رضا منصورنیـا

کارشناس ارشد مدیریت رسانه
۰۳
مرداد

 

 

 

 

 

 

 

 

 

 

Network Neutrality:

 

 

 

Seeking the Best approach to Regulating the Broadband Internet Access Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Candidate number: 8028

 

Submission deadline: 01.12.2016

 

Number of words: 17.455

 

 

 

Abstract:

 

 

 

 

 

 

 

Network neutrality is a widely debated policy issue that has the potential to alter the dynamics of accessing online content. The main focus of the debate revolves around analyzing whether broadband internet access market should be regulated under strict net neutrality rules that impose a total ban upon the contested practices of blocking, throttling and paid prioritization, or if a light-touch regulatory approach will better foster its dynamics.

 

The increased regulation that the market is currently undergoing is controversial, given that the challenges that are threatening to disrupt the market are largely theoretical, thereby challenging its implementation. Although ISPs use traffic management techniques that leave them with ample margin to engage in potential abusive practices at different levels of their infrastructure, this seems unlikely to occur and in any case is mitigated by their countervailing interest. Therefore, it is argued in this research paper that according to the policy goals sought by policymakers and regulators, the recently implemented net neutrality rules both in Europe and America will have a pervasive effect that will unwittingly bring about unwanted consequences; such as being a deterrent to broadband investment or innovation.

 

Light-touch regulation is thus proposed as a more suitable approach, given that net neutrality appears to be an investment and competition problem, not a regulatory issue. Minimal regulation will provide greater incentives for the further development of the market, leading to a trade-off that will be determined by the market and not by interventionist policies, maximizing total welfare.

 

After analyzing the main issues surrounding net neutrality, an innovative conceptualization of the broadband internet market will be suggested; namely high-income fee to funding infrastructure. In this approach is stressed the two-folded nature of the market, seeking to procure a cost-efficient allocation of broadband investment, whereby the different competing interests are reconciled.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Acknowledgments:

 

 

 

 

 

 

I want to thank my family for my support during my whole study experience both economically and morally. They always push and try to inspire me to outdo myself.

 

 

 

I want to say thanks to Maryke who was assigned as my tutor, as she was always open and available to go through my work and give me appropriate feedback. She was fundamental to approach the question and finding a good structure to it.

 

 

 

I want to thank Elisson for reading some important sections of my thesis and discussing some important points of it with me. Also, I want to stress my appreciation for those long never-ending fun nights at the library, fighting against sleep and monotony.

 

 

 

Also, I want to acknowledge the help provided by Einar, hosting us for some goods breaks that reactivated us and was of great help to keep us motivated and focused.

 

 

 

Last but not least, I want to give a special acknowledgment to Madeleine, who helped a lot during these months of hard work. Her kind motivating works, texts and calls inspired me to keep working and reinforced me toward achieving my sought goals.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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TABLE OF CONTENT

 

 

 

 

1           INTRODUCTION............................................................................................................................................. 1

 

1.1       Overview................................................................................................................................................................... 1

 

1.2       Purpose and Structure of the Thesis.............................................................................................................. 4

 

1.3       Legal Question....................................................................................................................................................... 5

 

1.4       Methodology........................................................................................................................................................... 7

 

 

 

2           ANALYSIS OF NET NEUTRALITY LEGAL FRAMEWORK........................................ 8

 

2.1       Legal Basis for Regulating Net Neutrality in Europe........................................................................ 8

 

2.2       Legal Basis for Regulating Net Neutrality in America................................................................... 10

 

2.3       Legal Scope European Net Neutrality regulation.............................................................................. 12

 

2.4       Legal Scope American Net Neutrality regulation.............................................................................. 14

 

2.5       Concluding Remarks........................................................................................................................................ 19

 

3           CHALLENGING THE ADEQUACY OF NET NEUTRALITY RULES: LIGHT

 

TOUCH REGULATORY APPROACH.......................................................................................... 19

 

3.1       Arguments in Favour of Net Neutrality Regulation......................................................................... 20

 

3.2       Actual functioning of the Internet and Arguments Against Net Neutrality......................... 23

 

3.3       Controversy with Ex-Ante Regulation..................................................................................................... 27

 

3.4       Zero-Rating Implications................................................................................................................................ 30

 

3.5       Promoting a Light-Touch Approach as the Best Way to Deal with Net Neutrality......... 31

 

3.6       Concluding Remarks........................................................................................................................................ 34

 

4           ANALYZING   THE   UNDERLYING   REASONS   FOR   JUSTIFYING    THIS

 

INCREASED REGUALTION............................................................................................................... 34

 

4.1       Is the Increased Regulation of the Broadband Internet Market Grounded upon

 

Consistent Data?................................................................................................................................................ 35

 

4.2       To What Extent is Government Regulation a Form of Crony Capitalism?.......................... 38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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5           WHAT   IS   THE   FUTURE   OF   THE   BROADBAND  INTERNET  ACCESS

 

MARKET............................................................................................................................................................ 40

 

 

5.1       The Future of Net Neutrality Rules........................................................................................................... 40

 

5.2       Proposal of New Economic Approach.................................................................................................... 42

 

 

 

 

 

6           CONCLUSION............................................................................................................. 45

 

 

 

 

 

TABLE OF REFERENCE..................................................................................................................................... 47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Chapter 1: Introduction

 

 

 

 

1.1 Overview

 

 

The internet has drastically reshaped the way we communicate, behave and interact with each other, opening a space of countless wide-ranging opportunities. This trend is irreversible and in 10 years from now the internet will be even a more indispensable motor for socio-economic behavior worldwide. Internet was much simpler a decade ago; as it was based on a simple architecture, in which computers could transmit information, or the so-called ´´packets´´, which were not inspected by the providers.1 Yet, recent technological advances, such as Data Packet Inspection (DPI) have enabled Internet Service Providers ( ISPs) to examine these data packages and learning about the content being transmitted; bringing about new challenges as a result of the implications that the different internet traffic management techniques being used by ISPs may have at different levels of their infrastructure.

 

As the internet is evolving into a commodity and new services are emerging, mainly television over the internet, devising a suitable regulatory framework became arguably essential to accommodate the existing competing interests among the businesses and the public .Network Neutrality (Net Neutrality) was first coined by Columbia Law school professor Tim Wu in 2003, meaning that the internet is simply a carrier of content, which does not distinguish from one website to another. 2Net neutrality was and remains being the cornerstone of this sweeping phenomenon, as it ensures that the net is an open space in which every individual can get equal access to all the online content without any discrimination as to the type of content.

