Old Regulatory Silos Do Not Work
Mobile video traffic is forecast to grow by around 50 percent annually through 2022 to account for nearly 75 percent of all mobile data traffic by that point.
Social networking is expected to grow by 39 percent annually over the next six years. However, its relative share of traffic will decline from 15 percent in 2016 to around 10 percent in 2022. Other application categories have annual growth rates ranging from 19 to 34 percent, so are shrinking as a proportion of overall traffic.
To be sure, not all the video is driven by subscription video. Embedded video in social media and web pages continues to grow. But subscription video will be the single biggest eventual driver of bandwidth consumption, as watching an hour of Netflix TV or movies might consume between 1 GB and 3 GB per hour.
The growing dominance of video traffic on internet access networks of all types raises some questions beyond the sheer amount of data to be carried.
Some three decades ago, it would have been common to hear observers talking about convergence, whereby all media types--from voice to messaging; print content to video and music--would be conveyed to consumers using a single, integrated access platform. We do not use the term much, anymore, because it simply is the way communications and content are used or consumed using internet mechanisms.
In 1983, Professor Ithiel de Sola Pool said:
“Separate nations will have separate networks, as they do now, but these will interconnect. Within nations, the satellite carriers, microwave carriers, and local carriers may be—and in the United States almost certainly will be—in the hands of separate organizations, but they will interconnect. So even the basic physical network will be a network of networks. And on top of the physical networks will be a pyramid of service networks. Through them will be published or delivered to the public a variety of things: movies, music, money, education, news, meetings, scientific data, manuscripts, petitions, and editorials.”
De Sola Pool correctly identified several fundamental features of the coming “next generation network:” that it would separate logical and physical networking, becoming a network of networks; and that all media types would be accessible from one physical platform. That might seem unremarkable. That is not the case.
Recall that the IBM PC had been introduced in 1981 and that the Ethernet networking standard was released in 1983. In 1984, home computer ownership might have been about 10 percent and about 1.4 percent used the internet--using dial-up modems. There was no World Wide Web. In other words, the shape of the world to come was anything but clear.
More important than the identification of the technology developments, de Sola Pool grasped the implications for regulation.
“In the coming era, the industries of print and the industries of telecommunications will no longer be kept apart by a fundamental difference in their technologies.”
Keep in mind the traditional regulation of various media types. Print content is essentially unregulated. Cable TV is lightly regulated. Broadcast TV and radio are more regulated. Voice and messaging are heavily regulated using a utility model.
All that becomes problematic in an era where all those media types can be--and are--internet or IP apps, and when apps mix and mingle all those media types, and when any type of company can compete in another segment’s business. In that scenario, old regulatory frameworks simply do not work very effectively. Some contestants face constraints their competitors do not.
Telcos have mandatory wholesale obligations and sometimes price controls; cable TV companies do not. Some app providers have universal service obligations; others do not. Some app and access suppliers are constrained where it comes to retail pricing and packaging (zero rating), while others are not.
Some apps and services are covered by content rules, others are not.
The point is that the coming shift to on-demand content delivery is going to stress regulatory models and notions of fairness. Traditionally, “media” firms are free of content and other rules related to their business models. Cable TV firms essentially are free to set their own prices and packaging policies. Some telcos remain highly or substantially regulated in that regard.
But nearly all larger contestants in internet content markets now are “media” companies to some significant extent, and moving more in that direction.
That is going to keep exposing irrationalities in the legacy regulatory structure. The internet is used by “everything.” But not everything using the internet and IP actually has been historically regulated (or not regulated) as a “data” app.
There are multiple frameworks to resolve.