The Twilight of the Broadcasting Regulators: Causes and Consequences
Lecture given at University of East London On Monday 14th March 2005, London, UK for Innovation and Regulation of Information and Communication Technologies Module
Date: 14/03/2005
Venue: University of East London, London, UK
Article
There may be any number of historical reasons why politicians have regulated broadcasting but, at base, the main reason is that they like it.
In the first instance, governments want to regulate new phenomena out of a sense of caution, or fear, whichever you prefer. In this specific instance, broadcasting was seen to be as destabilising as the popular press and, handily, there was the cover of spectrum scarcity and international spectrum boundaries.
In almost every respect the UK got a better deal than other countries. The general strike was a bad start for the BBC but if it had happened ten years later or if broadcasting had started ten years earlier, things would have been very different; in 1926 the rules were still being worked out. What characterised the UK regulatory framework was its genius for the arms length solution:
- The license and the appointed Governors at the BBC;
- The spectrum/content deal for ITV; and
- The commercial, not-for-profit Channel Four
By contrast, most Continental European countries had the dreariest state broadcasting and/or US-style commercial channels. The USA, where the market is supposed to be king, developed a highly idiosyncratic regulation by politically appointed civil servants. With the notable exception of competitive network news, the menu was grim. For all their great programmes, the US networks have chronically performed in terms of plurality and creativity.
In the USA, as opposed to the UK, the regulatory framework was and still is negative rather than positive. It is almost entirely concerned with what you cannot do and that is almost entirely a matter of sexually related content. When I went to the FCC a month after the infamous Janet Jackson affair, I was anxiously asked by officials whether we in Britain were concerned with sex and violence; I said that we were but whereas we thought sex in general was a good thing and violence in general was a bad thing, I gathered that US regulators thought the exact opposite! Nonetheless, any serious examination of conflicts within the right wing camp between free market operations defended by free speech and the exercise of moral control will demonstrate that the market always wins. The victim in the Janet Jackson affair was one of the three major, allegedly 'liberal' networks and the regulatory crack down will make no difference to subscriber purchased pornography.
So one thing we may be able to say with reasonable assurance is that if broadcasting regulation is about to die in the UK where it has been both successful and popular, it does not stand much of a chance anywhere else unless it is imposed in an irrational way or undemocratically.
I want briefly to look at three phenomena, the first two related, the third a little more radical, associated with the concept of broadcasting regulation; these are:
- Leverage
- Convergence
- Essence
- Leverage. By leverage I mean the use of one kind of power to moderate the power of another party; I do not mean it either in the sense in which it is used in physics or the way in which it was used in the .com boom to mean achieving an output from another party significantly disproportionate to one's own input. The history of UK broadcasting regulation can be summarised as follows; I will use a scale of 1-5 with five representing the highest degree of regulation:
- Monopoly BBC - 5, occasionally 4
- Entrant ITV - 3, falling to 2
- Channel 4 public broadcasting quality/quantity - 4
- Sky platform (for fundamentally party political reasons) - 1
- 5, last entrant - 2.
Even if spectrum scarcity did not justify a monopoly BBC, its mere existence made heavy regulation possible, assisted, of course, by the Second World War. The BBC's regulatory pressure has, of course, varied from time to time but not noticeably relating to the Political party in Government but more specifically to the cycle of its Charter Renewal. The BBC is much more respectful of its public service broadcasting purposes when seeking Charter Renewal; but it is very important to bear in mind that much of its PSB obligation is a matter of self policing; this is particularly true of radio where it has no formal PSB obligations. It is perhaps ironic then, that in an era of declining broadcasting regulation the BBC is about to go the other way, with much tighter controls between now and 2010 than it has experienced during the last decade. I want to suggest that this is a 'political' blip.
You can actually see the ITV regulatory framework loosening before your very eyes. The advantage of concessional spectrum allocation is declining as is the projected audience and, consequently, the projected fall in revenue from spot advertising. Don't be confused by the apparently spectacular profits increase declared by ITV last week; the real figure to look at is audience share and, of the five major channels, its audience decline was only exceeded by BBC-2. ITV will keep an obligation to broadcast international, national and regional news as far ahead as we can see; but that is essentially because, like the American networks, it sees commercial advantage in this. Furthermore, there seems little sense in imposing public service obligations on a reluctant supplier when the fragmenting market for television and the convergence of its services with the internet offers wider options, such as Ofcom's proposal for a Public Service Publisher (PSP) for producing a plurality of public service broadcasting and information.
