city university london school of social sciences convergence of ...

ABBREVIATIONSCA: Competition Authority (of Turkey)EC: European CommissionEU: European UnionGDP: Gross Domestic ProductICT: Information Communication TechnologiesICTA : Information and Communication TechnologiesAuthorityIPTV: Internet Protocol TelevisionIT: Information TechnologiesITU: International Telecommunications UnionOFCOM: Office of CommunicationsOECD : Organization for Economic Cooperation andDevelopmentRTSB: Radio and Television Supreme BoardTA: Telecommunications Authority (of Turkey)TRT: Turkish Radio Television CorporationTT: Turk TelekomVoIP: Voice over Internet Protocol4

different policy objectives‟ (p.30).It is a fact that once separated regulatory principals must also converge or a totallynew regulatory framework must be adapted to cover all communications industries,whether the convergence between telecommunications, information technologies andmedia industries takes place because of technological developments or politicaldecisions. Then the question arises: „How different should regulation to be to dealwith convergence? Any regulation aims at achieving both the efficient allocation ofresources and public interest goals (Clements: 1998, Kiessling and Blondeel: 1998).Even in a convergent environment, these goals will remain vital. To achieve thesegoals the regulator will need to provide potential participants and investors, as wellas users, with an environment that has some legal certainty (Clements: 1998, p.203).The current regulatory framework is being challenged by convergence and manyissues have already been raised that need to be resolved. Given the transition of themarket structure, policy makers and regulators would need to handle those issues offair competition, licensing and public interest goals‟ (Hukill et.al: 2000, p.298-299).The need to introduce legal frameworks and regulations to regulate aspects ofconvergence through a flexible and technology neutrality approach moved someregulators around the world to restructure their regulatory agencies towards anintegrated information and communication technology regulator. For example,OFCOM (Office of Communications) was established in 2003 by integration of fiveseparate regulatory agencies in UK, also telecommunications and broadcastingregulatory authorities are integrated and new communications authorities areestablished both in Hong Kong and Australia. Besides the integration of existingregulatory authorities, also some countries readjusted their broadcasting andtelecommunications authorities‟ field of work taking into account convergence suchas France.This study focuses on convergence of telecommunications, information technologiesand media industries with a regulatory point of view. As it is explained in depthbelow, a case study regarding Turkey is done and some regulatory proposals arederived in order to deal with the challenges posed by convergence and regulate6

aspects of convergence in the country.1.1. Aim of the StudyThis study aims to provide in depth information regarding convergence ontelecommunications, information technologies and media industries and itsregulatory effects. It overlooks and critically assesses the technical and economicaspects of the concept together with social and cultural ones. Since convergenceblurs the boundaries between these sectors that used to be regulated separatelybefore, it brings some regulatory challenges. When considered from this point ofview, convergence brings some challenges on regulatory frameworks to overcome.Besides the general conceptual information, the study includes a case study regardingTurkey and derives some regulatory proposals taking into account the structure andthe current regulatory framework in the country.1.2. Research QuestionsMain research questions that are answered in the study are as follows:1. What are the effects of convergence on regulatory frameworks? Is there a need fora change in regulatory frameworks taking convergence into account?The answer of this question includes the analyze of different aspects of convergencefrom regulatory point of view. First, convergence in different levels is scrutinized inorder to better understand the concept. Besides technical and economic aspects, alsosocietal effects of convergence are examined in order to have an understandingregarding social aspect of the concept. By examining mentioned effects, it is tried tobe answered whether there is a need for change in regulatory frameworks or not.2. What is primary overall outcome of an organizational regulatory unification inTurkey?Since the outcome of constructing a converged regulator depends on the specificcircumstances and the ways in which the unified organization is constructed, in orderto answer this question, current regulatory situation in the country is scrutinizedtaking into account the structure and scope of separate regulatory bodies in the7

country. The possible outcomes of a converged communications regulator areanalyzed and the situation is put forthin order to answer this question and results are used to derive some regulatoryproposals.3. How should a converged regulatory body be constructed in Turkey?In order to answer this question, the recommendations of regional and internationalbodies are taken into account. In light of the analysis regarding current situation anddefects of markets and regulatory frameworks, recommendations are derived abouthow to form a converged regulatory body.1.3. Structure and MethodologyLooking at the structure of the study; following the introduction part, Part 2 detailsthe concept of convergence by reviewing the related literature. The main drivers thatlead to convergence of telecommunications, information technologies andbroadcasting sectors are reviewed in this part. Also, convergence is assessed from aregulatory point of view taking into account societal importance of regulation. In thiscontext, universal service and public service considerations in a convergingenvironment are assessed together with regulation‟s effects on consumers, quality ofservice, security, privacy and intellectual property rights issues.As convergence is an international phenomenon, the views of internationalorganisations are important and Part 3 details the approaches of some internationaland regional organizations to convergence. International Telecommunications Union(ITU), Organization for Economic Co-operation and Development (OECD) andEuropean Commission‟s (EC) approaches to convergence are analyzed.The measures needed in order to deal with regulatory challenges in a convergingenvironment are put forth in the study in order to answer the research questions.While doing this, the process towards a converged policy framework in one of themost successful countries across Europe in terms of convergence efforts is alsoelucidated. In this context, some aspects of the communications regulatory8

framework in UK are put forth taking into account convergence in Part 4.After the basis that is set in these chapters, the research part takes place in Part 5.This chapter concentrates on Turkish case. In order to answer the second and thethird research questions, first both the legal and administrative structure in thecountry is analyzed. While analyzing the appropriate form and role of a newconverged body, recommendations and policies that are developed by abovementioned international and regional bodies are also considered. Then, in the light ofthis analyze some regulatory proposals are derived for the country.Finally, Part 6 summarizes the study and puts forth the important points that arereached during the research.Regarding the methodology; qualitative research strategy and case studymethodology are used in this particular study. Data is gathered using secondarysources of literature such as official documents from regulatory and governmentalbodies. Articles from academic journals are used as well as academic books andofficial documents of EU, ITU, OECD and regulatory reports from countries. Inorder to analyze the situation in Turkey and answer second and third researchquestions, individual case study methodology, which may be understood as „theintensive study of a single case where the purpose of that study is –at least in part- toshed light on a larger class of cases‟ (Gerring: 2007, p.20) is used in Part 5. Thismethodology is chosen in order to pursue in-depth analysis and to study whole unitsof the issue rather than some aspects of units. As stated by Gerring (2007, p.68),„evidence for a case study may be drawn from an existing dataset or set of texts ormay be product of original research by the investigator‟. In this particular study, amixture of these two methods is used. Current structure, duties and responsibilities ofregulatory agencies and boundaries between them are put forth by analyzingsecondary resources.9

2. CONVERGENCE AND ITS REGULATORY EFFECTS2.1. Concept of ConvergenceThe process of convergence was first mentioned in the academic literature in the1970‟s. One of the earliest expressions of the idea came from Nicholas Negropontein 1978. „He used three overlapping circles to represent the technologies ofcomputing, printing, and broadcasting. The most rapid growth and innovation, heargued, could be found in the area where the three intersected. Negroponte hadoverlooked the telephone system, but simultaneously, telecommunications‟(Mueler:1999 p.12).After its first usage in the literature, many colleagues attempted to define the termbut there is not a commonly accepted definition of the convergence in the literature.According to Lind (2004), „it was not just the business community who embracedconvergence without reflecting about how to define the term or its deeper meaningand implications. Most academic articles the last decade mentioning convergencehave taken it as a given and just dealt with different implications of the phenomena.Almost no academic articles have tried to define convergence and relate it to atheoretical framework‟ (p.2).EC‟s „Green Paper on the Convergence of the Telecommunications, Media andInformation Technology Sectors, and the Implications for Regulation‟ (Green Paper)which is the most quoted source for definition of convergence, defines the term as:„the ability of different network platforms to carry essentially similar kinds ofservices, or the coming together of consumer devices such as the telephone,television and personal computer‟ (EC:1997, p.1).In most of the definitions of the term, its characteristic is emphasized to “blur theboundaries”. For example, OECD has defined convergence as a buzzword in theinformation industry „which blurs the technical and regulatory boundaries betweensectors of economy‟ OECD:1992, p.13). Similarly, Fransman (2000) definesconvergence as „the blurring of borders between telecoms, computing and media‟(p.39). Choi and Valikangas (2001) similarly defines the term as the blurring of10

