Monday, June 20, 2011

Digital Economy Round-Up - Issue 1

This will be an occasional series on the blog - starting now. It should be considered a contribution under my DigEcon Research brand. It picks up the fact that Digital Economy thinking and strategising has been revived throughout the (developed) world - not just Australia.

I'm going to start with two pieces from national regulators on convergence. "Convergence" has re-entered the policy discussion in conjunction with Digital Economy thinking because the regulation of telcos, media and ICT plays an important part in how successfully these services can be (positively) deployed for economic change.

Konrad von Fickenstein, Chair of Canada's CRTC gave an address last week which could have been from here - starting as it did with digital switchover and 700MHz and 2.5 GHz auction news.

We are in a new digital world now [in which] the Commission's ability to regulate through control of access is very much reduced.

I believe we need a conceptual rethink of the whole regulatory be embodied in a single comprehensive Act to govern all communications.

The aim of the new legislation would be to create a structure for optimal regulation of the transportation of bits, whether by wireline or wireless technology, and whether they are carrying voice, video or data. This structure would support the development of a flexible, competitive and innovative system providing access for all Canadians to their choice of fast and efficient digital resources.

Here are some of the key points that might be included:
* A statement of objectives for the system—economic, social and cultural.
* A clear distinction between the broad policy choices to be made by the government and the powers to be assigned to an independent regulator in all areas of communication, including broadcasting, telecom and spectrum management.
Specific provisions on timelines and on regulatory tools, such as AMPs (Administrative Monetary Penalties), mandatory adoption of codes, and the power to impose arbitration.
* A coherent scheme for the support of Canadian content. This could include subsidies, or incentives in the form of regulatory exemptions and exceptions, or a mix of all of these methods.
* The responsibilities and governance of the public broadcaster, defining its special role in reflecting Canada's unique culture and values.

We should also consider a rationalization of our institutional framework. ... Should the powers of ex ante regulation be curtailed, while ex post powers of enforcement are increased? The aim should be to favour competition, with intervention limited to cases of market failure.

Should the relationship between the CRTC and the Competition Bureau be more clearly defined? What about the CRTC and the Copyright Board?

The industry must act


The kind of fundamental reform I'm talking about can only be realized through action by the government. The government, however, is unlikely to take action unless the industry itself is pushing for it. It is therefore up to you to organize yourselves and make sure the message gets out loud and clear.

Earlier in his speech he'd referred to an interesting initiative on "terms of trade" between increasingly large and powerful producers and broadcasters - an interesting initiative that he claims "will bring clarity and certainty to broadcasters and producers. They will also help to bring Canadians a steady supply of high-quality Canadian programming available on a variety of platforms."

The four dot points could work very well as framing points for our own Convergence Review, and the institutional question is equally valid.

On the industry point the Chair was particularly addressing the broadcasters. In Australia a similar position can be advanced about the telcos (but that is another topic).

The Chair of our own regulator, Chris Chapman, addressed CAMLA on the topic of convergence from a regulator's perspective a few weeks ago.

He noted;

Put simply, convergence is an everyday issue … the indisputable fact [is] that developments in communications technology are outpacing what was thought of as possible just five years ago, let alone what legislative frameworks considered would be required more than 10 years ago. Many of the controls on content and the provision of telecommunications services will need revision and adaptation for today’s reality and for the emerging digital economy.

He looked at the issues through separate timelines on devices, content, networks and services, usefully highlighting that "convergence" is an issue across each of these domains. Added to this he introduced the issues affecting consumers and citizens. He did not in this address highlight the important difference between the two words and the need to focus policy on the impact on individuals as both consumers and citizens.

Turning to regulation he noted;

As a result, in our view the Australian communications legislative landscape now resembles a patchwork quilt. It is fragmented and characterised by legislative ‘band-aid’ solutions that lack an overarching strategy, narrative or coordinated approach to regulating communications and media in a digital economy. Regulatory pressure has bitten into core legislative concepts and definitions, creating these strained or ‘broken concepts’. Ultimately, their ‘elasticity’ will expire at which time they will no longer function efficiently or effectively in a converged environment.

We at the ACMA have consistently documented and indicated our preparedness to grapple with the regulatory implications of convergence. ‘Broken concepts’ is a reasonably provocative phrase we have used to highlight the notion that legacy legislation, the rules for the communications sector that used to work nicely 20 years ago, now don’t entirely fit the circumstances we have to embrace now, let alone over the next 20 years.

Unfortunately he seemed good on diagnosis but limited in solutions;

The ACMA maintains an active review program to effectively and efficiently manage our response to convergence impacts on regulatory and co-regulatory arrangements for communications and media services. In this program, my staff have examined the convergence status of 40 or so key concepts in Australian communications legislation, and found that many of these are broken or straining in relevance. I will go into a little detail below on some specific examples to highlight the depth of the issue.

For convenience, will do so under the headings of the ‘four worlds’ that the ACMA regulates—telecommunications, broadcasting, radiocommunications, and the internet. Each of these ‘worlds’ had its genesis in a traditional, often physically defined analogue world, but they are all now trending towards that converging centre point. A common denominator across all of these is an evident need for much greater consistency in approach to definitions, concepts, regulatory policy, structures and approaches as well as compliance measures, available enforcement powers and actions.

What followed was a sample of his list of 40 broken concepts. He offered some further diagnosis of what is broken.

As I see it, there are actually three problems, which can be synthesised into an overarching meta-problem, which is what faces this Convergence Review:

1) Digitalisation broke the nexus between the shape of content and the container which carried it – ...This meant that regulation constructed on the premise that content could be controlled by how it is delivered has increasingly lost its force, both in logic and in practice. This problem began to be recognised as one of ‘convergence’ as far back as the end of the 1980s9; however, legislative response has been sporadic.

2) Based on digital content and carriage, IP networks have come to play an ever more important role. This has meant content has become increasingly non-linear, interlinked and ‘uncontained’ while people increasingly expect to connect and communicate seamlessly – anywhere, anyhow, anytime.

3) But here’s a curve-ball for you: the playing out of virtualization. maybe even then it’s not safe to go back into the water because, looking into the next decade and towards 2025 it seems plausible that we are moving towards a communications world of ‘virtualisation’, where network elements can and will be emulated in software, which will lead to an ever more intricate and subtle interconnection between networks, services and content as those very layers themselves become diffused as a consequence. So my initial provocation is this: even legislation and regulation possibly based on that radical horizontal (i.e. the layers model), and not based on the vertical, is itself likely to be challenged in a future environment.

The last point is indeed the one worth playing with - the horizontal model is one I favour but each element of the stack can emulate another raising the question of what's what.

He went on with some useful discussion about regulatory tools but these should wait for a different discussion (let me just say I disagree).

The final interesting development is an initiative in Coffs Harbour. As a second release site for the NBN they have advertised a series of workshops designed to ensure the region gets the most of its opportunity. Hopefully every LGA in a second release site will do this and not wait for the Feds "Digital Communities"and "Digital Enterprise" initiatives from the DE strategy.

Novae Meridianae Demetae Dexter delenda est

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