Media "collision' creates winners and losers, expert says

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Broadcasters, policy makers, regulators, and experts in media sector have met in Hanoi on May 24-25 for the 8th Asia Media Summit, which was viewed as a significant platform to address challenges and to identify opportunities in the new age of digital economy.

The two-day meeting reached a consensus that the broadcast industry is now redefining and reinventing itself to seize opportunities being offered by digital technologies and new media that will enhance its services, business and contribution to industry and society.

A senior expert from Alcatel-Lucent Australia, Geof Heydon, made it clearer when he described the convergence of media and telecommunications as a "collision" that would create thousands of new business models, followed by success and failure stories.

Oliver Lauras, president and managing director of Alcatel-Lucent Vietnam, described Geof as one of the Alcatel-Lucent's "futurists" given his expertise in high speed broadband services, applications and new business models.

Lauras said that, although Vietnam is not in the list of Heydon's case studies, the country is expected to witness a flood of changes in media and broadcasting industries that will reshape the way people live, work, do business, entertain, and connect to each other.

How do you define the term "convergence of media"?

This has many different dimensions and means a lot of things: convergence between telecommunication and media, convergence between broadcasting and interactivity, convergence between fixed and mobile networks, convergence between IT and media and telecom three ways. But I prefer to describe it as a collision, not convergence. Because it's not easy to bring these things together. While media is about contents, whether written or video content, telecommunication is about connectivity how do you help people to communicate with their content. These two things are not always compatible.

The broadcasting industry uses a transmitter to send the same content to everybody because it is very efficient. Telecommunication likes everybody to talk to each other - it's very different and modern. Bringing these things together creates policy challenges for government. When you combine interactivity and traditional media, you also create regulation challenges and inspire new business models. More bandwidth, more performance in the network, and more interesting content are sometimes created themselves or with other media. When you bring these together, what will be the answer? The broadcasting industry knows how to broadcast and how to make money from advertising. Newspapers know how to make money from advertising. Telecommunication knows how to make money out of telephone calls and bandwidth. When we bring these things together, which way do we make money? There are now many possibilities.

It is hard to imagine the high-tech world in the distant future. How would you describe the way applications are transitioning among mobile phones, PC and TV environments?

Geof Heydon is a member of the Australian Senior Leadership Team. He regularly engages with and consults to various govern-ment agencies and other industry sectors in areas including broadband (fixed and mobile), convergence, the media, telecommunications regulation and policy.

The applications you have now on your iPhone or Android based smart phone just control what you see on these devices. But in the future those applications will be able to control the network that is hidden behind them. So if you need special performance from your network, the applications from your Smartphone will be able to control the performance of the end to end network, giving you the capacity you need at a certain price, giving you the connection you need just for the time you need it.

Today you get broadband connected to the Internet and it is permanent. But in some applications you may only need access to the network for maybe an hour, even one minute for connection. And even though the application may use the network, the end-user might not even be aware of this at all.This really changes the kind of services we'll see in the future. Today we think of the Internet as a web and a PC with a browser, but in the future it will be much more about the applications on devices. The devices will one day be your TV set too. The future applications can be on your TV, PC, tablet device and smart phone. Many TVs now can be connected to the Internet. Most TV manufacturers make web-connected TVs. But that's just the beginning. The future applications on TV can start to control the broadband network, then you can see a whole new range of business models.

Many movies now have been made with embedded advertising products in the movie. You see the Pepsi can, the BMW car, that's all about advertising revenues within the movie. But in some movies there are so many products, the stories might be lost. So it is highly likely that one day I'll be able to remove advertising as long as I pay an extra cost if I don't want to see advertising. So I'll pay extra. That's an example of a new business model.

IPTV (Internet protocol TV) was introduced in Vietnam around 2006 but it appeared not to gain so much progress. Are there any technical obstacles here?

Actually in 2006, IPTV was defined really as a mechanism for competing with the cable and satellite TV. It used the same technology as the Internet but it's not the Internet but a separate closed network, and commonly the telecommunications companies who built these networks have limited understanding of the broadcasting and content industries and market.

Today as the broadband connected Internet gets more and more high performance, more capacity, more and more bandwidth, IPTV will start to be more about the terms we use to describe the "over-the-top" services, with services integrated into the TV, like TV program downloading from the net.

When we look into the distant future, we will see no more copper telephone wires. Everything becomes optical fiber and wireless and there will be so much network capacity that the Internet has the ability to play movie, to watch TV, to do all the things that today are impossible on the Internet because it is too slow.

It is clear that IPTV is so small now in Vietnam. Maybe it is too expensive. Maybe it does not provide much content choices or new customer experiences. I don't know. But I think Vietnam has already started the broadband deployment although there is a long way to go. Some advanced markets are already a long way down this path. Markets in Korea, Japan already had fiber to most homes. Australia and Singapore are doing the same thing. Everything now becomes rich media and it's really what we call IPTV now.

And this is just the beginning. High definition we call today in 10 years' time will not be called high definition but low definition. The next generation of high definition is already defines and in use in some medical instruments. It will be very impressive when this technology reaches the mass market And every time the picture quality improves, more bandwidth is needed to deliver it in a timely way.

Could we discuss on your view that the traditional broadcasting business models will be challenged by these new business models?

In the same way, in telecommunication we have seen voice services move from very expensive to very low price. And now with mobile services, they become both low cost and more convenient. This is also happening in the media sector. The price for paid TV services is going down and down. Expectation of viewers is going up and up. And the cost of making the network is also going down very fast.