oundaries between industries by the convergence of value propositions,technologies and markets (p.426). Also, according to Bauer et al. (2003) convergencemeans „processes that blur the boundaries and/or reduce the differences betweenactivities, industries, nations and regions‟ (cited in Hacklin:2008, p.2)Convergence can also be defined as a figure, where different sectors move into eachother and constitute a new converged entity after convergence. Figure 1 representsthe sectors that converge and constitute one single entity.Figure 2.1:industriesIllustration of convergence of telecommunications, media and ITYpsilanti and Xavier (1998) state that, „convergence is not only a technologicalphenomenon, but includes services and therefore markets‟ (p.644). Since, it ispossible to define the term in different ways in terms of technology, services,markets or regulation, the definitions of the term show variety. As a concept havingthat many dimensions, several different types of convergence is defined in theliterature. For example; in its Green Paper, EC defines convergence on four differentlevels which are namely: technology and network platforms, industry alliancesand mergers, services and markets and finally policy and regulation. (EC:1997,p.2)11

„Another example is the report from the Swedish government ConvergenceCommission (SOU 1999:55 cited in Lind:2004). The report defines four types ofconvergence. Network Convergence happens when separate physical infrastructurescan carry all types of services. Service Convergence is the process when theboundaries between communication services and content services are lowered andthe two separate service classes converge into one. Appliance Convergence is theprocess when user gadgets and terminals embrace new functionality and eventuallycan be used for all purposes. Market Convergence is defined as the consequence ofthe three other kinds of convergence and means that market players can enter newindustries when network, appliance or service convergence makes that possible‟[emphasis not in original] (Lind:2004, p.3-4).Skogerbø (1997) also proposes a definition which emphasizes the different types ofconvergence, namely network, service and market convergence.„Network Convergence: Different network platforms provide seamlessinterconnection and allow for the distribution of any kind of serviceTerminal Convergence: Equipment may be used to access different networkplatforms, and/or they may be used for a wide range of services across differentplatformsService Convergence: Different services adopt the others format or same servicesare provided in different formats, e.g., as films, books, or multimedia servicesMarket Convergence: Because of these other kinds of convergence, the actorsproviding the different platforms and media are becoming intermixed‟ [emphasis notin original] (Jansen and Nielsen:2005 p.80).Similarly, Tarjanne (2000) states that „convergence has been argued to take place ondifferent levels: on the technology, industry and service levels: on the technologylevel, thanks to digitalization, different networks and devices can perform similarfunctions. Technology convergence enables traditionally separate sectors to enterinto each other‟s domains. Digitalization allows satellite, wireless, microwave, cableTV networks and telephone lines to be interconnected into one overall system. Thiswill make combined services possible‟ [emphasis not in original] (Tarjanne:2000,12

p.40).Like Tarjanne, also Iosifidis (2002) claims that „convergence […] can be present atthree different, although interrelated levels: the technological level (mainly due todigitization of broadcasting, IT and telecommunications networks), the structurallevel (as a consequence of corporate alliances across different sectors), and theservices and markets level’ [emphasis not in original] (Iosifidis:2002, p.28).It can be easily seen that it is hard to find one common definition or classification ofthe concept in the literature. Some of the definitions concentrate on the technologicalside of the concept whereas some others highlight the convergence of markets andservices. It would be helpful to define the reasons that lead to convergence in orderto provide a better understanding of the concept and its dimensions. Thus, nextsection concentrates on drivers of convergence.2.2. Key Drivers of ConvergenceAs it is not possible to find a generic definition of convergence in the literature, thereare different opinions regarding the drivers of the concept as well. But it is possibleto say that technological change is considered as main driving force of convergence.(OECD:1992, p.13) Also, Blackman (1998) emphasizes the role of the technologicaladvancements and states that, advanced digital technologies allow the manipulationof all forms of information across all types of network and digital compressionabolishes the constraints of the past (p.164). Similarly, Ayish (2003) states that„digitalisation is the major driver, but far from being the only factor, which can makeconvergence happen‟ (p.78). Melody et. al (2003) explain the role of digitalisationas an enabler of „new possibilities for development and creation of services withinand beyond the framework of traditional communication sectors‟ and they alsohighlight the role of computerization as a driver of convergence, besidesdigitalization (p.28). Shin (2005) also emphasizes the importance of internet onacceleration of convergence besides developments in digital technology. Mueler(1999) analyzes convergence as a combination of two factors and states that also theadoption of common protocols and standards are important besides technologicaladvancements. According to Mueler, „raw technological power is only part of the13

convergence story. Often overlooked is the fact that digital convergence also impliesa process of settling upon common protocols and technical standards for datainterchanges. This is a predominantly socio-economic process, not a technical one. Itinvolves the coordinated adoption of compatible technology platforms by a criticalmass of producers and consumers. That process is affected by network externalitiesand product life cycles. So, in many ways, the progress of digital convergence is astory of the rise and fall of specific standards that were designed to bring togethervarious media forms‟ (p.12-14). Similar to this view, Nystrom and Hacklin (2005)emphasize the importance of socio-economic drivers including the opinions andreactions of end-users. According to them, technological change –specificallyinternet and digitalization- together with liberalization of telecommunicationsmarkets is the foremost driver of convergence. They also state that „regulation hasadopted in favorable ways, enabling the process of convergence to move on intodifferent corners of our economy‟ (p.4).2.3. Convergence from a Regulatory Point of ViewWhile analyzing convergence from a regulatory point of view, it is useful to have alook at the situation in the past in order to provide a better understanding of theregulatory situation. Part 2.3.1. briefly explains the situation in the past and rightafter that, Part 2.3.2. explains the regulatory characteristics of the converging sectorsbefore Part 2.3.3. analysis the reasons of need for a new regulatory policy forconverging sectors and Part 2.3.4. puts forth societal importance of convergence andits regulation.2.3.1. The Situation in the PastAs Blackman (1998) summarizes; „in the past, communications networks weredesigned to carry different types of information separately. Telephone networks weredesigned for voice, broadcast networks for video and so on. Individuals have beenrestricted to either communicating with each other via telephone or to watching,listening to broadcast programming‟ (p.164). But with the emergence ofconvergence, this traditional separation has disappeared and new services likeInternet Protocol Television (IPTV), Voice over Internet Protocol (VoIP) or digitalbroadcasting have emerged that carry the characteristics of both telecommunications14

and broadcasting sectors. The blurring of boundaries between these sectors has posedsome challenges in terms of policy. In order to understand these challenges better,first the regulatory characteristics of converging sectors are explored in the nextsection.2.3.2. The Regulatory Characteristics of Converging SectorsAs it is stated briefly in the introduction part, information technologies, media andtelecommunications sectors have different regulatory structures stemming fromdifferent characteristics of each sector.Telecommunications industry is subject to sector specific regulation. Regulators areexpected to „provide constant monitoring, arbitration, legal guidelines and a levelplaying field for all. Regulations are required that control operators, provide themwith frameworks for operation and ensure that the interests of operators andconsumers are protected‟ (Murdock 1990 cited in Gardner: 2003 p.104).„Broadcasting, especially television, is often viewed as the most pervasive form ofmedia. It can influence the manner in which we receive the information that we needfor entertainment, to keep informed and information to fulfil our obligations ascitizens. Broadcasting also offers the most accessible cultural experience for the bulkof the population‟ (OECD:2004 p.10). „The principles and objectives behind mediaregulation include defining and protecting values such as freedom of expression andaccess to information, and balancing these with acceptable limitations, such asprotection of minors, rights to privacy and personal integrity, and conceptions ofpublic service and fair competition as Noveck, McGougan, Gibbons and Tonguedetail‟ (Marsden and Verhulst:2000 p.7). As it can easily be seen, different fromtelecommunications sector, broadcasting sector is subject to content regulation inorder to provide pluralism, diversity, fairness, and impartiality; social responsibility;maintenance of high quality programming and of cultural and linguistic identity;coverage of important events; protection against abuse of market power;strengthening national and regional industries; protection of consumers; andmaintenance of standards in matters of violence, sex, taste and decency as stated byMarsden and Verhulst (2000 p.7). Besides, as broadcasting necessitates spectrum15

