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Convergence and the common man
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The information era has the potential to influence every aspect of our lives at the individual and societal levels. It permeates everything from the way we learn to the way we earn. It redefines the manner in which the common man evaluates the delivery of public services and also his role in a democratic society. A `global village' is fast emerging to the domain of fact from that of fiction.
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CONVERGENCE, IN the most common usage refers to the fusion of formerly distinct technologies, industries or activities. Telecommunications, broadcasting and information technology sectors are the focal concerns in this context today.
Convergence implies a situation where both traditional and new communications services (be it voice, data, sound or pictures) could be transmitted over many different networks. Conversely, convergence is also the ability of different network platforms to carry essentially similar kinds of services. From the point of view of consumer devices, convergence represents the coming together of the plain old telephone (POT), the idiot box (TV), and the personal computer (PC).
Although network convergence is more visible than convergence of consumer devices, it is all too obvious that previously independent groups of services and customer premise devices are increasingly merging into one another, substantially barring the distinctions between them.
It is a common misconception that convergence is purely a technological entity. The fact is that although technology is the driving force for convergence, the phenomenon itself is essentially about services, about new ways of doing business and of interaction with society.
Three dimensions
Convergence manifests itself in three distinct realms, each being partially a cause and consequence of the other.
1. Technology convergence: This pertains to the evolution of telecom, IT, and computing technologies which facilitate their overlap. Digital source encoding forms the core of technological convergence. Digital technology in telecom and computing has made content "scalable". Content could thus be used in different environments and delivered over different network structures. High-speed networks based on optical fibre transmission technologies such as broadband ISDN, xDSL and ATM are enabling both existing and new infrastructure to support innovative services.
The Internet has come a long way from its humble beginning as a purely academic and inter-governmental network platform. It has established itself as a network of networks and a leading example of platform independence. Its reach spreads across households to business establishments, structures of governance in metros to village panchayats, stock markets to primary schools.
The Internet, which is essentially user driven, where the user contributes a substantial part of the content, may provide an inkling to the future trends of convergence.
2. Company convergence: The policies and strategies of business are being restructured and redirected in tandem with technological convergence. Alliances, mergers and joint ventures facilitating sharing of know-how and "peering" are the order of the day. Business convergence is taking place at different levels in the value chain continuum ranging from content creation, content packaging, service provision and final delivery to consumers.
There is a horizontal integration between companies operating in the same part of the value chain. An example in the Indian telecom sector is the alliance between Birla, AT&T and Tata (BATATA). There would soon be vertical integration among companies operating in different parts of the value chain.
3. Service convergence: In the era of information explosion, the rise of consumerism has necessitated an anticipation of the customer demands. This has led to convergence of services.
In the more advanced countries, broadcasters are offering programme bouquets and thematic channels which give greater choice to customers. Pay-per-view on individual subscription basis is replacing schedule based broadcasting. They are also providing data services and are exploiting the prospect of digital transmission of both radio and television with the added feature of interactivity.
Traditional telecom operators are beginning to offer audio-visual programming over their network. They are themselves providing Internet access apart from offering their backbone infrastructure to other players for various services.
The "cable guys", in addition to television programming distribution, are rolling out a variety of telecom services including voice telephony. High-speed Internet access is also being made available by deploying cable modems.
In India, liberalisation of the telecom sector has brought in a range of value added services including mobile communications. The UMTS and 3 G systems are all set to make voice, video, data and sound available through wireless communications and wireless Internet access.
The inevitable fusion has begun and is moving at a rate that is perplexing our policy-makers as it did those in the West half a decade ago. Nevertheless, India must view these developments in the right perspective and embrace these changes. There is a need to create an environment that supports convergence and canalise it to benefit the common man and the country at large.
The formation of the Information, Communication and Entertainment (ICE) Ministry which is on the cards is perhaps a step in the right direction. What's needed is will and vision on the part of our political and executive machinery.
The information era has the potential to influence every aspect of our lives at the individual and societal levels. It permeates everything from the way we learn to the way we earn. It redefines the manner in which the common man evaluates the delivery of public services and also his role in a democratic society. A "global village" is fast emerging to the domain of fact from that of fiction.
New converging services and innovations in existing ones would lead to a paradigm shift within the information market that may have far-reaching consequences on different sectors. The Indian economy would be provided with an opportunity to integrate with the world economy and thus contend globalisation in its own terms. There is immense potential for a job creation and job enrichment in the information age. At the broader social level, the traditional provider-consumer relationship and social interaction could be radically overhauled.
Convergence has a fission effect. It will result in a demand for specialists and content creators. Individual creativity and entrepreneurship has a very important role to play in filling the gaps of the value chain. Education and training will acquire immense importance in meeting the demands of a converging market. New services are not just supply driven but are compelled to have new patterns of consumption in view.
An international angle was added to convergence for the first time when in 1995, G-7 countries met in Brussels to devise a global strategy for developing towards the information society. With its rich cultural diversity, native intelligence and valuable human resource, India can ill afford to let the opportunities of the "third wave civilisation" just pass by.
Going by international standards, India is making a belated entry into the converging cyber world. It could however leverage this to its advantage by exploiting the potential of leap-frogging in selection of appropriate technologies and business models.