 

This research paper will analyze net neutrality by scrutinizing the function its plays toward safeguarding the interest of major contend providers, small and medium- sized businesses (SMBs) and consumers, stressing the challenges that they would be facing if ISPs succeeded in their goal of becoming internet gatekeepers. Indeed, it can be argued that lack of regulation will hamper net neutrality to materialize, as it can lead to discriminatory practices such as

 

 

 

 

 

1   Chad   Dickerson, 'Etsy     CEO:    How    Net    Neutrality    Shaped    My    Life' (Backchannel, 20    February

 

2 Patrick Kingsley, 'Open Internet' (The Guardian, The Wu master:The internet as a model of free speech and access is coming to an end, says web expert Tim Wu) <https://www.theguardian.com/technology/2011/mar/17/the-master-switch-tim-wu-internet> accessed 15 September 2016.

 

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blocking, throttling or traffic prioritization.3 For instance, it may pave the way for ISPs to impose a new pricing structure, whereby they could charge major content providers with a fee in return for preferential access, analogous to faster lines.4

 

ISPs may be potentially driven to do this because of their long sought goal of reducing network operational expenditure, whilst providing an enhanced user experience in line with today´s rapid development and consumer expectations. Against this backdrop, competition is likely to be severally undermined, as SMB that cannot afford the cost of this premium service will be automatically placed in the slow lane. This will limit their scope, blurring some of the underlying principles in which the internet was based on toward becoming the overarching tool that is today. Accordingly, innovation and economic growth may be fettered, ushering in a new period in which the internet will move away from being an open, fair, and free space to becoming commercial tool, akin to television bundled services.

 

Although the recent regulations implemented both in Europe and America intend to keep the network neutral, as further evidenced by the public statement held by Obama5 in which he emphasized that treating internet traffic equally was the reason why the internet experienced such an unprecedented growth and innovation during the last decade, the debate is still ongoing . ISPs such as Comcast or Verizon do not seem to be willing to desist in their attempt of retaining commercial freedom, being substantially a battle for power, given that internet became today´s most coveted asset .Moreover, the potential implications that regulating a capital-intensive dynamic market through comprehensive rules may entail and the ulterior functioning of some aspects thereof, render the recent implemented net neutrality rules contestable.

 

On the one hand, we have advocates of net neutrality, including popular content providers such as Google, Yahoo or Netflix who advocate maintaining the status quo, as they do not embrace ISP´s ambition of having an unregulated or slightly regulated market because of the potential adverse effect it may have upon their business.6 Other supporters of this line of

 

 

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Malik   Zakaria, 'Impact   Of   Net   Neutrality   On   SMBs   &   Other   Businesses   -   Positive   Or

 

 

 

 

Negative?' (Externetwork, 2016) <http://blog.externetworks.com/impact-of-net-neutrality-on-smbs-other-

 

 

.businesses-positive-or-negative> accessed 20 September 2016.

 

 

4 John Wihbey, 'The net neutrality debate and underlying dynamics: Research perspectives' (Journalist´s re-sources, 10 November 2014)<http://journalistsresource.org/studies/society/internet/net-neutrality-debate-underlying-dynamics-research-perspectives> accessed 25 September 2016.

 

Robert Faris and others, 'The Berkman Center for Internet & Society at Harvard University' [2015] 1(1) Score Another One for the Internet? The Role of the Networked Public Sphere in the US Net Neutrality Policy De-bate 3.

 

6 Supra at 4.

 

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thought can be found in start-ups, SMBs and consumers, given that they fear abuses on their part as a result their weaker bargaining position.

 

On the other hand, ISPs oppose to this increased regulation of the market. They are not willing to invest to maintain and upgrade their services, whilst content providers do not carry any cost, free-riding their infrastructure. This is arguably an unbearable cost for ISPs, given that they are required to continuously streamline their infrastructure to keep pace with this fast-paced evolving technology.7 Therefore, proponents of this stance content inter alia that investment will be undermined if they are required to comply with stringent rules; as otherwise the cost will be passed into the consumers. Also, the threats of abuse by ISPs seem to be largely theoretical rather than empirical as a result of their countervailing interest, making ex-ante regulation to be a potential deterrent to a market that is inherently dynamic.

 

As stated by Tim Berners-Lee, the founder of the World Wide Web, internet is the basis of a fair competitive market economy, stressing the need for a neutral net.8 Yet, it will be analyzed as to whether the recent net neutrality rules are adequate to achieve the sought policy goals. It will be weighted whether they are the most efficient way to regulate the market in light of the given threats, or if some other less intrusive alternative will be more suitable by its greater flexibility to adapt to changed circumstances and to embrace novel business models.

 

The drastic increase in demand for online service during the last decade is the main reason why this fierce struggles to become prevalent has been sparked. Considering the essence of having a neutral net is to further the development of the internet and its valuable features toward maximizing welfare, it seems overriding to overcome the hurdles posed by this phenomenon. Thus, it will be concluded in this paper that in order to settle this controversial issue is essential to devise an adequate economical scheme that complement the legal framework. A theoretical approach will be presented in this paper, seeking to reconcile some of the shortcomings found in the solutions proposed to date, as they have hitherto proved arguably inadequate.

 

 

 

Mozilla approach will be used as a yardstick for this proposal, as it contends that the market is two-folded; including edge providers.

 

 

 

 

 

Luca Belli, Net Neutrality Compendium: Human Rights, Free Competition and the Future of the Internet (1st edn, Springer 2016) 70-75.

 

8 Jorge Perez Martinez, Net Neutrality: Contributions to the debate (1st edn, Ariel SA 2011) 152-155.

 

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The new approach suggests that successful content providers getting revenue above a certain threshold should contribute with a fee toward funding infrastructure, similar to the high-income tax approach seen in some jurisdictions. Although it could be based upon the same legal principles, this is an innovative manner to allocate the costs of building new infrastructure and ensuring further investment in new technologies among the different whole-market players, considering they have the shared interest of benefiting by providing enhanced services that will continuously increase demand and thereby profit. The economic implications of this proposal is outside the scope of the paper, yet its succinct the main challenges presented throughout this research, seeking to draw the most efficient trade-off among the competing interests.