usage, regulation is also needed in order to encourage efficient use of this scarceresource.In comparison with telecommunications and media sectors, the InformationTechnologies sector does not have sector specific regulation tradition, but generalcompetition law applies to this sector.As Xavier and Ypsilanti (1998) state, over time „historical characteristics of differentservices and the technological platforms they used to deliver service, have expandedand evolved leaving behind the distinctions that regulators have placed upon them‟(p.650). So the scene between regulators and players in the market has changed andthis necessitates some changes in terms of regulation. Next section explores this issueand discusses whether a new regulatory approach is needed.2.3.3. The Need for a New Regulatory ApproachAs it is stated above and highlighted by OECD (2004), the previous regulation ofelectronic communications sectors was based around delivery platforms and „thischaracteristic developed in an analogue environment where delivery platforms wereservice specific‟ (p.18). But with the emergence of internet phenomenon and serviceslike digital TV, this separate structure is challenged and the distinctions between thesectors of ICT industry became blurred.In the literature, most of the researchers highlight the fact that existing regulatoryframework is challenged by convergence concept and this necessitates some form ofintervention. For example, Just and Latzer (2000) claim that, the major challengesstemming from convergence resulted because „the industry has already entered themediamatics era while the policy makers still remain anchored in the traditionalseparation between telecommunications and media (audiovisual)‟ (p.396). Theyfurther claim that in this situation, the criteria used to categorize the new services arenot objective anymore and this creates regulatory problems that can lead unnecessaryconflict. Since, inapplicable categorizations, combined with divergent regulationsproduce contradictory preconditions for market development, they claim that „it isnecessary to propose an institutional integration of telecommunications and media16

Since end users can benefit from more accessible and cheaper services because ofconvergence, it is commonly agreed that convergence is for sake of consumers. Inthis regard, Tarjanne (2000) states that convergence is good news for end-users. Heindicates that end-users benefit from a widening choice of platform-independentservices at decreasing costs. He further claims that, „these should change the way wedo business and live our daily lives. New applications in areas of telemedicine,education and electronic commerce, for example should increase the quality of lifefor many and transform our society in the same way as electricity and telephoneshave done for the past hundred years‟ (p.42). Similar to Tarjanne, Hukill et al. (2000)state that convergence spells good news for consumers „as availability of servicesincreases even as the services themselves become more affordable‟ (p.303).Regarding the effects of convergence on consumers, affordability and availabilityissues are also stated by the World Bank (2009). In a recent report of the WorldBank, it is indicated that since the prices lower because of the convergence,consumers‟ access to services expands and this widens coverage by using multipleinfrastructures (p.21). The report also draws attention that ICT users are able toaccess a range of services through a wide variety of devices because of convergence(p.24).Besides foremost effects as availability and affordability of services, convergencealso has some less direct effects on end users as stated above. Hukill et al. (2000)note that convergence leads continued and renewed interest in developing nationalinformation infrastructures and this development provides introduction of newservices even in the countries that have limited service availability. According tothem, development of information infrastructure leads a broad range of social andeconomic activities such as „increasingly efficient business and trade links to bettereducational opportunities‟ (p.303). Furthermore, it is stated by the World Bank(2009) that „convergence has an indirect effect on social and economic development‟by changing business models, expanding markets, increasing the range of services,applications available to users and altering market structure (p.21).22

Also, it is stated by ITU (2002) that „it should also be considered that convergenceimplies an evolution and a possible reduction of traditional jobs, while, at the sametime, imposes the development of new skills (and consequently the need forspecialized education and training)‟ (p.2). Although this is not a direct effect ofconvergence on citizens, anyhow this situation affects the people working atconverging industries.While mentioning the effects of convergence on citizens, it is worth to advert that allcitizens will not benefit from convergence because of the differences in internetpenetration and computer concentration per household. According to this issue, ITU(2002) states that convergence is not going to reach the same level everywhere at thesame time, and even in the most advanced economies, all citizens are not going tobenefit from convergence since the beginning (p.2).At this point, it is important to emphasize that the words „consumer‟ and „citizen‟ aredifferent from each other. Consumers buy or use goods and/or services in the market,however citizens participate in society that also includes the market. It can beinterpreted from the definitions that citizen interest already covers the consumerinterest and anything that is for the benefit of consumers is already for the benefit ofcitizens. The point that consumer interest and citizen interest are differentiated isexplained by UK government as follows: „The consumer interest referred to aneconomic focus on networks and services, for the benefit of individuals; by contrast,the citizen interest referred to a cultural focus on content, for the benefit of thecommunity‟ (Livingstone:2008 p.2).When referring to the impact of convergence on society, different words like „endusers‟, „customers‟, „viewers‟ or „citizens‟ are used in the literature, as it can be seenabove. It can be interpreted that economic issues such as availability andaffordability are more likely to meet the interests of consumers whereas socialbenefits of convergence as advanced information infrastructure and bettereducational opportunities are more likely to meet the interests of citizens.To wrap up, convergence has many benefits on consumers and citizens as it is stated23

above. In order for them to enjoy these benefits, a proper regulatory framework isimportant which is sensitive to consumer rights, avoids regulatory overlaps,encourages market players to investment and avoids barriers for the development ofconvergent markets.2.3.4.3. Regulation’s Effects on Quality of Service, Security, Privacy andIntellectual Property RightsConvergence and its regulation also have some effects on quality of service, security,privacy and intellectual property rights issues.When we look at quality of service issue, it is possible to examine quality of serviceindicators in two different groups as product quality and consumer service quality.Product quality includes applications and network service reliability and quality suchas, voice and video quality, call completion rate, delivery times and reliability ofmessages whilst consumer service quality includes issues such as billing andcomplaints handling.While analysing the effects of convergence and its regulation on quality of service, itwould be a good starting point to express that technological advancements that leadto convergence, also enable competition between companies. This has a positiveeffect on quality of service especially in terms of product quality. So it wouldn‟t bewrong to argue that convergence and competition go in parallel and there is highquality of service where there is convergence. With advanced technology andincreasing competition, there is improvement in technological parameters such aspicture, video sound and voice quality today. When it comes to the second subgroupof quality of service indicators -consumer service quality- it is of crucial importancefor market players to focus on improvement in consumer services keeping in mindthat demand is amongst the important factors that shape converging markets. Thisleads to better results in terms of consumer service quality. As it is mentioned above,convergence takes place together with competition and competition is another factorthat provides amelioration on quality of service. Atubra and Frempong (2001) statethat, competition has potential to lead existing network providers to focus attentionon improvement in consumer service (p.206) and this probably means better quality24