To do this, it is imperative to take stock of the actual and potential barriers to convergence.
Barriers
1. Access to users: At present, the economies of the local loop, that is, the route available to reach customers are limited. Telecom and cable companies are predominant in the area of connectivity. If vertical integration between dominant companies leads to a control of bottleneck facilities, it could limit competition and service variety. This would in turn scuttle the potential for employment generation.
2. High prices of telecom services: In the West, competition has led to a flat rate tariff structure offering lower call charges. Reduction in charges of leased network capacity has resulted in lower cost for providing access and consequently lower prices for the customer. In India, the infrastructure and delivery of telecom services continue to be high, thereby affecting demand and usage. Policy restrictions on use of infrastructure could push up unit cost and hence tariffs as also discourage delivery of innovative services.
3. Content availability: Bottlenecks could show shift from delivery to content. Policy makers must be prepared to face the shift in consumption patterns towards "premium content."
4. IPR protection and public confidence: The lack of sufficient IPR protection will discourage content providers to invest in innovative services and their delivery. Data protection and privacy in legal treatment of electronic transactions will be crucial in generating public confidence about using new services.
5. Interoperability and interconnection of convergent networks: The lack of standards in this area or the proprietary standards controlled by a few dominant players would restrict competition and investment.
6. Access to networks and allotment of radio spectrum: Access to networks is a matter of both government's policy and commercial negotiations between operators. Competition rules play an important role here. The amount of radio spectrum available and the manner of its allocation will also determine a dynamic convergent environment.
The issues mentioned above bring into focus the need for regulation, its ambit and its nature.
Regulatory authority
Regulatory uncertainty is the most important factor that could stifle convergence before its benefits could be felt by the economy and society at large. Consistency in regulation is truly a challenge. For instance, delivery of different services over a single network does not make all services the same. On the other hand, regulating different services similarly may result in discriminatory treatment which may hold back competition, investment and innovation. The question of restrictions or otherwise on market entry and licensing would ultimately affect the consumer.
The impending Communications Convergence Act would make India the second country in the world to have an Act regulating the convergence of different media technologies and business. The Convergence Bill 2001 (which is at present being examined by the parliamentary standing committee on IT and communications) seeks to establish a single "super" regulator — the Communications Commission of India (CCI). This autonomous entity would subsume the existing Telecom Regulatory Authority of India (TRAI) and that Telecom Disputes Settlement Appellate Tribunal (TDSAT).
The CCI aims to establish a "self-regulating" convergence sector. It has an unenviable task of balancing consumer interests with inexorable technological developments and fluid market conditions.
The Bill has structured activities in the convergence sectors into different spheres, each interdependent on the other. They are: (1) network services, (2) network applications services, (3) content applications services, (4) value added network application services and (5) network infrastructure facilities.
The Convergence Bill lays down the objectives, duties and responsibilities of the CCI (Section 19, sub clause 1-11). Its objectives include, among others, development of the communication sector in a competitive, equitable and non-discriminatory environment. It aims at making services available at affordable cost to all including those in remote, hilly and tribal areas and ensure increasing access to information for greater empowerment of citizens.
In the information age, any regulation must consider not only individual customers but also customers who are the end-users. Higher Internet and access cost of operators would be passed on to the customers who would be paying more for less variety of services and lower quality.
All the regulatory issues either directly or indirectly impinge upon the common man. Some of these issues are market entry and licensing, access to networks, interconnect charges, access to frequency spectrum, quality standards and pricing. The guiding principles of the CCI do focus upon consumer interests. However, what is conspicuous by its absence is a mechanism to ensure it.
Licensing in the five categories of services must be flexible and overcome the propensity to revert back to the licence raj. The complex categorisation of services could add to the already existing difficulties faced by companies, especially the upstarts. An ISP, for instance, will now have to obtain a licence each for fax on Internet, setting up a portal or providing UMS (unified messaging service). The problems would be compounded with a large number of permutations and combinations that are possible within the categories. An entrepreneur would definitely be discouraged to offer new and cost-effective services considering the resources consumed in obtaining a plethora of licences.
Regulation of content could become another bone of contention with entrepreneurs who would want it to be out of regulatory controls.
The Bill only outlines the "ideal" information society. It neither identifies the barriers to convergence nor envisages methods to overcome them. Privacy issues, reliability of content, protection of minors, free speech versus libel and consumer representation would be of concern to the consumer apart from variety, quality and affordability of services.
At another level, the debate is on about the dangers of a single super regulator with both normative (fixing norms and standards) and adjudicatory powers. Some say that this goes against the basic principle jurisprudence. The alternative would be an independent regulator for each of the three converging sectors. Yet, multiple regulators could themselves become the greatest barrier to convergence.
There is also concern in some quarters of the industry about the government having the last word about the CCI. Section 83 of the Convergence Bill invests the Central Government with powers to make rules on almost all matters pertaining to the CCI.
As far as the common man is concerned, it doesn't matter if the government or the CCI takes care of his interests, as long as they are in fact taken care of. Meanwhile, he can only wait, watch and hope, as he so often does about most matters that concern him and his beloved country.
N. KALYAN SAGAR
Dy. General Manager (Finance), Chennai Telephones
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