 

1.2 Purpose and Structure of the thesis

 

 

This research paper will focus on analyzing the legal framework regulating net neutrality as a result of its polemic scope and potential implications. It will be reviewed the rationale behind the decision that prompted the European Parliament and the FCC (Federal Communication Commission) to regulate the broadband interment market under the recently implemented net neutrality rules both in Europe and America. Subsequently, it will be analyzed whether or not in light of the threats that the market is facing this approach can be considered as the best way to regulate it.

 

First, this paper aims to seek the best regulatory approach for regulating this market by looking at the policy goals being sought. It will thus be weighted whether these rules are reasonable and proportional in view of the existing challenges and purposes pursued.

 

Second, a large array of legal, political and market-based arguments for and against the current rules will be presented in order to get a better insight as to the potential implications of passing a comprehensive set of rules. The main analysis of the paper is thus directed at seeking a trade-off that reconciles the interest of the different market players toward maximizing total welfare. Thereby, a light-touch regulatory approach will be suggested as an alternative to the current rules, as its less interventionist role will arguably better adapt to the inherent dynamics of the market. Also, it will be analyzed whether this approach would be self-sufficient to deal with potential market failures and abuses, or if it is dependent on some sort of preemptive measures.

 

The last part of the essay will put forward the symbiotic relationship between law and economics that characterize this market. It will be presented the aforesaid theoretical approach to regulating the market, which attempts to suggest an innovative conceptualization of the

 

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market toward spurring on investment in broadband networks through an arguably innovative cost-efficient allocation of resources.

 

1.3 Legal Questions

 

 

The subject matter of this paper revolves around two central legal issues. First, it analyzes whether or not European and American legislators sufficiently grounded upon law and consistent factual data their legislative authority for regulating the broadband internet access market. It must be noted that the discussion as to whether legislators were granted an adequate source of power toward enacting the recent net neutrality rules is mainly discussed with regard to America, given its greater legal precedent. Second, it reviews whether this robust regulation that totally banns the contested practices of blocking, throttling and paid prioritization is needed in order to safeguard the rights of the different market players involved, or if a light-touch regulatory approach will better foster the dynamics of the market. Therefore, the main focus of the research paper lies on analyzing a number of competing arguments about the potential harms threatening the market and thus weighting them with regard to the implications that the current net neutrality rules may entail, seeking to find the best regulatory approach to regulating the given market.

 

Regarding the first legal question, European legislators recently implemented rules on net neutrality and apply as of 30 April 2016, following the adoption of Regulation (EU) 2015/2120.9 This regulation seems to have a solid legal basis, as it was established through the European democratic law-making process.10 Yet, these mainstream rules are contested, considering inter alia that the market is arguably sufficiently competitive, thereby not meeting the competition policy test required for the implementation of sector-specific rules. The main focus in Europe will thus revolve around discussing the potential effect and scope of the rules.

 

 

In America, Section 706 of the Telecommunications Act 1996 is especially relevant, as the previously overridden Open Internet Rules in America were based upon them. They were overturned in Verizon v FCC11 by the D.C Circuit, as it was held that the FCC exceeded their authority when treating ISPs as common carrier. Thus, it will be analyzed whether the FCC has successfully grounded the Open Internet rules 2015 under this section.

 

 

 

European comission , 'Open Internet' (European Comission Website, 20/09/2016) <https://ec.europa.eu/digital-single-market/en/open-internet-net-neutrality> accessed 18 October 2016.

 

10 Frode Sørensen, 'European Net Neutrality – Regulation and guidelines' (Norwegian Communication Authori-ty, 2016) <http://eng.nkom.no/topical-issues/news/european-net-neutrality-regulation-and-

 

guidelines> accessed 20 November 2016.

11 740 F.3d 623 (D.C. Cir. 2014); 11-1355 (2014).

 

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Subsequently, it will be discussed whether American legislators were legally entitled to reclassify this market as a public utility under title II of the Communications Act 1934. The ruling given in the Brand X12 will be used as a starting point, given that the court held that the FCC had leeway to decide as to how different categories of services should be classified. Yet, other arguments opposing this classification will be put forward in order to reach a better understanding as to the purview of this legal instrument; for instance it is argued that this change need to be supported by sufficient evidence and that cannot thus be done on a whim of the FCC.

 

Regarding the second question, it will be analyzed the suitability of pre-emptive sector-specific regulations when compared to ex-post remedies both in Europe and America. The latter has been the preferred approach for governing the market from the onset, allowing the market to develop as a result of its minimalist approach and making the internet to become the important socio-economic tool that is today. Thus, it will be scrutinized as to whether ex-ante and ex-post regulations have a symbiotic relation that strengthens their best attribute, or if the former is just a transient measure. The rationale of this analysis is aimed at assessing the suitability of the current rules from a different standpoint, in particular by deeper looking into the implications that preemptive measures may entail.

 

The core of the thesis will be devoted toward presenting a number of competing arguments about the need of regulating net neutrality through robust rules. Pro net neutrality advocates inter alia the need to prevent a tiered internet or ISPs acting as internet gatekeepers. Yet, this view will be contrasted with arguments contending otherwise; such as less incentive to innovate or invest; allowing me to analyze which set of arguments are overriding in light of the sought goals. Thus, it will be concluded whether this increased regulation is justified and needed, or if some other alternative regulatory approach will be more suitable in the given market.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12 NCTA v. Brand X, 545 U.S. 967 (2005).

 

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1.4 Methodology

 

 

The study is methodologically designed to be based on a legal analysis of the regulatory framework currently governing net neutrality. American and European current net neutrality rules have been used as primary source materials. Secondary sources consisting of books, journal articles and an array of online available content have also been employed in order to present a critical analysis as to the adequacy of the current legal framework governing the broadband internet market. In addition, theories, public statements, and critical comments are used to put into perspective the wide-ranging connotations surrounding this phenomenon.

 

Considering there is not much literature analyzing the recent changes that the market has undergone during the past few years, the study is mainly carried out by looking at some critical views and proposed alternatives in order assess the implications of regulating such a dynamic market through heavy-handed rules and analyzing the suitability of any potential alternative approach.

 

A light-touch regulatory approach will be proposed as an alternative toward governing net neutrality, consisting in a more de-regulated market with arguably higher incentives to further investment and innovation, in which any potential failure or abuse will be redressed by ex-post regulation. This has been developed throughout this paper by relying on several proposals suggested by a number of scholars and using as bedrock the thriving effect of the preceding light-touch legal framework governing the broadband internet market in the given jurisdictions. In each section of this essay is concluded the support for this approach, given that after analyzing competing arguments, my view is that is paramount to leave this market ´´unfettered´´.