Much the same is true for Five; it will continue to make programmes which can be classified as PSB as long as these give it adequate commercial returns. For both ITV and Five a nominal adherence to PSB may provide it with some market advantage for its other programmes that an outright commercial channel would not enjoy, particularly in EPG rating.
This leaves Channel 4 and the BBC. Well, they will be subjected to regulatory control in direct proportion to their non commercial revenue streams, saving the comment I have just made about credibility. In terms of the market, Channel 4 and the BBC are artificial institutions but, then, so is much of what sustains us; the essence of democracy is to finance social engineering that does not damage minorities. The argument for the settlement we have over the BBC and Channel 4 is not rational because PSB is one of our national, admirable, idiosyncrasies, similar to the French love of film production and the Central European subsidy of opera.
In summary, then, the future of public service broadcasting will increasingly depend upon dedicated revenue streams and not upon regulation and a panoply of implicit deals on such matters as spectrum pricing.
- Convergence. Let us be clear from the outset that the convergence of the user interface experience, though important, is insignificant when set against the convergence of digital data creation. It doesn't matter whether your favourite interface started out as a PC, a television or a telephone and somehow became something else; what matters is that the production of digital data will converge so that there will not be a major conglomerate with an internet division and a broadcasting division, a set of publishing operations and an advertising and PR Department; the production technologies will converge as will the actual functions.
The first big question this raises is whether broadcasting over the internet will be legally classified as broadcasting or publishing. The advocate of quality and standards in me wants it to be broadcasting but the libertarian in me wants it to be publishing and that is, I think, where it will end up. And it will end up this way in spite of a rather strange paradox; the commercially unfettered publishing industry is far more conservative about digital convergence than the regulated broadcasters. There is no evidence that independent publishing will sustain long term damage from digital data convergence and every reason to believe that privileged digital data publishers like the BBC and Channel 4 will be seriously damaged by a completely open market; and yet the BBC and Channel 4 are much more engaged in this discussion than publishers who tend to be totally defensive.
Whatever the rough patches on the way, however, the conclusion is already clear. Even if certain phenomena are popularly considered as broadcasting because they command massive audiences - e.g., sports events, public occasions, global crises, soap operas - broadcasting transferred to IP will be publishing. You only have to look at laws on publishing to see how this will radically reduce public control over organisations which are currently classified as broadcasters. There will be a great deal of agonising over pornography and gambling and the protection of minors but the outcome of that argument rests on secure controls rather than on legal content constraints.
Digital data production convergence, then, along with developments in carrier and reception technologies, will accelerate the decline of regulation already started through audience fragmentation and its effect on advertising revenue.
- Essence. The third argument I want to make about de-regulation is more principled - you may say more abstruse - but in an academic context it is important to understand the fundamentals of the phenomena you are considering.
Let us start by asking ourselves about the content of broadcasting.
Publishing - defined here as the deliberative communication of individual and collective experience through statement and structure - is largely derivative. You or I gather life experiences, we interpret them symbiotically - i.e. in the light of each other - and we make patterns and structures with them, identifying overlaps, chains, circles and other kinds of attitudinal geometry. We want to communicate ideas about some of our experiences so we select a certain number and conflate them into a personalised proposition, more or less unique which we then liberate, often through the mediation of others: a composer needs a conductor and musicians; a film script writer needs a director, producer, actors etc; and even a novelist needs an editor and designer.
In this cascading derivation from generation to generation there occasionally arises such a conflation of elements that the resulting statement is as the butterfly to the chrysalis, still intellectually/genetically descended but hard to recognise physically. At some point a human being fuses ideas that have never been fused before or takes a common fusion and eliminates some of the traditional construction: the first case is Bach, the second Schoenberg; the first, Fra Angelico, the second Rothko, the first Shakespeare, the second Becket. Incidentally, it is no accident that in all three pairs of examples the simplifiers succeed the amplifiers; but that is a discussion for another day.
Now what has this to do with television? The answer is that in spite of superficial appearances to the contrary, television does very little that society does not already do, it simply transmits publishers who are, in turn, amplifiers and simplifiers. The exception to this general proposition is news casting and live sport. These two kinds of publishing release a constant stream of new material into the global data bank. Much of the news reports events that derive from previous events but its authenticity depends not upon publishing individual experience but, rather, weighing the significance of observed new experiences to a receiving collective, the audience. Whereas all the best artists deliberately rank audience second authenticity of personal or collective statement, the television news audience determines the way that statements will be given significance; all kinds of 'relevances' such as proximity, novelty, impact and explicability apply.
In sport, there are endless, unforecastable, variants in a rule based system which also makes it different; and the same is true to some extent of soap opera which works on a set of unforecastable variants within a rule based system.