service. Besides, regulators tend to provide a robust consumer protection mechanismtaking into account the converging services environment and this is another factorleading to improvements in consumer service quality. After all, it wouldn‟t be wrongto argue that convergence and its regulation have a positive effect on quality ofservice.Convergence is also „introducing new issues that may require regulation, includingsecurity, privacy and consumer protection‟ (Melody et.al.:2003, p.vii). Since itbecomes much easier to transmit information through internet and collectinformation regarding people, privacy protection and its regulation gain importancein a converging environment. It is stated by Henten et.al. (2002) that, consumerprotection is an important issue in a converging environment and „consumers mustbe protected against low quality products, late delivery or pure and simple fraud‟(p.24). As society is becoming more dependent on electronic communicationsnetworks and services, it is important for regulators to constitute a regulatoryframework addressing security and privacy problems in order to protect consumersand citizens.Intellectual property rights constitute another area where converged environmentcreates problems. Convergence, accompanied by the ability to access, distribute andmanipulate content creates a problem for intellectual property rights holders in termsof protecting their rights against infringements. In order to cope with this problem,some regulatory effort is needed. Taking into account that intellectual property rightsis an international issue that goes beyond the national boundaries, both nationalregulators and international organizations should consider this problem and takenecessary steps to prevent the grievance of intellectual property rights holders.3. REGIONAL AND INTERNATIONAL BODIES’ APPROACHES TOCONVERGENCE„In a world where service provision increasingly crosses national boundaries, withthe appearance of worldwide operators offering integrated multimedia services, it isessential to ensure that the national regulatory approach fits with the developinginternational framework‟ (ITU:2002 p.5). As highlighted by ITU, convergence is an25

international phenomenon and at this point the views of international organisationsare important.This section briefly puts forth the views of ITU, OECD and EC regardingconvergence in terms of regulation.3.1. ITUConvergence is being handled by ITU since mid 1990‟s. Since that time, the topic ishandled in various study groups, forums, seminars, workshops and colloquiums.ITU‟s views regarding convergence which do not have a binding nature but ratherhave an advisory role are briefly explained in this section.It is stated by ITU that a revision of the nature and role of National RegulatoryAuthorities might be necessary and convergence will probably necessitate a singlecommunications regulator to regulate Telecommunications, Broadcasting andInformation Technology markets together.According to ITU, one out of three drivers that influence convergence is regulationbesides technology and market. Because of this, ITU tried to identify the bestregulatory framework to deal with convergenceITU draws attention that, definition of a new regulatory framework needs to take intoaccount the possible socioeconomic effects on the different regions since there arelarge discrepancies within different regions of the world. Also „the new regulationshould be as flexible as possible and quickly move towards a situation where specificex-ante regulation are applied only in case of lack of market self-regulation orcomplete market failure‟ (ITU:2002 p.5). ITU suggests that, since there is no morespectrum scarcity, broadcast regulation can be upgraded accordingly and the sectorcan be ruled only by the principles of competition law –excluding data privacy andintellectual property rights protection- and the content might be reviewed on themodel of free press. In addition to this, ITU states that alliances and joint ventures(horizontal integration) should be evaluated having regard to the fact that strong26

cooperation between different subjects is needed for the development ofconvergence. ITU‟s view on competition rules and ex ante regulation is as follows:„Competition rules should be adapted to the reality of this new marketcharacterised by a heavy impact by technology and innovation. It should beparticularly stressed that only the abuse of dominant position has to beavoided, and consequently the application of an asymmetrical “ex ante”regulation is in principle not justified anymore. The situations should beevaluated on a “case by case” basis, taking also into account that a dominantposition in an adjacent market does not automatically imply an extension ofthis position in the market under evaluation by the competition authority‟(ITU:2002 p.5).ITU proposes three options regarding how to define new regulatory approach. Firstone is to progressively introduce a new regulatory model to cover the whole range ofexisting and new services. Second alternative is to build new framework on currentstructures and the third one is to develop a separate regulatory model for newactivities to co-exist with telecommunication and broadcasting regulation. Accordingto ITU, the first alternative seems the only viable one though it is the most difficult toachieve since the second one leaves in place the current vertical regulatory structureas it is in place in most of the developed economies. ITU states that the presentasymmetric approach would be kept in place and the convergence market wouldprobably remain too rigid and over-regulated if the second option is adopted. Alsothe third option does not seem to be viable according to ITU since it could lead toconfusion and uncertainty to have different set of rules running in parallel.It is highlighted by ITU that the general orientation regarding converged regulatorissue is to move towards one converged regulator such as in the United Kingdomwith the creation of OFCOM. ITU predicts that, more countries will establishconverged regulators in charge of controlling all communications sectors in the longrun. However ITU draws attention that there are some negative aspects ofestablishment of converged regulators besides its positive effects such as provision ofeconomies of scope and scale, prevention of legislative and political disagreementsand inefficiencies stemming from existence of different regulatory agencies for eachdifferent sector. According to this, development of digital technology or convergence27

of platforms does not solve the cultural matters at once; rather these issues should bepaid more attention taking into account the globalisation. ITU also highlights the factthat, establishment of one converged regulator does not guarantee handling of allservices, platforms and content in a similar way. According to ITU, internalorganisation of the converged regulator according to the sectors can lead to differentregulations to different sectors and this should be paid attention.Regarding the establishment of a new converged regulator, ITU states that, everymember state should decide whether its regulatory regime is appropriate in order tocope with convergence and it is a national matter to decide if regulatory agenciesneed to be restructured or not. ITU draws attention to the point that „the convergenceof services and markets necessitates a convergence of laws, and may also necessitatethe convergence of institutions or, at a minimum, mandate coordination‟ (ITU:1999,p.6).3.2. OECDConvergence has been a topic in the agenda of OECD since 1990‟s. Since that time,many policies and recommendations regarding convergence have been produced byOECD for its member states. Like ITU, OECD states that blurring of the distinctionsbetween electronic communications sectors necessitates revision in traditionallyseparate regulatory frameworks. However, OECD (2004) also highlights that theintegration of frameworks requires a review of the legal and policy frameworkscovering the formerly distinct sectors and it is not simple (p.3).OECD calls its member states „to consider that convergence of platforms andservices requires the reassessment and consistency of regulatory frameworks‟(OECD:2006 p.21). Consistently, it is stated that „many OECD member countries arein the process of realigning their regulatory regimes to deal with convergence in lightof the disparities that have arisen as Internet content has proliferated. There is also anincreasing trend in some OECD countries to aim for a consolidated regulatoryauthority for broadcasting, telecommunications and other electroniccommunications‟ (OECD:2006 p.21).28

Regarding the integration of regulatory agencies, OECD states that „minimising thenumber of regulators that an enterprise needs to deal with is important in order tominimise regulatory costs, and reduce the potential for uncertainty andinconsistency‟ (OECD:2007 p.49).OECD has proposed a model for reform in order to meet the challenges created byconvergence that has many similarities with the initiatives of EC which will beexplained in the following section. The main lines of this model are summarisedbelow: A horizontal approach in which carriage and content have separate regulatoryarrangements should be structured. However it is important to keep in mindthat decisions on some carriage matters can have an effect on cultural andsocial objectives and vice versa. So it may not be possible to speak of anabsolute separation in regulation of content and carriage. Access of consumers to basic services - universal service obligations- shouldbe provided. Cultural diversity should be provided by production of domestic programmesand audiovisual services. Plurality of voice objective should be achieved by using the capacity providedby digital technologies. Objectives of plurality and diversity should be achieved by financiallysupporting public broadcasting. More efficient use of spectrum should be encouraged in order to achievesocially desirable outcomes. New regulatory framework should be structured taking into account theimportance of protection of consumers.Regarding the social and cultural side of convergence regulation, OECD states that itis important to assess whether convergence requires a change in policies to achievesocial and cultural objectives in a country and highlights that it may not be optimumto impose common regulations applying to all services. According to OECD, „thedegree of influence of free to air radio and television may justify a more intrusive29