 

Ultimately, a theoretical approach will be put forward in the last section, highlighting the importance of seeking an effective interplay between law and economics toward ensuring the implementation of an efficient regulatory framework. This has been carried on by analyzing the different given arguments and finding a middle point among the competing interests. It must be noted that this proposal is not intended to be comprehensive, but it aims to highlight an alternative viewpoint; aiming to reconcile it main implications.

 

 

 

 

 

 

 

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Chapter 2 – Analysis of Net Neutrality Legal Framework

 

 

In the first section of the chapter it will be presented some background discussion as to the regulatory mechanisms governing the market prior to the implementation of the recent net neutrality rules. Thereon, this chapter will analyze the legal foundations that European and American legislators have resorted to for grounding the increased regulation of the market and the blanket ban imposed upon the contested practices of blocking, throttling and paid prioritization.

 

Subsequently, it will be presented some of the arguments employed for justifying the implementation of these robust rules; thus they will be contrasted with arguments challenging this departure from the preceding light-touch regulatory approach. This will help to illustrate some of the potential implications that a comprehensive framework may bring about and question its suitability.

 

 

 

 

 

2.1 Legal Basis for Regulating Net Neutrality in Europe

 

 

 

 

The 2009 EU telecoms reform introduced new safeguards for ensuring a more open and neutral net, at the same time as it sought to protect consumer rights to internet access. Although not express reference to net neutrality were enshrined within the different directives, apart from an annex in 2009/140/ EC which included a commission declaration on net neutrality, it could be implied a clear will from EU legislators to include net neutrality as a policy objective to be promoted by national regulatory authorities .This can be evidenced by recital 28 of the directive 2009/136/EC, stating that end-users should decide what content they want to send and receive. The European commitment to preserve the inherent functionalities of the internet can be further illustrated by article 8.4 of the Framework Directive (amended by Directive 2009/140/EC), where it was first conceptualized consumer protection toward ensuring ´user´s ability to access and distribute information and to run applications and services of their own choice´.

 

Similarly,  the  transparency  requirements  contained  in  the  Universal  Service  Directive (amended by Directive 2009/136/EC) and the requirement of a minimum qualify of services enshrined in article 22.3 of the same directive seem to have a bearing on net neutrality. They set limits with regard to ISP´s practices, limiting restrictive traffic management and imposing reporting requirement upon them; when changes on any conditions limiting access and use of 8

services and applications have occurred. Also, the European Regulators of Electronic Communications (BEREC) was created in 2009 to ensure coherence and harmonization when transposing EU directive into national law, whereby seeking to promote uniform actions by the National regulatory authorities (NRA).13

 

Although some scholars have argued that broadband internet is not included in the universal service obligation and its provisions thus should not be applicable to net neutrality issues, this argument is vulnerable in at least two ways. First; it can be contended that a connection to the public telephone network allows the supply of both telephony and broadband services and given that the physical last-mile connectivity is the same, the obligations should be the same.

 

Second, in accordance with the EU Framework Directive, NRAs must ensure that, in the context of their day-to-day work, they take all reasonable measures to achieve certain policy objectives listed therein. These include ensuring that end-users derive maximum benefit in terms of choice, price and quality and that there is no distortion or restriction of competition in the electronic communications sector, including in the transmission of content. Therefore, the provisions of the Universal Service Directive can be useful in ensuring that consumers are not affected by certain practices of ISPs, and, as mentioned, derive maximum benefit when accessing electronic communication services (telephony or broadband through which online content is provided).14

 

However, this fast-evolving market brought about new challenges, giving rise to news inconsistencies and potential threats. For instance, the relationships between ISPs and content providers are evolving and commercial actors are addressing scalability issues and taking advantage of new technologies and business opportunities. Similarly, new forms of interconnection, new market solutions for content delivery or the contested ´´sponsored data plans´´ seemed to give persuasive grounds for regulatory intervention.

 

It is starkly evident that in the recent decade the EU has striven toward regulating the broadband market aiming to strike a balance between the interest of consumers and ISPS, envisioning greater consumer choice and higher standard of services at a lower price by strengthening competition and consumer’s protection through a sound regulatory framework.

 

Consequently, the EU commission contrived a forward-looking review of Internet development and governance, giving rise to a new set of rules. EU TSM regulation (telecommunication single market) applies as of 30 April 2016, following the adoption of

 

 

13 Cristina Cuellell March, ´´Faculty of Social Sciences and Human Sciences´´ (2011) Net Neutrality Freedoms under the European Union Telecoms Reform 2-8.

 

14  Maria Cristina Leal, 'Computer Law & Security Review' [2014] 30(5) The EU approach to net neutrality: Network operators and over-the-top players, friends or foes? 506-520.

 

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Regulation (EU) 2015/2120 on 25 November 2015.15 One of the two main parts of this regulation is made out of rules on Net Neutrality (Open Internet).

 

 

 

 

 

2.2 Legal Basis for Regulating Net Neutrality in America

 

 

During a relative long time, Net Neutrality, or the equal treatment of all websites by ISPs, has been one of the most technological policies issues in America. The congress expressed it preference of leaving advanced services like broadband ´´unfettered´´ by both state and federal regulation, resulting in a minimalist approach that prevailed for more than a decade, being incredibly successful when measured by a range of metrics. Yet, federal regulators recently elected to drastically alter this approach to broadband by seeking to regulate the market. This decision has raised numerous questions about the reach of FCC authority over broadband and the implications of regulating a once thought immune market.16

 

Internet access was previously classified as a ´´information service´´ under title I, conferring upon the FCC ‘’ancillary’’ regulatory authority. Yet, during the past many years the Commission developed an alternative theory to regulate under Title I. They thus relied on section 706 of the telecommunication act of 1996 for grounding the Open Internet rules passed in 2010, seeking to prevent large corporations like Verizon and Compcast from stifling competition and innovation in the online market. Section 706 aims to promote competition whilst reducing regulation, in order to secure lower prices and higher quality of services and to encourage the rapid development of new technology. Thereby, before the article is invoked, the FCC is required to conduct a prior study providing evidence that the telecommunications services are not being deployed at all Americans in a reasonable and timely basis. 17

 

Assuming that is the case, the congress can ask the commission to undertake measures, provided they identify a barrier combined with evidence, showing that it impinges on infrastructure investment or there is existing sufficient evidence indicating that competition is at risk of being disrupted at the local telecommunication market. Although Section 706 arguably gives the FCC the authority to regulate ISPs to pursue the aforementioned policy

 

 

 

15 Supra at 10.

 

16 Charlies M Davidson and Michael J Santoreli, ' Hastings Science and Technology Law Journal 8 Hastings Sci' [2016] 8(2) Broadbands, the States and Section 706: Regulatory Federalism in the Open Internet Era 220-228.