But today, the whole broadcast industry is based on largely two business models. Subscription or advertising based business models. Usually there is a national broadcaster who delivers its content to the market because the government owns and makes the decisions about what content it likes to share with the public. And the second one is the normal commercial advertising-based models. It is very similar in the telecommunications sector with one business model was telephone calls, then mobile telephone calls, then Internet and business data communication. There have been a very small number of business models.

With the Internet today, however, there are thousands of business models. Every experiment on the Internet is an opportunity to generate new ideas for new business models. When you add all the interactivity and you combine the telecommunication with media industry, then there are many new possibilities for business models. The way I love to see it is when the Internet is available to everybody, the population, with more and more bandwidth, and optical fibres everywhere, in many years' from now, it becomes like the road system. Think about what is the business model for roads when you have a family car, or a push bike, or a Ferrari, a track for transport, ambulance, etc. All of these are different business models, they all have reasons to do with different services for different markets. Everybody uses the roads, in the digital economy we see the same thing. Everybody is connected, everybody uses information. Business model is whatever you want it to be. Do you want a model to sell a piece of information? Is it a medical record? Is it a piece of education? Is it just for entertainment? A written word? A picture? A movie? Any of these things can be a different business model, and we will see thousands of business models. So the biggest impact for me that we should really think of that for the future is how to live in an environment when there are thousands of choices of business models. Broadcasters must adapt. The telecommunication sector has been adapting for the last 10 or 15 years. How to survive when voice calls are no longer the only business model? Now there are many choices to replace the traditional voice call.

The problem was already faced in the music industry which has completely changed. The business model now is buying one track at a time with an MP3, rather than buying the whole album. So now musicians create one song at a time. They don't always create albums. This is a different business model. How you buy music is changed completely and I think the broadcasting industry is facing the same really big change. Going from one business model that everybody understands to lots of innovations and lots of really interesting possibilities.

In any process of change, there will be winners and losers. Who are they?

I will look at a new tool in the US, a website called Hulu. Many people use Hulu to find their TV program rather than going to the broadcaster's websites. The ABC, CNN, Fox News, they all have websites for their own content on the Internet and many people download played TV programs from these websites. But in just 1 or 2 years, twice as many people go to Hulu. Why? Because they don't remember which channel the program was broadcasted on. So people go to Hulu, which is simpler. And ABC, CNN, they lose. It's up to them to think about what they'll do now. They'll have to think of more ways to bring customers back there to their own web sites.

I'm asked many times what the new killer application is. That's a wrong question. The real question is how many applications, how many business models will be successful before there are too many, before we all go crazy looking for choices what do we like and what we don't like. I don't think there is a killer application. But I think we know what a "killer environment" is. That would give us many different choices and that's really interesting for us.

The web and the way we use the web is creating huge job opportunities and is changing the world. When big things change, there are winners and losers. Today the big potential loser is the one who actually uses the most traditional business models the newspaper, the broadcasting, magazines and the radio. All of these are threatened by the change that comes from the Internet. After all, it's about offering more choices. If you embrace the open Internet market you will have hundred of choices and the prices will be very low. It's very competitive. That's exactly what's going on.

Please tell us a success or failure story in your country Australia.

Oh, there are many examples of change, of success and failure in Australia. Many Australians love to watch American TV programs. After a program has been successful in the US market, the rights are sold into the Australian market. So in the past, we have watched new TV shows like "Desperate House Wives" one or two years after the US market.

That kind of model is starting to change today when everybody learns through globally social networking what's popular and then the programs get downloaded and seen a few days after the US market. As a result the US producers are now selling the rights much earlier in Australia. But this means the Australian content buyers must take a bigger risk about which programs will be successful. This may not happen so much in Vietnam because you don't have the the same langueade as the US market. We have both advantage and disadvantage to have the same language as American market. We take American content very quickly but because we are in the southern hemisphere and Americans are in the northern, the right seasons are upset by 6 months. In the past, we would get a new TV program at least 6 months after it was a success in the US because first of all we have to see if the program is successful or not. Once it has a big market, the people who create that program will sell it to other countries, they come to the English speaking countries first. In Australia we used to buy series 1 when the US is broadcasting series 3, for instance. This is now changing fast because of the Internet.

So what do you think has happened? The moment somebody starts to enjoy a program in Australia, they download all the episodes from the US, and they stop watching TV. They can watch them on their computer, or transfer to the TV and watch them on the TV, but they get them from the net. So that's really changing how the broadcaster sees value. This happens for 5 recent years. We now almost never get a new program 2 or 3 years after it's been in the US, because if you wait that long, you'll lose the opportunity to become successful broadcasters. Now a program in the US is immediately provided along on TV in Australia. So now Australian broadcasters have to take a risk. They have to buy that content before it is famous in the US.

There are also many newspapers with advertising revenues completely shifting to online models. We saw recently in Australia a newspaper who has regional newspapers all over the country just decided they want to break into a new market. They only launched an online newspaper with no printed media at all. That's much lower cost model for them and more profitable because there were no printed newspapers. So there are losers the printed press but there are also new markets.

What about the rest of the world?

Probably the most advanced market using Internet today is Korea. The government here invests very heavily many years ago to connect every school and to connect everybody to Broadband Internet. And now there are lots of interesting business models in Korea. They don't use global tools like Google much. They use the local Korean version which is much more detailed about Korean society.

Singapore is on the way with IPTV, and they offer very good quality services today but only a small amount of content differentiation.. The US is very advanced now; so much content comes from the US and it has such a big population of over 330 million They have a very active and large community doing amazing things with content and new on-line business models.

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