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E Is for Everything? e is for everything? Public policy and converging digital communications December 2001 Report 170 POST Report 170 December 2001 E is for everything? Summary Digital communications in the UK have changed greatly over the last five years. Over 70% of adults now own a mobile phone, more than one in three households have home internet access and a similar proportion have digital television. These technologies are starting to 'converge', so people can use similar services on a variety of devices - from sending email via a digital TV to viewing film clips on a PC or accessing internet content with a mobile phone. These developments have wide-ranging implications for communications regulation and wider policy. In spring 2002, the Government plans to publish a draft Communications Bill. This will create a single communications regulator, OFCOM, merging current broadcasting and telecommunications regulators. Key issues for the Government and the new regulator will include: • the extent to which content supplied by different routes is regulated. At present, TV broadcast content is regulated while internet content is effectively unregulated. As these distinctions become blurred, new regulatory issues will be raised. • encouraging UK take-up of high speed 'broadband' internet access, which is lower than in any other G7 country. • the deployment of the next generation of mobile phones, for which operators paid £22bn in licence fees. • switching off the analogue TV signal. The Government has set conditions for coverage and take-up of digital TV services which must be met before analogue TV can be turned off. It has stated that it may be possible to meet these conditions and switch to digital TV between 2006-2010, but a range of difficulties must be addressed before this will be feasible. • the 'digital divide', where some members of society are disadvantaged because they lack the opportunity, means, skills or inclination to use new technologies. • the future of public service broadcasting, in a world where a large proportion of viewers have hundreds of TV and radio channels to choose from, and many people use new media for information and entertainment. In particular, it is unclear whether the Communications Bill will be flexible enough to cope with the rapidly developing communications environment for the next ten years, while still setting out enough detail for full Parliamentary scrutiny. A 4-page summary of this report is available from POST, or at www.parliament.uk/post/home.htm Contents 1Introduction 1 Convergence and its implications 1 Devices - Chapter 3 2 Delivery – Chapter 4 2 Content – Chapters 5 and 6 3 Access – Chapter 7 3 Predicting the future? – Chapter 8 3 2 Background 5 2.1 Current take-up of communications 5 Summary 5 Internet access 5 Digital TV 7 Mobile phones 9 2.2 Government policy 10 The Communications White Paper 10 Internet policy 11 EU policy 13 2.3 Broadcasting 14 2.4 Bandwidth 15 3 Devices 17 3.1 Computers and the internet 17 3.2 Digital TV 17 Set-top boxes 17 Integrated digital TV sets 18 Standards and interoperability 19 3.3 Digital radio 20 3.4 Telephones 21 Mobile phones 21 Mobile data services 21 PDAs 22 Satellite phones 23 3.5 Platform evolution 23 Converging PCs and TVs. 24 PDAs and mobile phones 24 4 Delivery 27 4.1 Terrestrial wired networks 27 Telephone lines 27 Cable 33 Optical fibre 34 4.2 Terrestrial wireless communications 34 Digital terrestrial television (DTT) 34 Mobile phone networks 36 Fixed wireless 42 4.3 Satellite services 43 5 Content background 45 5.1 Interactive applications 45 Interactive services on digital TV 45 Gambling 48 Gaming 49 Streaming video 49 Video-on-demand 49 Adult content 50 5.2 Commerce and business applications 50 Advertising 50 M-commerce 50 Business applications 51 5.3 Location specific services 52 5.4 Content creators 53 Internet content 53 Broadcast content 53 5.5 Delivering public services 54 Education 55 6 Public policy and digital content 57 6.1 The content market 57 Open access or 'walled garden'? 57 One-to-one, or one-to-many? 58 6.2 Regulating content 58 Internet content 59 Current broadcast content regulation 59 Newspaper content regulation 60 Regulatory options 60 Illegal content 61 Liability of service providers 62 Rating and filtering 62 Implications for broadcast content 63 Electronic Programme Guides (EPGs) 64 6.3 Intellectual property 64 7Access 67 7.1 Universal access 67 The digital divide 67 A geographic divide 68 Why worry? 