 

17 Ibid

 

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goals, it is not clear how that would allow the commission to safeguard net neutrality due to its rather limited scope.

 

Thus, the regulation was struck down in 2014 after Verizon appeal. The D.C circuit deemed it to be based on a flawed legal foundation. 18 They regarded the actions taken by the FCC as tantamount to common carriage obligations falling under title II;19thereby, exceeding their authority, by obligating carriers to furnish services to all comers at reasonable and nondiscriminatory rates. Without net neutralities rules, the online market faced a large array of challenges, widely feared by the overriding majority of market players that were not dominant ISPs.

 

 

The FCC was left with two paths, either reversing the presumption that paying for services would violate FCC rules and place the initial burden of proof on the complaining content provider, thus continuing to ground the rules under 706 or leaving the presumption in place and ground the rules under the tougher regulatory system envisioned by title II of the Telecommunication Act. The FCC sought to proceed with the first option, yet president Obama ordered the independent commission to change the course, opting for a third path; namely new rules under section II. These rules eliminated the case-by-case process and established a full prohibition on paid prioritization, blocking and throttling.20

 

Consequently, the recent Open Internet rules are grounded in the strongest possible legal foundation by relying on multiple sources of authority, including: The aforementioned Section 706 and title II of the Communication Act 1934, which reclassifies broadband as common carriers with all the rights and responsibilities that it implies. The rationale behind this decision was voiced by Tom Wheeler, the commission chairman, who asserted that the FCC strive toward devising the most expedient way to warrant innovation and consumers rights, as without these set of rules the internet´s core role of being a space for free expression and realization of democratic rights will be at stake. The main purpose sought by the legislators was to ensure an open internet, in which the internet is not blocked or divided into lines at ISP discretion. 21

 

 

 

18 Public knowledge, 'Net Neutrality' (Public Knowledge, 2016) <https://www.publicknowledge.org/issues/net-neutrality> accessed 3 October 2016.

 

19  The Court did so because the rules imposed per se common carrier requirements on Broadband providers, being in contrast with FCC decision to reclassify broadband internet access as purely an information service under title I.

 

20 Federal communication Comission, 'Open Internet' (Federal Communication

 

Comission, 2016) <https://www.fcc.gov/general/open-internet> accessed 9 October 2016.

21 Ibid.

 

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The FCC yearlong path to issuing rules to ensure an open internet precipitated an extraordinary level of political involvement, from grass-route populism to the white house. Indeed, the record-breaking 4 million commenters who partook in the FCC´s open internet calling for title II reclassification evidenced practically public consensus about the impending need to regulate the online market according the recent reclassification in order to ensure that America´s broadband network is fast, fair and open. Interestingly, it is worth noting that the vast majority of these comments were driven by advocacy groups, arguably advocating positions that could not reasonably be attributed to those submitting them.22

 

 

 

2.3 Legal Scope of European Net Neutrality Regulation

 

 

The rules have been followed by BEREC guideline on 30 August 2016 in Net Neutrality in order to contribute to its consistent application. These guidelines are hailed as a victory for the free and open internet, as they clarify vaguely worded that experts said that were under the risk of being exploited by telecoms. The regulation enshrine the principle of Net Neutrality into EU law: it prohibits ISPs from blocking, discriminating or slowing down the internet traffic except when necessary. These exceptions were clarified by BEREC, limiting them to the following cases: traffic management to comply with a legal order, to ensure network integrity and security, and to manage congestion, provided that equivalent categories of traffic are treated equally. It must be noted that ex-ante sector-specific regulation can only be imposed if it is considered that there is insufficient competition in the telecommunication market, being supposed to roll back as soon as the market becomes competitive again. Hence, it makes the European Network debate about neutrality to be largely grounded in law and economics.

 

NRA further complement the application of the TMS, as they are empowered to monitor market developments, assessing traffic management, commercial practices and agreements toward effectively enforcing the regulation. Furthermore, they are also assigned the task of reflecting advances in technology, being empowered to take appropriate measures to that end, ensuring end-users enjoy an open internet service of good quality. Thus, when considered appropriate they can set minimum quality of services requirement on ISPs in order to prevent the degradation of services.23 This policy can be understood as a light-touch regulatory

 

 

 

22 Supra at 16.

 

23 Supra at 5.

 

12

approach that attempts to strike a balance between ensuring investment from ISP´s and safeguarding consumer´s rights.

 

Despite attempts of the broadband providers to thwart this regulation of the market, it has been passed even more stringent rules that the one adopted in 2015 in America. As stated by Wilhelm Eschweiler, the vice president of Germany´s telecom regulator Bundesnetzagentur and current chair of BEREC, the regulations are a more robust and more legal-based approach.24Also, it must be noted that public awareness seem to have played an important role, as the fear of users regarding the risks associated with having a not neutral net seem to have become mainstream, lobbying the implementation of these rules by bombarding the internet with statements as to the need of having an open internet toward ensuring a thriving internet. Save the internet.eu has been a remarkably lobby group, as it contains over 5000 million statements therein.

 

This regulation seem as a victory for the future of broadband internet services, as it seeks the most efficient trade-off among the competing interests toward ensuring the further development of the internet, focusing on safeguarding its inherent characteristic as an open and neutral space. Yet, given the fact that various articles of the TMS do not provide clear guidelines, there is a risk that broadly drafted provisions are subjected to a restrictive interpretation, resulting in over-regulation of ISPs. Thereby, it is feared by those advocating this argument that if that was the case, the benefits of consumer welfare will be unwittingly scarified on the otherwise laudable attempt of ensuring an open internet.