egulatory approach than is necessary for a pay per view, point to point service. ....The level of regulation applied to a particular service could be influenced by thelevel of interactivity and the degree of control or choice which can be exercised bythe viewer, as well as the nature of the commercial transaction‟ (OECD:2004, p.20).It is an important point to consider by national states while structuring theirregulatory frameworks. According to this, member states should consider applyingdetailed regulation for some specific services but unnecessary regulation should beavoided. As a last point, OECD also draws attention that, carrying out of frequencyplanning and assignment issues by one common institution would help spectrum tobe used efficiently.3.3. ECConvergence has been considered as an important means to create informationsociety by EC and therefore regulatory reform was very important in order toencourage convergence as it is stated by Iosifidis (2002). Therefore the concept ofconvergence has occupied the agenda of EC for a long time.Green Paper on the Convergence of the Telecommunications, Media and InformationTechnology Sectors, and the Implications for Regulation dated 1997 which ispublished to tackle the emerging policy and regulatory issues associated with theconvergence is an important cornerstone. Green paper attracted attention thatconvergence is not only about technology but also about interacting with society „Itsthesis is that convergence challenges traditional notions of regulation, implying theneed for a new approach. What that approach should be lies at the heart of thedebate‟ (Clements: 1998 p.197).Three different future regulation options suggested in the Green Paper takingconvergence into account are as follows:1. Build on current structures: Leaves in place the current vertical regulatorystructure, subdivided into telecommunications and audiovisual/broadcasting.2. Develop a separate regulatory model for new activities, to co-exist withtelecommunications and broadcasting regulation.3. Progressively introduce a new regulatory model to cover whole range of existing30

and new services. (Latzer: 1998, p.461-462)The consultation process revealed that, convergent environment necessitates ahorizontal approach that covers both existing and new services in thecommunications sector where competition policy gains importance rather than sectorspecific rules. Horizontal approach means application of same regulatory rules on allnetwork infrastructures regardless of the service carried. Separate regulation ofcarriage and content is also another result emanating from consultation process. It isalso another point to pay attention that regulations should encourage investment fornew services and pay attention to protection of consumers.In 2000, a package of measures for a new regulatory framework has been proposedfor electronic communications networks and services in order to encouragecompetition across Europe, taking into account the complex communicationsenvironment and especially the convergence between telecommunications,broadcasting and information technologies. After the consultation period, the newdirectives regarding regulation of electronic communications sector have beenpublished in 2002. It is stated by EC that „the convergence of thetelecommunications, media and information technology sectors means alltransmission networks and services should be covered by a single regulatoryframework‟ and this new framework satisfied this need (EC:2002 p.33).Issue of content regulation is not included in the new framework since EC states thatit is necessary to separate the regulation of transmission from the regulation ofcontent. It is stated that „audiovisual policy and content regulation are undertaken inpursuit of general interest objectives, such as freedom of expression, mediapluralism, impartiality, cultural and linguistic diversity, social inclusion, consumerprotection and the protection of minors‟ (EC:2002 p.34).4. COUNTRY ANALYSIS: UKMany countries across the world have exerted some efforts in order to cope with thechallenges that stem from convergence and either reshaped their regulatory agencies31

or merged them. This section analyzes the implications of convergence on regulatoryframeworks in UK. Because of the word limitation of the study, only UK is selectedto analyze. UK is one of the earliest and most successful examples in Europe interms of restructuring of ICT sector taking convergence into account and it is pioneerto other European countries. First, institutional framework of the country is put forthand the analysis continue with the situations in the country regarding public interest,content policy, diversity and plurality, universal service and consumer policy issuesin relation to convergence.Communications Act of 2003 has been prepared in order to meet the need for a newconverged framework to cover all communications industry in the UK. Theconverged communications regulator, OFCOM assumed its full powers under theCommunications Act, in response to the convergence in electronic communicationssector. Besides convergence, another contributory factor for foundation of aconverged regulator was the European Commission‟s new set of directives(Ofcom:2005, p.10). OFCOM has a range of duties on telecommunications,television, radio and spectrum issues to ensure the optimal use of electro-magneticspectrum and maintenance of a sufficient plurality of providers of different televisionand radio services (Communication Act 2003). OFCOM replaced five separatebodies such as the Broadcasting Standards Commission, Independent TelevisionCommission, Office of Telecommunications and Spectrum Management AdvisoryGroup. Establishment of a converged regulator can be considered as one of the mostsignificant gainings of new regulatory framework. As it is stated by Shin (2006) thenew approach which is introduced by Communications Act of 2003, „can be seen asa move towards a more horizontal approach for the convergence services. A movingfrom the sectoral regulation means a response to the challenges posed by theconvergence phenomenon‟ (p.48). UK communications regulatory framework isanalyzed in terms of some aspects below:UK has a public broadcasting tradition rooted in both the public and private sector fora long time. As it is stated by Iosifidis (2006) „regulation should re-define andpromote the broader public interest in the new communications environment in orderto incorporate social benefits associated with digital revolution‟ (p.35). With32

emergence of convergence concept, the question of how to reshape the concept ofpublic interest in UK became important. As Shin (2006) states, OFCOM assumesthat „the concept of public interest should be approached as a process, not as anentity or destination that is subject to definition‟ (p.54). OFCOM‟s approach is toprovide public interest by creating a competitive environment in electroniccommunications sector where consumers can benefit many different choices.OFCOM highlights the importance of content regulation in a convergingenvironment, where internet is becoming an important way of supplying content. It isstated that existing model of content regulation will need to evolve taking intoaccount convergence but „devising means to respond to citizens‟ interests in this arearepresents a considerable challenge‟ (Ofcom:2008a p.2). At the moment content isbeing regulated differently than carriage in UK as part of the horizontal approach.Content regulation is under the responsibility of Content Board within OFCOM.According to Communications Act plurality and diversity in relation to contentshould be safeguarded. In order to ensure these goals OFCOM imposes somerequirements on the main networks to show significant amounts of high qualityfactual programming, new drama and comedy. OFCOM also obliges public serviceprovider channels to show UK originated programs in order to maintain nationalcultural identity and social cohesion. (Ofcom:2008b p.4 ) Besides public servicebroadcasting content, online public service content also becomes important withemergence of convergence. However OFCOM (2008b) states that „it does notcurrently constitute a substitute for public service broadcasting‟ since its reach andimpact is limited (p.9). Besides all these efforts regarding content, OFCOM‟s aim tocreate a competitive communications environment across UK can be claimed tocontribute to the aim of plurality and diversity as well. As many players to representmany different opinions and thoughts can find a chance to take place in the marketthis has a positive effect on plurality and diversity of content.Another aspect that is analyzed in relation to the UK regulatory framework isuniversal service. As many new services are being offered in many different ways ina converging environment, this raises the question of which services should beavailable to society in UK, like it is the case in many different countries. At presentBT and (Kingston in Hull) has a universal service obligation regarding the provision33

of a phone line to anyone on demand at a reasonable cost. But OFCOM highlightsthat „over time, there may be calls for additional services, such as higher-speedbroadband, to be made available more widely‟ (Ofcom:2008a p.5). As convergencehas an effect on the scope of universal service together with different factors, scopeof universal service is being reviewed by OFCOM regularly and in consequence ofthese reviews „the Government has now decided to put in place a broadbanduniversal service commitment of 2Mb/s by 2012‟ (Ofcom:2009). As it can easily beseen, convergence has an important effect on universal service policy in the countryand the scope of universal service is evolving because of some developmentsincluding convergence.Consumer policy of Ofcom is explained as follows;„To work together with other organisations and industry to ensure thatconsumers benefit from increasingly competitive communications markets, areeffectively protected from financial and physical harm, unreasonableannoyance and anxiety, and have the information and tools necessary to makeinformed choices‟ (Ofcom:2006, p.3).As explained above, UK policy to ensure diversity and plurality in radio and TVservices to ensure competitive markets and widespread access to communicationsservices are all for benefit of consumers finally and shape the consumer policyregarding communications sector in the country.5. CASE STUDY: TURKEYAlthough there are some studies referring to country experiences and cross countryanalysis in relation to convergence such as Ayish (2003), Wu (2004), Simpson(2004), Garcia-Murillo (2005) and Shin (2005) there is not any study regardingconvergence‟s effects in Turkey in the literature. With the aim of filling this gap, thissection aims to analyze the current regulatory structure and derives some regulatoryproposals for the country to cope with the challenges posed by convergence.First, some indicators regarding Turkish ICT sector are given in order to provide ageneral opinion about the current status of ICT industry in the country in section 5.1.Following this, current roles and responsibilities of regulatory authorities andcompetition authority in Turkey are explained in section 5.2. to form a base for34

