Indra de Lanerolle at the National Broadband Strategy Forum
The second presentation from today’s National Broadband Strategy Forum painted an exciting picture for the future of content in a fully wired South Africa. Using the small platteland towns of Rosendal and Ficksburg as an analogy, media consultant Indra de Lanerolle pointed out that the founding fathers of Rosendal made the decision to do without a train station, while Ficksburg went the opposite way, and decided to allow the train to run through the town. As a result, Rosendal has remained small, isolated and remote, while Ficksburg has grown into a developed, thriving town. The phenomenon of preferential attachment – that connections will flow to entities that are already well linked, is the same, says de Lanerolle, for broadband users and small towns.
According to de Lanerolle, the arrival of broadband has several consequences for the creation, distribution and use of content, and he painted several possible scenarios for the content industry in South Africa.
The first was that broadband might mean the end of content as we know it. As mass media outlets battle with the Internet for advertising revenue; newspapers, television stations, record labels and the publishing industry have begun to lose out to the online world. He cited the case of ITV in the UK, who, until 2007 had been the largest recipient of advertising in the United Kingdom, although they had to spend 1.3 billion pounds on content per year to make themselves so. In 2007, however, Google UK, who spent nothing on creating content, beat them out of the advertising battle. South Africa hasn’t yet reached that point in the competition cycle, but as Ronnie Apteker, the founder of Internet Solutions, and now a well-known local film producer has pointed out, without mystery there are no [profit] margins.
Content is threatened by broadband because distribution networks and business models are threatened by broadband. In South Africa, media distribution methods have always been controlled by monopolies or oligopolies. There is one plant in South Africa that makes compact discs, and it’s owned by one of the record labels. Newspapers have to fit into the production schedules of the few entities that own printing presses. There are no real “independents” in the music industry because the major record labels control the distribution channels.
Regulation of these channels is also controlled. Telecoms, radio and television are controlled through regulation, and you need a license to broadcast. Traditionally, these monopolies have been able to sustain their control because they reach agreements with the regulator to clamp down on competition in return for meeting various obligations, including content obligations.
Distributors of content have also been able to control the physical and intellectual property of the content – physically through the technology (the sheer size of boxes of film made it easy, in the old days to control movies) and through law by the use of rights.
These rights were, in the past, governed by arcane systems, which divided the world of consumers into complex territories and markets. Ironically, it was these arcane systems that lead to piracy in the case of the local film Tsotsi – the systems of markets, rights and zones meant that many people pirated the film because it was unavailable to them through legitimate markets.
In a broadband world, however, every user has access to the means of distribution and broadband connects every point of production and consumption to every other point. The digital nature of the space also means that there is no physical property that can be locked down by distributors. DRM was an attempt to do this, but has proven to be, on the whole, unsuccessful, and is falling away as a method of control. DVDs had controls for different markets and zones, but the easy availability of crack codes has made this unfeasible. Broadband undermines all of these traditional business models.
So the question, says de Lanerolle is this: Should we care about the disintegration of old models? The answer, he says, is ‘yes’ only if we have a very narrow view of our (national) interests. He quoted Bill Clinton’s famous campaign phrase: “It’s the [whole] economy, stupid!” – the potential for development with broadband is so great that these opportunities should be embraced.
He cited a pilot project in the British region of Cornwall as an example of the potential of growth through broadband connectivity. Cornwall is a remote area, relatively inaccessible by car, and without any major cities. But it super-wired, as a result of a pilot project by the British government to connect the entire region through super-fast broadband connectivity.
As a result, labour productivity in Cornwall went up by up 5-10%, and the increased business process efficiency that resulted grew Cornwall’s GDP by up to 10%. What this example also showed, he said, s that the digital divide isn’t just a question of comparing the developed and developing world. It’s also about the degrees of ‘wiredness’.
Simple reductions of rates that make access cheaper are not, de Lanerolle said, a solution to the need for development. Reducing rates for telecoms, like Telkom had done for call centre development, will never be enough. If Skype or Google Voice allows calls to be made for what is, essentially, free, it makes no sense for telecoms’ offerings to be anything less than the benchmark of connectivity.
Deregulation, he says, is not the answer though. Content in South Africa is still regulated by the framework used before 1994, which is getting increasingly out of sync with the telecoms regulation as competition increases. As an example, digital migration of television is not introducing any more comepetition in South Africa. One possible cause of this is that there is no integrated approach from civil society or government to the issue of broadband content development or regulation.
Another challenge to content in the context of broadband is that of consumption. 93% of South Africans are reached by radio, 83% of South Africans can access television, and only 7% use the internet. How to make broadband as available as radio and television is a huge challenge.
Broadband, says de Lanerolle, should be defined broadly. It’s a moving target, and people’s levels of connectivity shift as their access to applications moves. It’s not possible for many people to access Web 2.0 applications and develop content because their connections and technology are not sophisticated enough.
The final scenario de Lanerolle painted is one where the flow of content shifts and becomes more of a conversation. With the potential collapse of traditional distribution methods, which operate in a one-to-many model, the potential exists for more horizontal, conversational models, and it’s this potential, according to de Lanerolle, that makes the possibilities for audiences much more exciting.