 

Notwithstanding the guidelines passed by the BEREC, the policy scope of the regulation covers wide-ranging business practices, hindering its effective application. A risk of under-and over-enforcement may harm the market, being particularly worrying the latter. Over-enforcement can give rise to the called ´´type I´´ error,25 in antitrust parlance. This can occur through the implementation of rigid, doctrinaire net neutrality policy that prevents commercial practices that are not per se anti-competitive.26

 

In any case, it can be argued that the symbiotic relationship between ex ante and ex post regulation seem to be fundamental given the challenges that this rapid-evolving phenomenon

 

24 Catherine Stupp, 'Europe will have stronger net neutrality rules than the US, regulators say' (Euractiv, 8 June 2016) <https://www.euractiv.com/section/innovation-industry/news/europe-will-have-stronger-net-neutrality-rules-than-the-us-regulators-say/> accessed 18 October 2016.

 

25 Type II error represents situations where the legislators do not take regulatory intervenation when the interven-tion would have increased social welfare.

 

26 Peter Alexiadis, 'Antitrustlaw' [12/06/2016] EU net neutrality policy and the mobile sector: the need for com-petition law standards 2-4.

 

13

faces and the current degree of maturity of EU law. Moreover, considering the re-thinking that the EU electronic communications Regulatory Framework has undergone over the course of 2016, and the wide-ranging commercial relationships evolving across the internet, it appears that the sole analytical basis upon which the TSM regulation can be best interpreted and applied is one that is in accordance with competition law principles. Many of the recitals contained within the regulation evidence this, by specifying that they have to be interpreted in light of ex post principles.

 

For instance, Recitals 7 or 8 revolving around non-discrimination principle exemplify that net neutrality is based on the logic and flexibility of competition policy, as consumer welfare implications are particularly complex to be construed in commercial contexts; thereby calling for case-by-case judgments of merits. This Ex post application will arguably diminish the potential risk of over-regulation, as they apply realistic market-based approach in each case, conducting consumer welfare test in order to determine whether the essence of the consumers rights affected have been violated. 27

 

Therefore, it can be argued that TMS regulation must at the very least be aligned with EU competition law because of its greater suitability for dealing with this multi-sided market; given that the interplay of many complex factors and many diverse market players hampers its application. Indeed, if a type I error does occur, this will unwittingly be counter-productive as the market will consequently suffer a downturn.

 

Chapter 3 will further elaborate upon the arguments opposing this comprehensive regulatory approach. A more flexible and less interventionist regulatory framework will be argued as a more suitable approach in light of the actual functioning of the market, its inherent driving force and the actual challenges they are facing.

 

 

 

 

 

2.4 Legal Scope of American Net Neutrality Regulation

 

 

The adequacy of the legal foundation will be analyzed in order to determine whether these rules grant sufficient authority to the commission to act. The FCC relied upon section 706 for justifying the no-blocking, non-discrimination and neutral rules proposed in its 2010 Open Internet Order. The FCC explained that these rules were promoting the policies outlined in

 

 

 

27 Supra at 11 p. 9 -10.

 

14

section 706 because they supported the´ virtuous circle of innovation´.28 Yet, it must be noted that this virtuous circle can turn both ways: Many innovators may be better enabled or even require net neutrality; and neutrality may foreclose some forms of innovation. Thus, whether or not Net Neutrality better promotes innovation appears to be an empirical question.29

 

In any case, The D.C circuit held in Verizon v FCC its support for this expansive theory regarding FCC general authority to regulate broadband internet access service, explaining that edge providers innovation leads to the expansion and improvement of broadband infrastructure .The D.C circuit further determined that section 706(a) constitutes a reasonable grant of regulatory authority. Indeed, the court held that both section 706(a) and 706(b) gave FCC actual legislative authority to regulate companies toward promoting the development of advanced technologies; namely ISP’s. However, federal statutes, FCC precedent, federal case law and an array of other factors make clear that regulatory authority over broadband accruing states under this section is very low, if it exists at all, and subject to a number of limitations, including federal preemption.

 

Also, as stated by Daniel Deacon, the communication act section gives the FCC a potentially broad power to regulate services that fall outside their core jurisdiction over common carrier. He further argues that this empowerment gives the FCC malleable and potentially broad jurisdiction over Internet-based networks and services, as it does not seem to be any limit as to the reach of the section to those particular providers.30 Yet, as outlined above, FCC power under this section is not limitless considering the verdict given by the courts in the Verizon case, where it was held that their authority is constrained to using the regulatory tools identified in the law toward encouraging development of advanced technologies.

 

Regarding title II reclassification, it seems to fit under the definition of a telecommunication service as evidenced in the Brand X case, where the Supreme Court ruled that is at FCC´s discretion to decide as to what category of services best fits into telecommunication or information,31 offering them a much more robust source of authority. Yet, it can be argued

 

 

28 The Internet's openness enables a virtuous circle of innovation in which new uses of the network--including new content, applications, services, and devices--lead to increased end-user demand for broadband, which drives network improvements, which in turn lead to further innovative network uses.

 

29 Justin Hurwitz, ' Michigan State Law Review 2015 Mich St L Rev ' [2015] 1(2) Net Neutrality: Something Old; Something New 668.

 

30  ThomasB Norton, 'Internet Privacy Enforcement after Net Neutrality ' [2015] 26(1) Fordham Intellectual Property, Media & Entertainment Law Journal 255-258.

 

31Supra at 11. All the Supreme Court did in Brand X say that the FCC has the discretion to interpret the Com-munications Act, and — even though it's not the best interpretation — as long as it's not wacky, we have to uphold it."

 

 

15

that even though the FCC may be allowed to change its decision as to how to classify internet broadband services, it cannot do it on a whim. Legal precedent requires the commission to acknowledge the change with substantial supportive arguments, as otherwise their decision will be rendered vulnerable when challenged in court. Thus, the future of these rules is still uncertain and its resilience will be tested in court.

 

Net neutrality proponents assume that the impact of common-carrier regulation will be minimal and that the U.S will maintain its technological lead forever, yet imposing regulations crafted for last century’s monopoly telephone service will potentially have a crippling and chilling effect on broadband investment. This can be evidenced by the study undertaken by Internet Innovation Alliance, where it was demonstrated that Europe has fallen behind America with regard to the number of available ISPS to consumers as a result of their overridden ‘’whole-access’’ regulatory regime, which was ironically designed to promote competition.32

 

In any case, it must be noted that this reclassification is akin to a middle group between light regulation under title I and heavy regulation under title II, as the commission has committed to refrain from enforcing the majority of the provisions contained within that are not relevant, as enshrined in section 10 of the Telecommunication Act. The commission forbore from thirty sections of title II; thereby limiting their regulatory control. However, it raised controversy as a result of the arguments given for and against forbearance of nearly every provision. Moreover, there is a reasonable concern that the ´´core ´´ provisions of title II; namely section 201 and 202 from which the commission did not refrain, confers upon the commission pervasive authority over ISP´s business practices.