discussion regarding measures to take in the country that are necessitated byconvergence. In light of this, some regulatory proposals are derived in section 5.3.taking convergence into account. The recommendations both include economic,social and cultural issues which constitute important aspects of regulation.5.1. ICT Industry in TurkeyIn line with the technological developments across the world, ICT sector haswitnessed a great development in last couple of decades in Turkey like it is the caseall around the world. In order to provide a general understanding of ICT industry inTurkey, some market data is provided below:2007 2008ICT Market (billion USD) 20.30 28.20Communications 15.50 20.50Information Technologies 4.80 7.70The percentage of ICT market in GDP (%) 4.16 4.08Communications 3.18 2.90Information Technologies 0.98 1.08Hardware 0.74 0.77Software 0.10 0.13Services 0.14 0.18The growth rate of ICT marketHardware 16.80 19.00Software 11.30 20.00Services 11.90 13.00Source: TUBISAD (Turkish Informatics Industry Association) 2008Table 5.1.: Some indicators regarding ICT sector in TurkeyAs it can be seen from Table 5.1. ICT sector is growing rapidly and its total size is28.20 billion USD as of 2008 which constitutes 4.08% 1 of GDP.Another indicator that closely affects the convergence is internet penetration which is32.2% 2 as of 2008 in the country. However, Turkey lags behind the Europeanaverage 3by means of internet penetration. Computer literacy is another factorenabling convergence in ICT industry in a country. As of 2008, percentage of1 According to the data of Turkish Informatics Industry Association2 According to the data of Information Communication Technologies Authority3 According to the Eurostat statistics, EU 27 average for 2008 is 60%.35

households with computers is 36.2% 4 in Turkey which can be regarded as a lowlevel. However, there are some projects of Turkish government in order to improvecomputer literacy across the country and facilitate the social transformation througheffective usage of ICT, so this number is expected to improve in following years.3G technology, which is important to contribute to development of broadband andthus has an accelerating effect on convergence, became operational across thecountry by the end of July 2009. It can be considered as an important developmentand in the near future, effects of convergence are expected to be perceived further.Digital broadcasting is important in terms of convergence since it leads marketplayers of broadcasting industry to play in telecommunications area as well.Regarding digital switchover that will lead switching all television services fromanalogue to digital format, Radio Television Supreme Board (RTSB) adopted theStrategy and Application Schedule on March 2005. According to this, a gradualchangeover is taking place in the country which is supposed to be completed in 2014.Besides the above mentioned developments, converged services such as VoIP,multimedia payphone services and videophone are becoming more popular acrossthe country and effects of convergence are being perceived more every day.Turkey is an official candidate country for EU membership and in this scope, legalframework of the country including information and communications sector has beenor is being reviewed to be in line with EU framework.5.2. Current Roles and Responsibilities of Regulatory Authorities in ICT SectorCurrently, there are separate regulatory authorities responsible from regulation ofICT sector in the country. The roles and responsibilities of these bodies are put forthin this section in order to serve a basis for the analysis regarding the need of a newconverged regulator.4 According to the data of Turkish Informatics Industry Association36

5.2.1. Information and Communication Technologies AuthorityAn important milestone regarding liberalisation of telecommunications sector wasestablishment of Telecommunications Authority (TA) as an affiliated institute ofMinistry of Transportation in 2000. Following this, Turkish telecommunicationssector is fully liberalised as of January 1 st 2004 and the incumbent operator‟s (TurkTelekom-TT) monopoly on carrying out of telephone services throughtelecommunications networks -including national and international voice telephonyisended. After the liberalisation, competition in the sector gained momentum,however there are still some deficiencies with effective implementation ofcompetitive safeguards in particular market segments due to the significant marketpower of former monopoly.A new Electronic Communications Law came into force on May 2009 that aimed toprovide the basis for alignment with the EU framework in the direction of EUcandidacy of the country. Although the name of TA has changed to Information andCommunication Technologies Authority (ICTA) with this new law, the duties andresponsibilities of the authority remained unchanged but reorganised towards thedirectives of EU. ICTA is an administratively and financially independent nationalregulatory authority, responsible for carrying out tasks defined under the ElectronicCommunications Law. Currently, ICTA is responsible for: ensuring competition inthe telecommunications sector, adopting regulations and performing supervisoryactivities to protect the rights of the end users, adopting regulations and performingsupervisory activities in the field of authorisations, tariffs, access, rights of way,numbering, spectrum management and market surveillance by taking intoconsideration the strategies and policies of the Ministry, ensuring the implementationof the harmonized standards prepared by the national standards bodies, marketsurveillance and supervision.5.2.2. Radio and Television Supreme BoardTurkey has a long tradition of public service broadcasting. In 1925, the first radiobroadcasts began and until March 1971 radio was the only component ofbroadcasting sector. At that date, television broadcast began under the scrutiny of37

Turkish Radio Television Corporation (TRT) which became an impartial,autonomous public corporate body. The monopoly of TRT on broadcasts continueduntil 1989 when first illegal company started its television broadcasting in thecountry. This situation continued until 1994 when there were many illegal radio andTV broadcasters operating. This illegal media became an uncontrollable powercreating many problems such as interference, improper program content,advertisement revenue and evasion of tax. Finally in 1994 Radio and TelevisionSupreme Board (RTSB) was established in order to regulate broadcasting in thecountry under the Law on the Establishment of Radio and Television Enterprises andTheir Broadcasts, numbered 3984. The events that led to foundation of suchregulator, necessitated intervention into the broadcasting area which used to beoperated in a lawless environment. RTSB is an independent and impartial regulatoryauthority which is currently responsible from: granting license to the radio andtelevision enterprises, allocation of channel and frequency bands, issuing licenses forthe construction and operation of telecommunication facilities and monitoring thecompliance of radio and television broadcasts with regard to the national andinternational legislation, deciding on the relevant sanctions in cases of violation ofthe provisions of the related law, conducting or commissioning public opinionsurveys in order to determine the reactions of the public, representing the State at theorganizations that have legal personality under international law, and are concernedwith radio and television broadcasts (Directorate General of Press and Information:2009 p.8).However in the meantime since its foundation, RTSB was not able to regulate thebroadcasting market effectively and fulfil its all duties stemming from the Law. Thissituation is clarified in section 5.3. while analysing the current situation in Turkeyregarding convergence.5.2.3. Competition AuthorityCompetition Authority (CA) which operates under the Ministry of Industry andTrade was established in 1997 in order to ensure the formation and development ofmarkets for goods and services in a free and sound competitive environment.38

