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29 April 2013
Convergence is a buzzword used by many, but not necessarily understood, even by some of those who use it. Essentially, it is the coming together of the media, IT and telecommunications sectors in terms of technology, products, services and markets.
We now have interactive television, we can connect to the internet on our mobile phones and almost every home computer allows access to the internet, as well as acting as a radio, television, DVD player and telephone.
Examples of the eagerness of the IT, media and telecoms sectors to seize opportunities in this converging world include the proposed merger of internet service provider AOL and traditional media company Time Warner. The Federal Trade Commission has already given conditional final approval to the proposed merger and the European Commission approved it last year. Vertical integration of this sort is becoming commonplace. Converging technologies and markets mean that companies will see the benefits of joining forces with those with an established presence in hitherto separate markets in order to improve the ways they target consumers and share technologies. In this new era, where all pieces of technology can do all things, content will be very important, as will the speed and user friendliness of the technology on offer. The benefits to consumers of convergence are plentiful. There should be a greater choice of products and services, faster and easier access and, in theory, lower prices as a result of increased competition. However, ensuring that there is adequate competition in the converging markets is likely to be an issue that continues to exercise the UK and EU competition authorities.
The Government's response to convergence is set out in the white paper "A New Future for Communications" presented to Parliament in December last year. At present, nine separate regulatory authorities govern the media, IT and telecoms sectors. This is a cumbersome structure that often leads to companies finding themselves answerable to the majority, if not all, of the authorities concerned. And despite the best efforts of the authorities to work together and to harmonise their approaches to relevant issues, there is always the danger of regulatory inconsistency.
The Government's main proposal is the creation of Ofcom (an office of communications). Ofcom is to be a single regulatory body which will take over the roles of the Radio Authority, the Independent Television Commission, the Broadcasting Standards Commission, the Office of Telecommunications and the Radiocommunications Agency. It will regulate and offer guidance on the range of issues that these agencies consider, including content and competition. Ofcom's primary remit would be to protect the interests of consumers and it would continue to play a role in pricing issues in much the same way as Oftel has done in the past and continues to do with its recent proposals for extending wholesale and retail pricing restrictions on BT.
Convergence is now occurring on every level. Methods of communication and traditional industry sectors are overlapping and communications businesses are seeking vertical as well as horizontal integration to pool their infrastructures and resources and to exploit technology and markets. So too, the role of their legal advisers is also changing. The media/communications lawyer is a new breed. In much the same way as the internet revolution spawned the e-commerce set, so convergence has brought mediacomms. While the need for specialist lawyers in each sector is likely to disappear, the ability to provide advice across the board on the myriad of regulations, procedures and issues that mediacomms clients now need to deal with is essential. The lawyers best placed to serve their clients will be those (whether individually or in a team) who can provide the wide knowledge and experience to be able to advise from all perspectives.
Sue Cozens is a media and communications partner at Charles Russell