 

Gus Hurwiitz argues that a lighter regulatory approach would keep further litigation from occurring, being in the public´s best interest. However, Weinberg, who watched the round table argued otherwise; contending that nobody should craft regulations to shun litigation altogether, as that is just simply not feasible. He supports title II as being an expedient manner to create strong net neutrality rules.33

 

Mignon Clyburn who is one of the longest-tenured commissioners and advocate of drawing upon to title II, assert that neutrality does not only address theoretical harms. Indeed, he argues that factual evidence such as the blocking of applications in telephone devices or

 

 

32 Boucher, Rick; Campbell, Fred Why Download Europe's Lousy Broadband Policy? Wall Street Journal, East-ern edition [New York, N.Y] 12 Feb 2015: A.13.

 

33  Greg Otto, 'Title II or Section 706? Legal minds weigh FCC's net neutrality options' (Fedscoop, 7 October 2014) <http://fedscoop.com/fcc-net-neutrality-title-ii-section-706/>accessed 1 November 2016.

 

16

Comcast throttling Netflix data, which significantly lowered the quality of their product in order to extract rent from them, gives compelling grounds for justifying such a reclassification. 34The new regulation is thus contrived toward precluding these types of practices to occur, by banning blocking, throttling and paid prioritization toward ensuring that ISP´S do not interfere with total welfare.

 

 

Hence, it may be argued that this grant of regulatory authority certainly renders the FCC with ample leeway toward devising appropriate measures that fosters the dynamics of the market and protect consumer´s rights.

 

Although the D.C Courts of Appeal upheld the FCC rules in 2016, major ISPs are still reluctant to be subject to title II, not desisting in their attempt to overturn the recent finding, as they are unwilling to comply with the onerous provisions contained therein. Hence, in the case United States Telecom Association v FCC and United states of America, the National Cable and Telecommunications Association together with AT&T and others brought proceedings in 2015 against the FCC guidelines,35 advocating that it contravened administrative law and that it violated the right of the claimant to determine what content they want to distribute and how quickly. They deem the decision to be capricious, arbitrary and unfair, as they consider it as an abuse of discretion by the FCC. 36 Furthermore, they are claiming that the order will result into new fees on consumers and burdensome procedurals requirements for providers. Yet, in the majority opinion by the D.C cirucuit , written by Tatel and Srinivasen, it was stated that the argument was underpinned by today´s people perception of the internet.

 

 

 

However, William who was the lone dissenter argued that even though they have the authority to change the way they regulate broadband, FCC fell short of providing enough compelling reasons to adopt such a finding. Although it can be argued that effective monopoly is a reason for determining that an industry is to be reclassified as a public utility or a common carrier, today´s communication networks fail to meet this requirement.37 Also, the Federal Trade Commission (FTC) and Justice Department have each issued extensive reports concluding that there is no evidence of concentration of abuse or abuses of market power in the broadband market that could possibly justify FCC interference.

 

 

34

Jon   Brodkin, 'FCC   votes   for   net   neutrality,   a   ban   on   paid   fast   lanes,   and   Title   II' (Ars

 

 

 

 

Tecnhica, 2/26/2015) <http://arstechnica.com/business/2015/02/fcc-votes-for-net-neutrality-a-ban-on-paid-

 

 

fast-lanes-and-title-ii/> accessed 2 October 2016.

 

35 Jeffrey Allen , 'American Bar Association' [2016] 33(4) ROAD WARRIOR: Revisiting Net Neutrality 1.

 

36 Supra at 26.

 

37 Supra at 35.

 

17

 

Ostensibly, it can be argued that the FCC has bumbled its oversight of some of the most important industries that it has sought to oversee, hindering their growth with short-sighted, over-reaching and confusing policies of political appeasement. The outrageous mistakes of the FCC in the realms of telephone, cable and broadcast make us wary about self-perpetuating factors that usually drive FCC intervention: lack of a clear congressional mandate, hunger of power and political susceptibility.38 Yet, the FCC argue that they believe they will be able to foster sufficient investment and achieve the policy goals, citing as an example the wireless industry, which has been under title II and with healthy levels of investment.

 

Nevertheless, in light of the discussion outlined above it seems not to be solid evidence justifying the qualification of these networks as a special infrastructure. Indeed, the FCC concluded that not only the broadband market is competitive, but that is moving in the direction of increased competition. Hence, considering the multiple wide-ranging implications recurrent changes in technology and demand will bring about and the feeble arguments vindicating these rules, it can be concluded that this regulation is redundant and unnecessary.39

 

Moreover, It can be argued that the commission should not adopt comprehensive Open Internet rules; rather should promulgate clear general guidelines to provide notice to industry participants about the general classes of conduct of concern to the Commission. Any subsequent behavior contravening these guidelines will allow the Commission to take swift enforcement actions on a case-by-case- basis under its 706 authority. This approach has been presented in the ´´commercially reasonable ´´ standard proposed in the Commission’s 2014 NPRM(Noticed of proposed rulemaking). It is based on modern principles of administrative law and procedure, arguably being sufficient to protect consumers and problematic behavior, whilst it encourages the continued development of new pro-consumer business and business models in the internet. This seems as a more satisfactory approach, considering there is not any other available alternative that allows developing these sort of business models in the interest of preventing hypothetical (and often irrational) consumer harm.40 Also, its flexibility is essential to forestall manipulation, capture and arbitrage by firms that will use the commission’s rule to profit, possibility at the expense of consumers.41

 

 

38 Bob Zelnick and Eva Zelcnick, The illusion of Net Neutrality (1 edn, Hoover Institution Press 2013) 12-17.

 

39 Jameson Mark a and Hauge Janice a, 'Journal of Competition Law and Economics' [2014] 10(2) Do Common Carriage, Special Infrastructure and General Purpose Technology Justify Regulation Communication Net-works? 475-493.

