Historically, telecommunication, broadcasting, and other related areas were separate industry segments; they used different technologies and were governed by different regulations. The broad and prevailing use of the Internet has aided in the convergence of technological platforms for telecommunication, broadcasting, and information delivery. Today, we can make telephone calls, watch TV, and share music on our computers via the Internet. Only a few years ago it was handled by different technological systems.
In the field of traditional telecommunication, the main point of convergence is VoIP. The growing popularity of VoIP systems such as Skype is based on lower price, the possibility of integrating data and voice communication lines, and the use of advanced PC- and mobile-devices-based tools. With YouTube and similar services, the Internet is also converging with traditional multimedia and entertainment services. While technical convergence is going ahead at a rapid pace, its economic and legal consequences will require some time to evolve.
At international level, governance mechanisms are mainly used for the exchange of best practices and experiences. The International Telecommunication Union's development sector (ITU-D) has a study group on the converging environment. The Council of Europe has a steering committee on media and information, covering one aspect of convergence: the interplay between traditional and new digital media. Convergence is most directly related to net neutrality, the IoT, the role of intermediaries, e-commerce, consumer protection, and taxation.
The economic implications of convergence
At the economic level, convergence has started to reshape traditional markets by putting companies that previously operated in separate domains, into direct competition. Companies use different strategies. The most frequent approach is merger and acquisition. As a consequence, convergence has lead to fears of the ‘Uber syndrome’ among business leaders: the scenario in which a competitor with a completely different business model enters the industry and flattens competition. Such was the case when Uber entered the taxi market by innovating on the technological aspect; as a consequence, traditional taxi companies and drivers, who businesses were threatened, filed lawsuits in courts across the world in protest against the new unregulated entrant in the market.
The need for a legal framework
The legal system was the slowest to adjust to the changes caused by technological and economic convergence. Each segment – telecommunication, broadcasting, and information delivery – has its own special regulatory framework. This convergence opens up several governance and regulatory questions:
- What is going to happen to the existing national and international regimes in such fields as telephony and broadcasting?
- Will new regimes be developed that focus mainly on the Internet?
- Should the regulation of convergence be carried out by public authorities (states and international organisations) or through self-regulation?
Some countries, like Malaysia and Switzerland, as well as the EU, have started providing answers to these questions. Malaysia adopted the Communications and Multimedia Act in 1998, establishing a general framework for the regulation of convergence. The EU’s regulatory framework for electronic communications, transposed into national laws, is also a step in this direction, as are the Swiss telecommunication laws and regulations.
The risk of convergence: the merger of cable operators and ISPs
In many countries, broadband Internet has been introduced via cable networks. This is especially true in the USA, where cable Internet is much more prevalent than ADSL (asymmetric digital subscriber line), the other main Internet broadband option. What are the risks associated with this convergence?
Some parties argue that the cable operators’ buffering between users and the Internet could challenge the net neutrality principle.
The main difference between ADSL and cable is that cable is not regulated by so-called common carrier rules which apply to the telephony system and specify that access should be non-discriminatory. Cable operators are not subject to these rules, giving them complete control over their subscribers’ Internet access. They can block the use of certain applications and control the access to certain materials.
Surveillance possibilities and consequently the ability to violate privacy are much greater with the cable Internet since access is controlled through a system similar to local area networks (LANs), which provides a high level of direct control of users.
This convergence problem may be addressed by deciding if the cable Internet is an ‘information service’ or a ‘telecommunication service’. If it is the latter, it will have to be regulated through common carrier rules.