So let me come to the point; most publishing, be it a novel, a play or a television programme looks like a linear phenomenon but it's actually an author specified database drawn from other databases which makes what we used to think of as broadcasting and novel writing look very much like what we rather primitively think of as web sites, primitive because the architectural metaphor is profoundly misleading.
Anyway, the key point here is that there is no essential justification for regulating what used to be called linear broadcasting if it's just about the same as other kinds of publishing.
I think there are two sets of special exemptions to the general rule that there is no intellectual case for considering heightened regulation for television publishing over, say, book publishing. I think there is a case to be made for:
- Publicly funded broadcasting/publishing
- News, Current affairs and Citizenship.
- Publicly funded broadcasting/publishing. The latest proposals for BBC Governance make it clear that if it is to live on public money its output must be judged by a public body against publicly stated criteria. This will only work as long as there is political will for public funding. By 2016 this hardly seems credible. If the BBC is forced down the elitist route, as seems likely, its elitist programming will not be leavened by soap opera and big ticket popular items. The same problem will arise with Channel 4. Ultimately the BBC and Channel 4 will have to fall into the emerging broadcasting/publishing pattern of subscription revenue. There is nowhere else to go, particularly as those who view the BBC and Channel 4 will be the richer segments of the population best equipped to pay as they go, cross subsidised by the poorer segments of the population least well equipped to pay as they go. Indeed, one of the fatal weaknesses in the defence of public service broadcasting in this country is its self interested class base; the vast majority of lobbyists have wanted public broadcasting to be broadsheet television; they have shown scant interest in the role of public service broadcasting as a means of helping or articulating the needs of the excluded, under privileged and poor. The ultimate effect of this snobbery will be that public support for publicly funded broadcasting will plummet in a fragmenting market; Hampstead will get no help from Huddersfield; and quite right, too!
- News, Current Affairs and Citizenship. The other special case might be news, current affairs and citizenship but I doubt this will escape the subscription model. Public service broadcast news has high esteem levels, much higher than newspapers, but in a converged digital data environment it is difficult to see room for a publicly funded news service in a world of massive data aggregators and highly sophisticated and personalised search algorithm systems. The one key factor running contrary to this general trend is not ideological nor commercial; it is the user problem with the tyranny of choice which favours intermediary enterprise. But that will still involve subscription.
So where is this likely to take us? Rather than trying to look a decade into the future it might be more helpful, and will certainly be more prudent, to set out an agenda for the twilight of the regulators.
I think the first broad problem for us all which we need to put right at the top of our agenda is the shocking epiphany for politicians which I think will happen around 2008 when some traditional broadcasters propose to turn in their analogue spectrum licenses as digital switch-over picks up and the cost of owning (as opposed to using) broad band falls through the floor. Not long afterwards some broadcasters will even turn in some of their digital television licenses. Suddenly the era of commercial broadcasting regulation will be close to its end. As channels switch to TV over IP, there will be all sorts of heart searching about the global tidal wave of pornography, internet gambling and the digital equivalent of junk food. Politicians, just because they are politicians, will take one hard, long look at internet regulation. There will be one global push and it will fail, not for lack of political will nor even of enforcement mechanisms but because of the inability to implement simultaneous global enforcement mechanisms; the bits will be moving at different speeds in different places.
The key here is not to wait until the inundation of crocodile tears. We need to know what aspects of publishing can and cannot be controlled from a technical point of view; and then we need to understand the intellectual arguments on both sides. Only then, with a dual intellectual and technological appreciation of where we are will we be able to do our best for citizens.
It's easy to laugh at politicians because they act in certain, largely predictable, ways; but they have a legitimate concern which is this. Fundamentally, the death of benign regulation will do most damage to the morally and economically weak. The kind of freedom we are likely to encounter in 'always on' digital data pumping services will test human self control to the ultimate. You only have to conduct a poll of those with the decency to turn off their mobile phones when asked, the self control to keep them turned off in public places like trains. There will be a little more of the faddish regret about information overload but personalisation will massively reduce this, particularly when systems learn to react to individual consumer behaviour. The gap between the self controlled, self regulators and the rest will be as wide as the gap between mill owners and disposable labour in the first third of the 19th century; only the percentages will be different. I estimate that it will be something like 60:40, roughly following the current ratio of PC private constructive use. 60% of the population will control their data, 40% of the population will be controlled by it.
So the second item on the Agenda is altering the National Curriculum radically to prevent that 40% becoming helplessly trapped in a media maelstrom. Tony Blair has always been right about this as an end but woefully wrong about the means.
