rationale upon which we have regulated linear/non-linear, broadcasting and telecommunications has become obsolete.
How IPTV is classified and regulated is critical to all types of service providers. Consumers (particularly in more densely populated and urban areas) have multiple delivery platforms wireless telecommunications providers (2G, 3G and Wi-Fi and, soon, WiMAX), wireline telecommunications (DSL, coax, fiber to the home), satellite (DARS, DTV), cable TV, and ISPs. Consumers ability to access diverse content, interact with that media, send data files, and communicate quickly and efficiently will dictate success. Regulators must endeavor to abandon legacy rules and mandates in favor of those that address consumer concerns that the market is unable to address.
As an example; regulations would be justified if, and to the extent that, market power becomes concentrated and, with it, distortions start to surface; new technologies or services were being stymied; consumers without market power (the poor and underserved communities) are being shut out of the evolving information society. Additionally, access to consumer information remains a concern for regulators. A week does not go by, or so it seems, without some data breach resulting in thousands, if not millions, of consumers information being compromised. Even the passports of politicos are viewed with ease. With the continued implementation of artificial intelligence in networks to permit consumer browsing, program, and product selection, and information sharing, privacy and security issues will continue to be a priority.
While exciting, this fast-paced evolution has imposed stresses on regulatory regimes and agencies worldwide and across multiple platforms and services. How regulators treat IPTV will define the parameters of the manner in which the delivery of content on other platforms will be regulated and influence the legislation of other services and sectors.
Tara Giunta is a partner of the Washington, DC office of Paul, Hastings, Janofsky & Walker LLP. Ms. Giunta has extensive experience in advising clients operating in, providing services to and/or financing companies in the satellite sector. She has expertise in structuring international satellite projects and developing and implementing strategies for commercializing those projects on a global basis, including structuring strategic alliances, partnerships and joint ventures; negotiating commercial contracts; and structuring projects to accommodate legal and regulatory requirements and obtaining required licenses.