This Digital Train Is Bound For Glory

Michael Hedges May 10, 2010 (Follow on Twitter)

Grousing about the digital new media is so passé. Through advertising shifts, economic woes, volcanoes and unrestrained technology development, broadcasters still worry that the light at the end of the tunnel is a freight train. Policy makers urge a mighty leap. This is no time for nostalgia.

New ITV chairman Archie Norman laid out to shareholders (May 7) “the unvarnished truth.”  First quarter revenue rose 8% year on year and the UK broadcaster expects a second quarter bonus from the World Cup football championships. After that, said Mr. Norman, ITV “has as much potential as challenges.“ The last ITV chairman, Michael Grade, also talked about challenges.

The first slice of unvarnished digital truth from Mr. Norman was yet another nail in the coffin of purely ad-supported television. “Free-to-air advertising is probably in long-term decline, and yet we as a business remain substantially dependent on it. For us, no change is not an option.” Advertising revenue, he said, either "blows too hot or too cold and it's very rarely somewhere in between.”

Mr. Norman, a former UK Conservative Party MP, said a strategic review is well under way. “The starting point of recovery means we have to have a clear-eyed view of where we are today.” That clear-eyed view means ITV will invest in new media. "We need as a company to be on all these platforms and at the forefront of exploiting this new technology. At the moment we are, if anything, slightly lagging."

Lagging behind in the digital realm was also a theme last week at the European Parliament (EuroParl), where its view of the digital agenda was offered (May 5). A resolution drafted by MEP Pilar des Castillo Vera endorses an ambitious plan to bring high-speed broadband internet connections to all Europeans by the end of the decade. EuroParl estimates 90% of Europeans have broadband access, which fewer than 50% utilize.

"The train towards the digital society is an extremely high speed one with no stops; the EU must be on board," said Ms des Castillo in a press statement. "We urgently need a fully developed competitive digital single market. To achieve this we must: first effectively implement the new regulatory framework. Second, boost the digital services market. Thirdly the free circulation of content and knowledge, the 'fifth freedom' must be developed" The EuroParl resolution stressed affordable digital services for all.

The EuroParl resolution pleased European Commission Vice President for the Digital Agenda Neelie Kroes. The digital benefit will come, she said in a statement, only when “citizens and businesses are empowered to be active and confident participants in the new digital society, which must deliver sustainable economic and social benefits.”

Speaking to the European Business Leaders convention in Brussels (May 4), Commissioner Kroes also slammed the laggards. “Anyone who doesn’t believe in the need for action is living with the fairies,” she commanded. “I will not pretend that our Digital Agenda for Europe could or should dictate the design and scale and direction of the Internet or other technologies. But we are determined to create a new set of conditions for ICTs and the Internet ecosystem of the future. We are determined to support all parties to take advantage of those better conditions.”

Commissioner Kroes pointed out to the assembled business leaders how “Nokia’s smart phone market share is still three times the size of Apple’s at nearly 50 percent. And I note that Nokia’s decades of success have been partly built on the GSM standard that developed from European Commission-funded research.” But past glories, she intoned, are not enough. Soon to be unveiled is the EC’s Digital Agenda for Europe action plan.

Certainly, the MEP’s wrap public services into the digital benefit, from e-government to education. “All primary and secondary schools must have reliable, quality internet connections by 2013 and very high-speed Internet connections by 2015,” said the resolution. “ICT training and e-learning should become an integral part of lifelong learning activities, enabling better and accessible education and training programs.”

The EuroParl resolution also pushes 3G mobile uptake, setting a goal of 75% of mobile subscribers using 3G by 2015. Again, Commissioner Kroes is looking beyond. An EC decision (May 7) sets aside a chunk of spectrum used by terrestrial television for WiMax and LTE (4G mobile) development. The decision asks Member States to harmonize frequency allocation rules to encourage 4G development.

4G takes, for now, mobile broadband to the extreme. From broadcast quality, real-time television and multiple-user, high-speed video games to digital publishing enabled by cloud computing and “augmented reality” in navigation services, the next generation of mobile broadband technology offers stunning opportunities. To paraphrase Commissioner Kroes, get on with it.

Compared with television production and distribution costs, websites cost nearly nothing to develop. That’s resulted in a gazillion websites, most boring, some fabulous and all indexed by Google. Increasing internet usage encourages even more development on the web. Encouraging European competitors to Google, Microsoft and Intel – not to forget Facebook and Twitter – is no small part of the Digital Agenda. 4G mobile broadband has the potential to shift news production and distribution away from satellite services.

Squabbling among EU Member States about solutions for the Greek debt situation (and that of the other PIGS) points to the difficulty getting 27 stressed neighbors to agree to anything. And financial crisis tends to put all else at the end of the train. The EC had to force Member States to adopt digital television, still an incomplete process after nearly a decade.

Commissioner Kroes, EuroParl and most stakeholders see reform of copyright law as essential to enable an effective commercial dialogue between content producers and distributors. And then, the public needs to be considered. The EuroParl resolution called for "a fair balance between the right-holders’ rights and the general public’s access to content and knowledge."

Broadband internet brings all kinds of cool stuff to laptops and PCs in schools, offices and homes. It has become the entertainment and information platform of choice for hundreds of millions. Both Commissioner Kroes and EuroParl MEP’s believe the single market can cure the perceived development gap between Europe and the US, India and China, particularly where mobile broadband is years ahead.

Also releasing first quarter results, much more quietly, was RTL Group (May 5). There was a “robust” 7.2% revenue growth year on year, stronger in Germany, France and the UK. For the end of this year, however, “no one can tell what the fourth quarter will look like… given the low visibility and economic environment."

Clarity and certainty are easy for Europe-level policy makers to trumpet before potential investors, eager for new profits, yet wary of new things. Content producers, broadcasters and publishers – with few exceptions – are coming to the realization that the new media may remain fuzzy, uncomfortable business models. The decision threshold of safety and security threatens more than fear of falling from this speeding train. It’s now a matter of being left behind. 

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