Internet-driven convergence – policy implications

This paper discusses the convergence being driven by digital content, IP technology and a move from hardware to software-based systems. Convergence can be thought of as occurring in three phases. In the first phase of convergence legacy market players have entered one another’s traditional markets and offered a range of services and service bundles to end users. In the second phase internet based applications and content have been offered by non-traditional players in the communications and entertainment markets such as Apple, Microsoft, Skype, Google, Hulu and Spotify. In the third phase, which we may now be entering, applications, services and content delivered via the internet replace existing platform specific services.
Access platforms are likely to change, with fibre replacing copper; and cable (intermediate between fibre and copper), fibre and satellite progressively replacing terrestrial broadcasting. Mobile access will be enhanced, may see consolidation and will compete with copper access. Bundling of services by service providers is likely to give way to device based integration of applications by consumers, with personal devices playing a central role. The internet is at the heart of these transformations, both in terms of demand for enhanced access and “innovation without permission” in relation to applications and content. If these changes become widespread they will fundamentally alter the nature of competition with access to “platform independent” applications and content on the internet replacing competitive models based on access to infrastructure.