The main duty of the Competition Authority is to prevent any threats to thecompetitive process in the markets for goods and services through the use of thepowers granted by law. Ensuring the fair allocation of resources and increasing socialwelfare by the protection of the competitive process constitutes the basic foundationof the mission of the CA. In order to facilitate and protect competition in markets,CA: penalizes undertakings which distort or prevent competition in the market,through examination and investigation processes subject to detailed regulation,grants exemption to and prepares secondary regulations for agreements which are inconflict with competition rules but are beneficial for the economy and the consumers,prevents monopolization within the market by examining mergers, acquisitions andjoint-ventures over a certain threshold, in the privatization stage, examines thetransfer of public undertakings to the private sector, and through privatization,reduces the effects of the state on the economy while preventing monopolization inthe areas the public sector exits,ensures the dominance of competitive conditions within the markets by sendingopinions on various acts and regulations which would negatively affect or restrictcompetition in the markets to government institutions and organizations concerned.(Competition Authority: 2009). CA‟s assignments regarding ICT sector, involvesimplementation of general competition rules.5.3. Analysing the Current Situation Regarding Convergence in the CountryThis section analysis the current situation of regulatory frameworks and markets inICT sector in order to put forth a general view regarding convergence in Turkey.Although there is not any regulatory effort at institutional level in order to cope withchallenges posed by convergence, the new Electronic Communications Law is animportant indicator stating that the concept of convergence is starting to take placeon the agenda. Even though it is not a converged legal framework that covers all ICTsector, it brings some amendments for the barriers to convergence.An important change that is brought by Electronic Communications Law is newlicensing regime in telecommunications sector. Before the enactment of the law,licensing regime was not parallel to the EU authorisation regime as all39

telecommunications services and infrastructures were subject to different licenses.However new Electronic Communications Law has changed the authorisation regimetowards the directives of EU. As it is stated before, convergence necessitates a morehorizontal approach, where service specific authorisation is excluded. The newtechnology neutral licensing regime introduced by new Electronic CommunicationsLaw is an important step to be able to cope with challenges of convergence. By thismeans, only services that necessitate the use of scarce resources are subject togovernment intervention. This is considered to prevent the barriers in front of marketplayers stemming from authorization issues.Spectrum issues in the country also constitute problems for convergence. Currently,frequency planning across the country is in the scope of ICTA‟s tasks. ICTA is alsoresponsible from frequency allocation and monitoring of interference fortelecommunication services, however frequency allocation and monitoring ofinterference for broadcasting services are being made by RTSB. This sector specificsituation seems to constitute a problem for convergence. As it is stated abovesections, taking convergence into account, international organizations recommendboth planning and allocation of frequency issues to be handled by one organization.It is interpreted that this sector specific administration of spectrum in Turkey is aproblem in terms of efficient usage of the resource and for the sake of convergence.Broadcasting sector has evolved interestingly in Turkey. As stated before, there wasa different situation in the country stemming from the legal gap in broadcastingsector that leaded the appearance of illegal broadcasters. As a consequence, an actregarding establishment of a regulatory authority in broadcasting sector was enactedin a short period as mentioned above. However this act was not able to solve allproblems in the sector and RTSB was not efficient enough to pave the way for ahealthy operating broadcasting environment. For example, although the frequencyplanning was assigned to RTSB by law, the broadcasting regulator failed to do thisand then spectrum planning task is given to TA. Also, all terrestrial radio andtelevision broadcasting in the country is being operated without a licence today asRTSB was not able to issue licenses for terrestrial broadcasters. RTSB also failed inperforming the limitations in the Law regarding share percentage in broadcasting40

sector. However RTSB was able to regulate the content area. In order to providepluralism, diversity, fairness, social responsibility and maintenance of cultural andlinguistic identity some obligations are imposed on the public broadcaster TRT. Inaddition to this, some other obligations are imposed on other broadcasters formaintenance of standards in matters of violence, sex, taste and decency andprotection of children and youth. For this purpose, some rules are established forclassifying programs that appear on TV screen while the program airs. Overall,because of deficiency of RTSB in regulating broadcasting sector, there is aperception in public opinion that RTSB is an institution that only regulates contentand imposes penalties on violators.When we look at the market structure in broadcasting sector; cross media ownershipsare exist in the sector as RTSB is inefficient to apply the rules regarding limitation ofshare percentage issues. There are a couple of conglomerates dominating the marketwhich are operating in TV broadcasting, radio broadcasting and also journalism areasand this is considered to harm the plurality and diversity of broadcasts.The effects of convergence are perceived in Turkish ICT sector, as some marketplayers in broadcasting sector are investing in information technologies andtelecommunications sectors. For example, Doğan Group which operates inbroadcasting sector with Kanal D, Star TV and CNN Turk channels and press withHürriyet, Milliyet, Radikal, Referans, Posta also operates in telecommunicationssector with Doğan Platform, Doğan Telekom and in information technologies sectorwith Smile ADSL. Also Çukurova Group which operates in broadcasting sector withShow TV, DigiTurk, SkyTurk channels and press with Güneş Gazetesi also operatesin telecommunications sector with Turkcell, KVK, Millenicom ve Tellcom andSuperonline. This dominant media power in the country is considered to damageplurality, diversity and some other public interest issues. The situation intelecommunications sector is more organized than broadcasting by courtesy of theefforts of ICTA. However at this stage it is not possible to talk about a highlycompetitive environment as liberalization movement was as late as 2004. Forexample currently, the incumbent operator is still monopoly in local calls market andits dominancy is being felt in some other markets. ICTA is working for a highly41

competitive market in the country but it seems that some time is needed in order toprovide this. This situation can be considered as a problem for convergence. As it isstated above sections, it is recommended by ITU and OECD to rely on marketpowers more in a convergent environment as markets change faster than regulationsand this necessitates a shift from ex-ante to ex-post regulations. Similarly EU policyrelies on competition law principles, which only necessitate ex-ante regulations inthe markets lack of effective competition. However this doesn‟t seem to fit thesituation in Turkey as liberalization in telecommunications sector does not have along history and the incumbent operator is still in a dominant position in somemarkets.In terms of cooperation between regulatory agencies, it is clear that more cooperationis needed in a convergent environment as the distinctions between sectors blur. Theemergence of convergence and converged services have increased the overlap oftelecommunication regulation with broadcasting regulation in the country as it is thecase across other parts of the world. According to existing framework, convergedservices that carry both telecommunications and broadcasting characteristicsnecessitate different authorizations from both ICTA and RTSB. In order to determinean appropriate way regarding how to authorize converged services by two distinctagencies a protocol between ICTA and RTSB has been signed in 2006 (ICTA:2008p.75). However this does not diminish the regulatory burden over market players thatintend to provide converged services, rather clarifies the steps to be taken by them.Market players are still subject to different authorization and auditing activities ofdifferent agencies for provision of converged services. This situation clearly putsforth the need for a revision at institutional level taking convergence into account.As a result it can be interpreted that the current situation of regulatory frameworkwhich is confusing and lack of a consolidated regulatory agency are importantbarriers in terms of convergence. In this sense, foundation of a converged regulatormay be a solution. However, as it is stated by Doyle and Vick (2005), „[s]implycreating a single regulatory body does not guarantee regulatory “convergence”‟(cited in Storsul and Syversten:2007 p.278). In order to overcome the challenges ofconvergence, it is important to review the legal framework in the country and create42

a new converged framework that covers all ICT sector.5.4. Proposals to Deal with Challenges of Convergence in TurkeyIt is clear from the analysis at the above section that current regulatory framework inTurkey is not formed to deal with challenges of convergence. Current separateregulatory framework is a burden to market players willing to provide convergedservices. This is a disincentive fact obstructing the development of convergence. It isa fact that convergence challenges traditional notions of regulation, implying theneed for a new approach. EC, ITU and OECD together highlight that convergence inservices and markets necessitates convergence of laws, may also necessitate theconvergence of institutions as stated above sections. In this sense, a revision ontraditionally separate regulatory framework in the country is necessary. However it isstated by OECD (2004), that integration of formerly separate legal and policyframeworks is not simple (p.3).At this point it is important to decide how to define the new regulatory approach. Asstated above sections, there are a couple of different approaches recommended byinternational and regional bodies. Amongst them, progressively introducing a newregulatory model to cover whole range of existing and new services is interpreted tobe the best for Turkey, in order to provide a regulatory environment with a horizontalapproach covering all services where sector specific rules left their place tocompetition policy.The new converged regulatory framework should pay attention to universal serviceissue and ensure that access to basic services should be provided. However as it isanalyzed in Section 2.3.4.1. universal service in telecommunications andbroadcasting sectors have different dimensions and there is no need for an integrateduniversal service policy. Also, towards the recommendations of OECD and ITU,carriage and content should have separate regulatory arrangements. As culturalconcerns related to content regulation are still exist, content should be regulatedintently in a convergent environment. Further, as globalization is a phenomenon oftoday‟s world, cultural issues regarding protection of national values gain moreimportance. Taking these into account, it is interpreted that content should be43

