Historically, telecommunications, 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 telecommunications, broadcasting, and information delivery. Today, we can make telephone calls, watch TV, and share music on or via our Internet-connected devices. Only a few years ago, such services were handled by different technological systems.
In the field of traditional telecommunications, the main point of convergence is represented by Voice over Internet Protocol (VoIP) services. The growing popularity of VoIP systems such as Skype and Viber 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. Such services – which use the Internet as the delivery platform – are known as over-the-top (OTT) services.
Convergence is also discussed in relation to new business models enabled by the Internet, such as the sharing economy, which, in general terms, involves the use of digital platforms for the provision of ‘offline’ services (e.g. Uber for transportation, and AirBnB for accommodation). With advancements in the areas of the Internet of Things and artificial intelligence, the integration of these new technologies into existing products, services, and business processes is also increasingly seen as a matter of convergence.
While this digital convergence is going ahead at a rapid pace, more and more attention is paid to the related economic and legal implications.
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. While new business models are emerging, existing ones see themselves threatened. For example, traditional telecom operators have been complaining about the fact that OTT services threaten their businesses; mobile telephony service providers, in particular, have seen drops in the usage of classical voice services, as customers are now more inclined to use VoIP services.
Faced with such challenges, companies take different approaches. Some insist that the competition brought by OTT services is unfair, as OTT providers are in most cases not subject to the same complex regulatory provisions. Others have taken proactive measures, by, for example, changing their business models to introduce new services to compensate for those less used. Another frequent strategy consists in merger and acquisition, when smaller, new-on-the-market OTT providers merge with or ar acquired by larger companies. In a more recent approach, OTT and telecom providers have started to conclude partnerships aimed to bring advantages to both sides: for telecom providers, partnerships with OTT providers bring them a competitive advantage, as well as added value for end-users; OTT providers, on the other hand, would have their services easier to find and access, thanks for partnerships with carriers. These models, however, raise concerns related to their compliance with the network neutrality principles, in cases when, for example, carriers choose to offer their clients unlimited and/or free access only to some OTT services.
Convergence has in many cases 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. At the EU level, for example, the Court of Justice of the European Union was asked to determine whether Uber could be considered a transport service provider, or a digital platform facilitating the provision of information society services. Courts were also asked whether Uber drivers are independent contractors or Uber employees.
Regulation in a converging environment
The legal system was the slowest to adjust to the changes caused by technological and economic convergence. Each segment – telecommunications, 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?
- Is there a need for new regulatory regimes that focus mainly on converged services? Or should they be subject to the same regulatory frameworks as, for example, traditional electronic communications services?
- When it comes to competition and consumer protection, what rules, if any, should be imposed on providers of converged services?
- Should the regulation of convergence be carried out by public authorities (states and international organisations) or through self-regulation?
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 Society, covering one aspect of convergence: the interplay between traditional and new digital media.
At national level, countries are addressing convergence in various ways. Some countries, such as several EU member states, India, and Kenya have chosen flexible approaches towards regulating convergence, by simply addressing the issue from the perspective of net neutrality: users should be allowed to choose any type of applications or services provided over IP networks. Other countries have created new legal and regulatory frameworks for converged services. In Korea, for example, IPTV services are subject to legal provisions in terms of licensing requirements and service obligations. The EU is also exploring the introduction of legal obligations for providers of OTT services and the conditions under which such providers should be subject to the same regulatory requirements as traditional telecom operators. In some countries, convergence is addressed through self-regulation. And there are yet other countries – such as Belize, the United Arab Emirates, and Morocco – which have chosen, at one point or another, to explicitly ban OTT services through regulation, or to ask that access to such services is blocked by telecom providers.