Socio-Economic Implications of Internet-Based TV

Interest in the media has increased with the growing impact of technology, government regulation, and economic globalization (Albarran, 1996). Social values and economic interests often compete for attention within the evolving framework of legislative tools. Social concerns about free access to information—a special form of 'merit goods' (e.g., Musgrave, 1998)—and the often debated 'digital divide' become issues.

In order to promote the technical innovation necessary to support Internet-based TV, legal environments must provide incentives to upgrade infrastructure and must guarantee access for end users and Internet service providers (ISPs), i.e., application providers (Bar, 2001). These two requirements represent a certain paradox: without cost-intensive infrastructure upgrades, bandwidth will not improve. To finance these upgrades, owners of communication infrastructures may try to draw added value from their investments by controlling access to application providers. Paradoxically, without free access for ISPs and application providers, innovation may be stifled. Additionally, consumers will be more reluctant to adopt broadband technology required for Internet-based TV if they see that they are locked into a controlled access system. Hence, regulators must balance the trade-off between providing economic incentives to infrastructure upgrades and guaranteeing infrastructure access to application providers. This regulatory paradox illustrates that policy issues throughout the new economy cannot be mended by moderate changes in the wording of old rules. The results of legislative actions will be more than policy changes; they will reflect political choices and basic values (e.g., Zysman & Weber, 2001).

Reciprocally, the prevailing political parameters and social values condition the program content options of Internet-based TV. The situation we have observed in 2002 indicates that program content closest to the definition of 'merit goods' has the greatest Internet-based TV potential. The provision of such goods can be justified when the consumer has faulty or insufficient information, or when a learning process is required. Therefore, optimal consumption levels for merit goods are based on value criteria that are inconsistent with the traditional notion of allocative efficiency. Typical merit goods in traditional TV have been news and information, including documentaries (see also Brown, 1996). Their variety and information relevance are socially desirable, even if individual consumer preference is not always sufficiently expressed. Such goods and access to them are, however, systematic indicators of good governance for democracies and supporting factors for human development (Norris, 2001). This defines such content—and the means of access to such content—as intrinsically desirable for the society at large.

As there is, theoretically, no single control point on the information highway, network ownership is no longer required to participate in unleashing innovation and profit (Bar, 2001). However, more than ever, unequal access opportunities exclude many around the world from reaping the economic fruits of the Internet. This situation is often referred to as the 'digital divide', meaning the gap between those who have access to new tools of communication and those who do not (see also Collins & Murroni, 1996). This situation has global implications that also affect highly industrialized societies (see, for instance, the previous section on the spread of broadband technology in Germany).

Having argued the economically meritorious nature, and social and democratic desirability of news and information via Internet-based TV, it follows that the fulfillment of these values are dependent on the development of access to infrastructure in Germany and worldwide.