egulated by a separate unit within the body of new converged regulator as it is thecase in UK.While forming new regulatory framework, quality of service, security, privacy andintellectual property rights issues should be paid attention and necessary measuresshould be taken in order to constitute a regulatory framework addressing protectionof intellectual property rights, security and privacy issues in order to protectconsumers and citizens. Consumer protection maintains its importance and allnecessary measures should be taken in the new regulatory framework in order toprotect consumers in a converging environment.As it is stated above sections, there is a trend to move towards one convergedregulator across the countries with developed economies. As coordination,consistency and technologically neutral policies that are necessitated by convergencemay be more easily accomplished with a single regulatory body, foundation of aconverged regulator covering telecommunications, broadcasting and informationtechnologies sectors in Turkey is considered to be appropriate. For that purposeRTSB and ICTA should be merged. CA is considered to be out of this structure.According to OECD (2004), in most of the countries, economic regulation issuessuch as price and interconnection are not being dialled with competition regulation,but the only exception is Australia. (p.20). As telecommunications sector is at anearly stage of competition, it is considered as an early period to propose a change foreconomic regulation issues to be handled by CA in Turkey.A new converged framework and regulator is considered to overcome thecoordination problem between separate regulatory agencies, solve the problemsstemming from administration of spectrum by different institutions, encouragemarket players to invest in ICT sector and serve the aim of consumer protectionbetter by one stop solution. However, it is an important point that sector specificformation in this new converged regulator should be avoided as it may leave in placethe current vertical regulatory structure. In such a case, the new converged regulatorwouldn‟t be effective to apply same rules on all network infrastructures regardless ofthe service carried.44

However it is interpreted that there is still some time needed before establishment ofa converged regulator in the country. As it is stated in section 5.3.,telecommunications sector still necessitates detailed ex-ante regulations as themarkets are not fully competitive at the moment. It is considered to harm somemarkets of the sector to shift a policy that relies on competition law principles ratherthan sector specific rules, at this stage. As digital switchover is planned to take placein 2014, that date is considered appropriate for foundation of a converged regulatorybody in Turkey. With termination of analogue broadcasting, spectrum will no longerbe a scarce resource. This is considered as an opportunity for broadcasting sector tobe upgraded and be available to be ruled by competition law principles. This is alsothe case in telecommunications services which necessitate the use of spectrum andmore competitors will be able to play in the market. Besides, a more competitivetelecommunications sector is supposed to realize until that date as ICTA is workinghard to achieve this goal.However, there is a legal obstacle in front of foundation of a converged regulatorybody in Turkey. RTSB‟s foundation as a regulatory authority is defined in theconstitution. So, abolishment of RTSB to establish a new converged regulatornecessitates a change in the constitution which is considered to make this processmore complicated.In order to put forth the strong and weak sides, opportunities and threats ofestablishment of a converged regulator in Turkey in the long run, a SWOT analysistakes place below:45

StrengthsAs overlaps between currently separateregulatory agencies will be prevented,regulations will be more efficientAs authorization issues of convergedservices will be handled by a commoninstitute, a barrier to market entry will lowerAs spectrum management will be held byone common organisation, spectrum will beused more efficientlyWeaknessesAs integration of formerly separate legal andpolicy frameworks is not simple, this willnecessitate a great effortAs abolishment of RTSB necessitates achange in the constitution, the process maytake longer time than expectedIntegration of two formerly separateregulatory bodies and different corporateidentities will be hardAs there will be just one institution forcommunications regulation, there will be amore coherent decision mechanismAs consumers will be in relation to just oneinstitute, consumer protection mechanismwill be more efficient and beneficial forconsumersEstablishment of a converged framework andregulator will increase percentages of theinternet and computer usage in the country.Establishment of a converged framework andregulator will encourage provision ofconvergent servicesOpportunitiesDevelopments in technology and emergenceof converged services urges policy makers toestablish a converged framework to deal withchallengesComplaints from both consumers andproviders of converged services regardingoverlapping duties of regulatory agencieswill support establishment of a convergedregulator with a new frameworkThreatsAs there is no vision in relation toconvergence at policy level in the country, itwill be hard to realize establishment of aconverged regulatorAs there are a couple of mediaconglomerates dominating the broadcastingsector, there might be a pressure againstestablishment of a converged regulatorTable 5.2. : SWOT analysis regarding establishment of a converged regulatory bodyin TurkeyAs it can be seen from the analysis, strengths and opportunities of establishment of aconverged regulator in Turkey outweighs the weaknesses and threats.46

6. CONCLUSIONConvergence of telecommunications, broadcasting and information technologies is aphenomenon of last couple of decades accross the world. Technologicaladvancements such as digitalisation, computerization and development of internetcan be regarded as main drivers of convergence together with socio-economic driverssuch as opinions and reactions of end-users. As a result, it is possible to watchtelevision or read newspaper from our mobile telephones or to watch movies fromour computers. However everything about convergence is not good news. Astraditionally, separately regulated markets converge, some regulatory problems arise.This study concentrates on impact of convergence on regulatory frameworks. It isstated by many researchers and also by ITU and OECD that, blurring of thedistinctions between electronic communications sectors necessitates a revision intraditionally separate regulatory frameworks. In addition to this, convergence maynecessitate a single communications regulator to regulate telecommunications,broadcasting and information technologies markets together. One of the first andmost successful examples of converged communications regulator is OFCOM in theUK. By replacing five separate bodies in broadcasting and telecommunications area,OFCOM was established in 2003 aiming to regulate converging markets together.There are also many other converged communications regulators in Europe andacross the world such as Finland, Denmark, Australia, Singapore, Malaysia andSouth Africa.When we have a look at the situation in Turkey, the main barriers againstdevelopment of convergence are current confusing regulatory framework and lack ofa consolidated regulatory agency. However, currently there is not any effort at theinstitutional level taking convergence into account. Telecommunications andbroadcasting sectors are still being regulated separately and general competition lawapplies to information technologies sector. However there are some indicatorssignaling that convergence is starting to take place in the agenda. ElectronicCommunications Law regarding the regulation of telecommunications sector hasenacted in May 2009. Although the main driver of enactment of this Law is EUcandidacy of the country, it introduced a new technology neutral licensing regime in47

telecommunications sector that is also necessary in a convergent environment.Nevertheless, there is still much to do in regulatory framework in order to deal withconvergence. For example, because of lack of a converged regulatory framework,market players providing converged services are subject to regulatory burden. Also,as there are a couple of conglomerates dominating the broadcasting market becauseof ineffective regulation of the sector, objectives of plurality and diversity areperceived to get harmed. In addition to this, spectrum management is being held bydifferent institutes in the country against the recommendations of ITU and OECD.In order to deal with mentioned challenges and let convergence to develop in thecountry it is seen necessary to progressively introduce a new regulatory model tocover whole range of existing and new services. It is clear that coordination,consistency and technologically neutral policies that convergence necessitates aremore likely to be accomplished by one single converged regulator. Taking this intoaccount, it is considered appropriate for Turkey to establish a single convergedregulator covering telecommunications, broadcasting and information technologiessector. However, its timing seems to be a little early since convergence necessitatesrelying on market powers as markets change faster than regulations and thisnecessitates a shift from ex-ante to ex-post regulations. The problem stems fromtelecommunications sector. Since liberalization in the sector realized only in 2004, itis still early to talk about a fully competitive sector. As a consequence, some detailedex-ante regulation is still needed in telecommunications sector. For establishment ofthe single converged regulator, the year 2014 is proposed. Because, digitalswitchover is planned to take place at that date, spectrum will no longer be a scarceresource it is considered that broadcasting sector can be upgraded and ruled bycompetition law principles henceforth. Also, competition in telecommunicationssector is evolving rapidly and telecommunications regulator is working hard onestablishing a competitive environment in the country. As a result 2014 seems like anappropriate date to establish a converged regulator in Turkey.48

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