What is the objective of this paper?
The aim of this paper is to spark public debate on the implications of convergence in the telecommunications, information technology, media and entertainment (TIME) sectors, and the Government’s proposed response.
Convergence is a term used to describe the common delivery of previously discrete service functions such as broadcasting and telecommunications over shared digital infrastructure, and the consequent reduction of the boundaries between previously separate industries.
Continuous improvement in digitisation, data processing and compression technology, combined with the proliferation of broadband internet, mean it is now possible to offer traditional communications and broadcasting services in new ways, for example radio and television delivered over the internet.
In reality convergence means different things to businesses, consumers and policy-makers. For communications businesses, convergence affects investment patterns and alters competition and market structures. The fact that different products and services are no longer bound to specific networks increases the accessibility of those products and services. However, it also increases the substitutability of products that were previously part of distinct industries (for example, the use of third-party software to deliver video calls over smart televisions). This exposes businesses to greater competitive pressure and adds new complexity to the decisions companies make on technology investments or in the pursuit of product innovation and market diversification.
The relationship between content creation and content distribution, which was previously close, is all but gone. Distribution is no longer a significant barrier for content creators. At the same time, consumers have more options for accessing desired content, thereby reducing the influence of distributors. The evolution of this relationship means that the business models of both content creators and content distributors are changing at pace.
For consumers, convergence means greater choice and lower cost. No longer bound to an individual provider for a specific service, today’s consumers can select the devices that best suit their lifestyles and connect them to one or more network providers to access the services and content of their choice. New Zealand consumers can increasingly choose between either subscribing to a triple or quadruple play package (voice, video, data and mobile) from a single provider or mixing and matching service offerings from multiple different sources. Consumers are also increasingly at the centre of content service delivery, controlling not only what they view, but also when, where and how they view it.
For policy-makers and regulators, the emergence of new, converged services challenges existing policy and regulatory regimes. Rapid changes in technology create the risk that New Zealand’s regulatory regimes may fall out of tune with changing business models and consumer expectations. It is important for regulators and policy-makers to enact legislation and policies that recognise ongoing convergence in the TIME sectors.
Convergence is also part of a larger wave of disruptive technological change that is significantly altering the way we live and work. Other parts of this wave include:
- Hyper-connectivity: Technology is changing the way we use data, allowing each of us to generate and access more data, in more ways, from more places. However, without ongoing investment, the proliferation of connected devices and increased volume of data traffic could see our communications networks become congested. Network operators will face heightened expectations to continue to ensure their networks are resilient, secure and provisioned for bandwidth capacity.
- Innovation: Uber, the world’s largest taxi company, owns no vehicles. TradeMe, New Zealand’s largest retailer, holds no inventory. Airbnb, the world’s largest provider of rental accommodation, owns no real estate. The internet is upending industries that had become protected by technological, scale or regulatory barriers. Its ability to connect suppliers of goods and services directly with consumers is providing new ways for companies and consumers to pool information and resources in a new peer-to-peer or sharing economy.
- Globalisation: International supply chains and the global reach of the internet are challenging regulation designed for local and national markets, ranging from copyright law and media content classification to tax policy. New social, economic and legal conventions will be needed to address these changes.
- Creativity: While online distribution presents some threats to the businesses models of traditional content publishers, it offers great opportunities for content creators. Social media platforms like Facebook and Twitter increase the speed at which ideas flow around the world. This has levelled the playing field between amateur and professional producers in their ability to influence public debate and popular culture, and is fostering a new generation of writers, film-makers, performers, and app developers.
- Security: Our reliance on networked technology provides opportunities for those with criminal or malicious intentions. As more public services are delivered online, and the digital interconnection of people – and things – increases, it raises new questions about how we can collectively better manage the security and privacy of our online communications.
Convergence enables, and overlaps with, many of the changes in these areas, increasing the complexity of considering any one issue in isolation.
The Government’s response
The disruptive influence of digital technology is opening up exciting possibilities in almost every part of the economy. The Government’s long-term vision for the TIME sectors is:
- High-quality, affordable communications services delivered to all New Zealanders, enabling our economy to grow, innovate and compete in a dynamic global environment.
- New Zealanders can access relevant, quality content, legally, safely, and cost-effectively.
To achieve this vision, we must make sure that government is not standing in the way. We need to make sure our regulations and policies are up to date and flexible. We need a comprehensive stock-take across government to ensure we remove any unnecessary roadblocks to innovation in the market. Where there is still a need for regulation, it should be the minimum required to achieve a clear, public purpose.
How do we get there?
The Government has initiated a cross-government work programme which considers the impact of convergence and its implications for a range of associated issues.
The work programme comprises:
- A review of the regulatory framework for content classification
- A review of the regulatory framework for telecommunications and radio spectrum
- Developing the infrastructure needed to support convergence
- A refresh of the Cyber Security Strategy and Action Plan
- A review of the applicability of GST to cross border services and intangibles
- A study of the creative sector use of the copyright and designs regimes
- The Data Futures Partnership
Additional work may be added to the programme over time.
What happens next?
This paper is intended as a road map to inform public discussion and participation in these work programmes. While these work programmes focus on specific issues, this paper invites submissions on any matters not covered.
To help focus feedback we have developed the following high level questions. These are included here to prompt your response as you read the paper as a whole:
- Do you agree with the way this paper defines convergence? Why/why not?
- Do New Zealand’s current regulations and policies need to change to account for convergence? Why/why not?
- Do you agree with the proposed convergence work programme?
- Should the Government be doing anything else to address convergence?
- What barriers are you aware of that prevent you from benefiting from, or responding to, convergence?
Details of the submission process are set out on the Submissions process page.