So what can we put on the Agenda for regulators, over and above getting ready for the political storm over convergence and the political need for a radical change in the National Curriculum.
I want to suggest five items:
- Taxation
- Copyright
- Labelling/Rating
- Navigation
- Access incentives.
- Taxation. In a knowledge economy it is unthinkable that knowledge transactions will not be taxed. My colleague Adam Singer's nostrum on this subject is that you can only regulate what you can tax; I would reverse this by saying you can only tax what you can regulate. I take as my model the passage of goods through the ports; until you have a supplier bar coding system and a package handling system that picks up imported goods which should attract a given degree of tax, you can't tax. So it is with digital data; until you can find a way of tagging the data and tracking its progress in the system, a form of angiography, you will not be able to tax it; but taxation models are essential; and yet, at that point, taxation will have to be such that it does not encourage corporate flight to low or no tax regimes. So ultimately this means personal rather than corporate tax, probably collected by data suppliers in the way that airlines collect exit tax.
- Copyright. In 1990 when I visited the WELL Network in San Francisco I had a fascinating argument with Howard Rheingold about how the Internet would turn out. He thought it was an engine for anarchy, I thought it was going to be controlled by global corporates. So far neither of us have been right but the debate we had has been best exemplified by the tug of war over copyright. At the moment we are profoundly ignorant; we do not know what information people are prepared to pay for and why. As television subscription revenue rises, record company revenue falls. We apparently pay for the ephemeral but want the timeless to be free. Intuitively one would think the opposite.
Whatever your conclusion, intellectual property rights to ensure revenue and origination integrity are essential for a flourishing information economy. As with taxation, I suspect we are moving towards a wholesale model where aggregators and suppliers pay creators and pass the charge to us. We surely can no longer apply the absurdly antiquated rules which currently apply whereby a slim volume of poetry which makes no profit for the author is treated in an identical way to the airport block buster.
I should, incidentally, just say one word in this context about creativity; we need to create incentives through education and our fiscal arrangements to guarantee a high level of creativity in our society because that is where our economic future lies as services follow manufacturing offshore.
- Labelling/rating. If god exists she is a taxonomist. Man's power on earth has always been deeply bound up, represented in the Book of Genesis, with the power to name. I believe that the most important legacy which Ofcom and other broadcasting regulators can hand on to the next generation is a robust system of content labelling and rating which is adopted as a matter of course by content creators and aggregators.
Labelling does not have to be monotypical; in a hypertext world you can label a piece of content in a variety of ways so that it turns up on different lists.
Rating is slightly more complex because it allocates a social value to content such as "Suitable" or "Dangerous" but what has been accomplished narrowly in the cinema could be applied much more broadly.
Unfortunately, broadcasters are proving to be extremely short sighted over labelling and rating content; so short sighted that they are damaging their own economic prospects. There are three extremely powerful reasons why labelling and rating are good for content providers and aggregators:
- Sales - you can't buy what you can't find
- Brand - you won't buy what you can't trust
- Archiving - you can't re-package what you can't find.
Curiously, the very broadcasters who claim that they can't label contemporary product are feverishly labelling their archives. the cost is minimal, compared with the advantages I have listed, because all the key word searching can be based on captioning text for deaf people.
- Navigation. Our current paradigm for searching television is the EPG and in the short term EPG power counts. Down the road we may well want, as subscribers, very special kinds of EPG's or, in correct parlance, highly bespoke catalogues of non linear entertainment. Rather than messing about with endless variants on pin identification (erroneously termed 'pin protection'), we will want our data centre to carry a fixed set of catalogues and news services which share our values. We will want to find our way round what we have set before us and become comfortable with it. We can always voyage to more exotic lands if we choose but I think that a new kind of 'virtual' walled garden, or rather a series of enclosures we may call a personal data park, will become the norm. This will eliminate the need for massive navigation systems for everyday use but they will still be used for major searches such as those we undertake in Google.
- Access Incentives. As public sector support for data production and aggregation declines it should be transferred to access incentives, particularly for that 40% I mentioned earlier. Instead of support for public broadcasting we need support for access. This is obvious in the context of accessing educational data but it should extend to subsidised access to not-for-profit enterprises supplying news, current affairs and citizenship material.
For the past 70 years of broadcasting regulators have helped the morally and economically strong and provided some residual protection for the economically and morally weak but soon we will be back to where we were before the First World War. The only difference will be that the means of instant self gratification, even for the poorest people in our land, will be way beyond the wildest dreams of the Edwardian proletariat.