68 Public policy 70 Assisting people with disabilities 73 7.2 Broadband access 73 The work of the Broadband Stakeholder Group 75 Public sector procurement 77 7.3 Switching off analogue TV 78 Encouraging take-up 79 Digital TV coverage 80 Government plans 81 8 Overarching policy issues 83 8.1 Scenarios 83 8.2 Competition and the future of the market 85 Vertical integration 85 Competition regulation 86 Marketing and revenue 90 8.3 The future of public service broadcasting 90 The public service broadcasters 92 Public service broadcasting online 94 Delivering public services 94 Regulating public service broadcasting 95 Restricted Services Licences (RSLs) 95 Public service radio 96 8.4 Privacy 96 Privacy from commerce 98 Privacy from the state 101 8.5 Security 104 Security Threats 104 Vulnerable services 106 9Overview 109 Annex A - Bandwidth 111 Bandwidth required by applications 111 Annex B – Additional devices for accessing digital content 113 Games machines 113 MP3 players 113 DVD players 114 Location sensors 114 New devices 115 Abbreviations 116 Acknowledgements 117 Members of the POST Board, December 2001 118 Boxes The Communications White Paper 10 Government publications on ICT policy 12 EU legislation 14 Connecting to the internet 16 What is digital TV? 18 Digital videos 19 Battery life 25 Accessing the internet 28 Access to the local loop 32 DTT coverage 35 Mobile data services leading to 3G 38 Planning 41 Interactive TV services 48 Peer to peer networking 52 Key e-government indicators 55 Can't or won't? 68 Geographical coverage 69 Universal Service Obligation 72 UK Government Broadband initiatives 75 Broadband Stakeholder Group recommendations 77 'A day in the life' - scenarios of convergence 84 Access to TV distribution networks 87 Recommendations from Better Regulation Task Force 89 Consultation on Media Ownership Rules 89 BBC digital plans 92 Authenticating people 97 Collecting information 99 Marketing by email 100 Microsoft passport 101 The RIP Act 102 RIP Act concerns 103 Hacking methods 105 Sharing bandwidth - 'contention' 112 Bluetooth 115 Figures Use of communications technologies in the UK 5 Internet access in EU households 6 International broadband access 7 UK Digital TV subscribers, latest figures end September 2001 8 Digital television household penetration, forecast for end 2001 8 Mobile phone penetration in EU countries, August 2001 9 DSL pricing in OECD countries, March 2001 31 Subscribers on each of the main UK mobile phone networks 36 Number of text messages sent 37 Broadband fixed wireless licences for auction 43 The broadband 'virtuous circle' 76 Bandwidth for different video applications 111 Bandwidth supplied by delivery technologies 112 Tables Internet access by business and residential users 28 International comparison of internet access charges 29 Oftel international comparison of ADSL and cable modem prices 31 UK cable subscribers, September 2001 34 International comparison of mobile phone costs 36 SME use of mobile data services 37 POST Report 170 December 2001 e is for everything? Introduction Page 1 1 Introduction The world of communications is changing rapidly. More than seven out of ten adults in the UK now have mobile phones, over a third of households have home internet access, and a similar proportion have digital television. Little of this was predicted ten years ago, and even two years ago the current explosion of text messaging was unforeseen. Setting policy for such a complex and evolving environment is beset with difficulty. However, some trends are apparent. In particular, communications media such as television, mobile phones and the internet are increasingly 'converging', which poses a range of policy issues. This report considers the background to such convergence, when and how it might take place, and analyses the policy implications. Convergence and its implications As faster internet connections become available to home users, it will increasingly become possible to view film clips and television highlights, listen to radio, and play games over the internet on a home computer. In parallel, internet content and interactive services are available through digital TV, and are becoming accessible through mobile phones, games machines or personal organisers. These trends are examples of 'convergence' - the ability of different electronic devices to carry similar services – so music could be played on a mobile phone, or web pages viewed on the TV. This does not imply that all communications will merge into a single medium or device. Rather, the different delivery mechanisms and content may be complementary, so customers have more choice over what services they receive and how and where they receive them. So, for example, a football fan could get scores sent to their mobile phone, use the world wide web to view team information and highlights clips, and watch the full match on digital TV. Some commentators argue that such convergence could lead to a revolution in entertainment, information and communications, posing a challenge to traditional models. Others anticipate evolution rather than revolution, but such change will undoubtedly have implications for businesses that use the technology and those that supply it. It could also provide an opportunity for delivery of Government services and education. Opinions differ over the extent to which convergence will occur, what form it will take and over the likely timescale. Nevertheless, convergence already raises a range of policy issues.
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