Colombia. Simón Gaviria Muñoz, director of the National Planning Department, announced that the entity will develop a proposal aimed at rethinking the financing model of public TV, as well as the economic burdens associated with the provision of audiovisual services in the country, in an articulated way with minTIC, anTV and crC.
The new law must contemplate the separation between the roles of promoter of public policies, regulator, and surveillance and control. To this end, a single entity in charge of the surveillance and control of the entire ICT sector, including content, similar to an ICT superintendence, must be created, as well as a single convergent ICT regulator – the existing Communications Regulation Commission would be strengthened for this – and the transformation of the National Television Authority (ANTV) with exclusive competences over content, including copyright.
These were three of the substantive recommendations that the director of the National Planning Department (DNP), Simón Gaviria Muñoz, formulated this Monday in front of the authorities of the sector in Colombia, depending on the evolution and new market trends.
And he ended with the strategic axes suggested by the entity for the evolution of the sector: "A public content policy framed within the ICT public policy; the repeal of previous laws, with the creation of new institutions, and a single promotion fund; a single convergent ICT regulator (CRC), the transformation of the ANTV with exclusive competences over content, including copyright; spectrum issues as part of the convergent ICT regulator, flexible approach to regulatory burdens for traditional models and that encourages innovation," said the Director of the DNP.
Gaviria Muñoz also highlighted more axes, such as a single entity of surveillance and control of the ICT sector; a new scheme for financing public TV and financial burdens for audiovisual market players; a scheme that preserves the philosophy of community TV, with a mechanism for the graduation of loads that helps the digitization of networks and that preserves Pay-TV; promotion of the digital content industry; and the use of new technologies such as Big Data for sectoral inspection and surveillance.
1. The diagnosis of TV
The first alarm raised by the Director of the DNP was that the classification of television services is outdated. "The traditional classification established in Law 182 of 1995 has been maintained in Colombia, even after Law 1507 of 2012 and today, within the framework of convergence, there are new business models and content provision that leads us to review this aspect," said Gaviria. (LISTEN HERE Audio 2 by Simón Gaviria)
He recalled that the international trend is to migrate the provision of content towards data-driven services (Internet), thus creating a movement from the value chain of services to applications. "International actors, outside of Colombian legislation, are generating additional challenges in regulatory, institutional and public policy matters," explained Gaviria Muñoz.
He said that both providers of telecommunications networks and services and classic content providers are venturing into Internet-based models, which shows the changes that technological convergence brings.
"Convergence is changing the consumption profiles of people who are redistributing the composition of the market," argued the Director of the DNP. He highlighted the phenomena known as Cord Never (new young users contract OTT services only), Cord Cutting (users with Pay-TV subscriptions cancel these services to contract OTT) and Cord Shaving (users with Pay-TV connections cancel Premium channels and access them through OTT).
He mentioned that Pay-TV subscribers grew 1.6 times between 2011 and 2014, while Netflix subscribers grew 13 times in the same period, aspects that lead to rethinking normative, institutional, regulatory and public policy models, with the aim of promoting competition and innovation.
2. Trends in technological convergence
These were the figures that the DNP prepared:
- Colombia is the second country (after Nigeria) with the highest consumption of video per day (not only the Internet), with 4.3 hours (259 minutes per day per capita) globally: Of that time, 68% is viewed on the Internet (176.12 minutes per capita). Source: Adreaction Video-Milward Brown (2015).
- The projections of use of OTT-TV services (Over The Top, is the platform of services that broadcasts content over the Internet) estimate more than 17 million users in 2018 for Latin America. Netflix is the most used carrier today. In 2015, the region registered 8.2 million users. Source: eMarketer
- Colombia went from 45,000 subscribers in 2011 to 535,000 in 2014. It is the second country in Latin America with the highest number of subscribers per million inhabitants, after Chile. Source: eMarketer
- Revenues generated by OTT-TV services reached about USD $1,132 million in 2015 in Latin America (equivalent to 1.18% of the GDP of the ICT sector 2015 and 5.16% of subscription TV revenues in Colombia for the same year). In 2020, Colombia will be the country with the highest growth in OTT-TV revenue in the region. Source: Digital TV Research
- The growth rate of OTT services is higher than that of fixed Internet service. In 2018 OTT will have 2.4 million subscribers (equivalent to 30% of fixed Internet subscribers and 42% of Pay-TV subscribers), and there will be a potential OTT-TV market of 7.8 million subscribers. Source: Colombia TIC, eMarketer and DNP Projections
- According to figures from YouTube Analytics, in Colombia more than 8 million hours are consumed every day on YouTube, which is equivalent to 120 million songs or 10 million TV programs. Source: Google
- Television and newspaper users have declined since the second quarter of 2011. Source: Acim
- The consumption of radio by mobile device (mobile Internet) has increased by 50% in the last 3 years. Source: EGM
- Millennials only watch 30% of audiovisual content on TV. 11% of users who have never had Pay TV already make use of OTT-TV in Colombia. Of the 4.3 hours of video that an average Colombian watches of video, 2.9 are through the Internet.
- From 2009 to 2015, investment in free-to-air TV advertising in Colombia grew by only 0.2% on average, while digital media was 32% for the same period"
Figures from the United States (figures that show what happens in more mature markets than Colombia, which shows what will happen in the country in the near future):
- In the U.S. the annual growth rate of digital pattern between 2003 and 2014 was 10.6% while the print pattern had a negative growth rate of -8.7%. Source: NAA (2014)
17% of the population over the age of 12 listened to podcasts last month. Source: Edison Research
iTunes revenue has increased 160% in the last three years, with figures close to 1.6% of Colombia's GDP. Source: Edison Research
3. The Dnp's Recommendations for Regulatory Framework, In a Nutshell
Traditional models of service provision (TV, radio, press) are not the only way to consume content.
Technological convergence means that traditional services and new models belong to the same market, even when they are transmitted in different ways.
A thorough regulatory diagnosis (CRC) that recognizes all of the above is required.
Regulation must recognize the existence of new business models. For this you must:
1. Adopt an approach that eases regulatory burdens and incentivizes innovation.
2. Adapt regulations to balance regulatory burdens and competitive conditions between traditional services and new models of content provision, regardless of the means of transmission.
4. The recommendations of the dnp for convergent entity, in a nutshell
• That the public content policy is framed within the ICT public policy, including a single promotion fund and that they meet the same principles (e.g.: general habilitation, efficient use of infrastructure, etc.)
• Repeal the above TV Laws.
• Separation of roles between policy enforcer, regulation, and surveillance and control.
• A single converged ICT platform regulator (CRC)
• A single convergent authority with exclusive competence over all content, including copyright (transformation of the ANTV).
• That the management, administration, allocation of the entire radio spectrum is part of the convergent regulator (ANE as part of the CRC).
• A single entity in charge of the surveillance and control of the entire ICT sector (new entity: ICT superintendence).
5. DNP recommendations to incentivise Community operators to digitise networks
Develop a scheme that preserves community TV, with a mechanism for the graduation of economic burdens and that preserves Pay-TV, with differential obligations, in the new Law for the audiovisual sector.
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