 

40 Suprat at 29.

 

41 Supra at 39.

 

18

 

As contended by the National Cable and Telecommunication Association, an industry group challenging FCC´s rules decision, is unlikely that this will be the final pronouncement settling this decade-long debate over internet regulation.42 The issue is thus still far from being settled, as opponents are still certain to be able to overturn the regulation.43

 

2.5 Concluding Remarks

 

 

Although it seems that the legislators both in Europe and America were conferred legislative authority to implement the recent net neutrality rules, their rigidity attracts criticism over potential conflicts of interest and deterrent effects. Thus, these rules are expected to be challenged in court given that major ISP’s are not contend with the reached outcome and they seem to have ample grounds for rebutting their adequacy.

 

Indeed, increased regulation entails many potential threats, being particularly worrisome in the given market, as recurrent changes in technology, drastically changes its nature and functioning. Therefore, in light of the challenges that the market is currently facing, it seems that a less interventionist approach will better foster its dynamics.

 

 

 

Chapter 3 challenging the Adequacy of Net Neutrality Rules: Light-Touch regulatory Approach

 

This chapter will start off by balancing competing arguments about net neutrality in order to determine as to whether or not the imposition of the recently implemented rules are based upon consistent factual evidence . The first section of the chapter will be devoted to analyzing the main arguments given by the proponents of Net Neutrality rules, whereas the second part will be contrasting these arguments by looking to dissenting stances and deeper assessing today´s functioning of the internet broadband access market.

 

Section 3.4 will put net neutrality into perspective by analyzing a relative novel contested practice known as zero-rating. In this section it will delve into its implications toward determining whether they adhere to net neutrality principles, whereupon it is balanced the main policy goals sought by policymakers in having a neutral net.

 

 

 

 

 

42  Rt, 'Net neutrality rules upheld by US appeals court' (RT, 14 June) <https://www.rt.com/usa/346676-fcc-net-neutrality-upheld/> accessed 2 October 2016.

 

43 Supra at 22.

 

19

After considering these set of arguments, section 3.5 will suggest a light-touch regulatory approach as a more flexible and suitable alternative for governing the broadband market.

 

 

 

3.1 Arguments in Favor of Net Neutrality Regulation

 

 

Proponents of Net Neutrality contend that is paramount to have a sound framework governing the internet, as this phenomenon has overtaken the socio-economic day-to-day life of millions of people by its wide-ranging far-reaching effect. They see the ability of Network operators to exercise discretion among sources of content and applications as a threat to the democratic, open and accessible quality of internet, which they consider as a constitutive element of the internet and it multiple benefits.

 

As evidenced by the research from Google and others, delays of milliseconds have long-term negative impacts on revenue. For instance, if consumers are clicking in a seller´s webpage and the images are buffering slowly, there is a high chance that they will click away, consequently losing the sale. Thereby, the risks associated with conferring ISPs negotiating leeway with edge providers is deemed rather high, since it is likely that will lead to access fees that will eventually give rise to limited platform, in which users will be only be able to see the content previously chosen by the ISPs at their discretion.44 Accordingly, major content providers may have to pay the fee in return for preferential access, undermining competition by setting barriers to the market. Similarly, ISPs that are vertically integrated will be in a position in which they could decide to promote their own services, hindering competition from other edge providers offering a similar service. For instance, ISPs may forestall users from visiting certain websites, slow down the services of content providers such as Netflix or Hulu, or even redirect users from one website to another competing website. Also, there is a potential risk that they will be acting as guardian of public morality or community values.

 

 

 

For startups trying to market their services or products, the Internet levels the playing field, by allowing low-cost access to a large audience. Also, they often resort to Internet-based services, such as Skype and Vonage, to keep operating costs down. Thus, their functioning will be severely disrupted if they were to be subjected to these proposed fees, as their limited economic capacity will preclude them from affording the cost of the premium service, relegating them to the slower-lane, undermining their business prospects. However, this

 

44

Chad   Dickerson, 'Etsy   CEO:   How   Net   Neutrality   Shaped   My   Life' (Backchannel, 20   February

 

 

 

 

2015) <https://backchannel.com/etsy-ceo-how-net-neutrality-shaped-my-life-

 

 

c6d53cdc79d2#.nybycjbkf> accessed 25 November 2016.

 

 

20

 

discriminatory pricing has not yet occurred, and indeed it appears difficult to explain why ISPs would want to impede the ongoing explosion of innovative content and applications that make their services valuable.45

 

Also, it must be noted that the incentives to invest by ISP´s under a discriminatory regime in the slow lane may be even lower, as the value of priority service diminishes according with the available capacity.46 Similarly, there is a potential risk that ISP´s will engage in quality degradation or sabotage. For instance, they may have an incentive to engage into these types of practices against the non-priority lane toward increasing the value of the premium one, whereupon they can get higher revenues from the content providers that opt to deliver prioritized service. This can be complemented by Choi and Kim theoretical analysis of net neutrality, as they showed that the discriminatory regime may not yield higher investment incentives in the long-run because less congestion may lead to content providers to have less willingness to pay for the prioritized delivery service. Cheng and Kramer gave complementary results both in the short and in the long run.47

 

There is even a possibility that without these policies, consumers will end up buying internet website bundles in the same way you buy channels on cable TV—a practice that already exists in some African countries without net neutrality provisions.48 This will affect SMB as well as democracy and freedom of speech. It will restrict access to today´s free available content and to a large spectrum of critical views about varied subjects to those who do not have the economic resources or inner-drive to seek information by purchasing access to the full bundle, limiting their understanding and development, arguably aligning internet users with the interests of large corporations. We will lose the freedom to choose as consumers and communicate as citizens by imposing access barriers upon content and services provided by smaller edge providers that cannot afford to be part of the premium bundle. Therefore, it can be argued that internet is an essential tool in today´s society, bolstering the need for ensuring a neutral net toward safeguarding fundamental human rights.49

 

45  Subhajyoti Bandyopadhyay and others, 'Net Neutrality, Broadband Market Coverage and Innovation at the Edge' [2009] 1(1) Net Neutrality Article 5-20.

 

46  Gerald Faulhaber and Gary Madden, Regulation and the Performance fo Communication and Information Netoworks (1 edn, Edward Elgar Publishing Limited 2012) 213.

 

47 Edmond Baranes, ´The interplay between network investment and content quality: implications to net neutrali-ty on the internet´[2014] 28(1) Information Economics and Policy 57-69.

 

48 Ben Popper, 'The great unbundling: cable TV as we know it is dying: Internet upstarts are pushing incumbents

 

to offer more a la carte options ' (The Verge, 22-April 2015) <http://www.theverge.com/2015/4/22/8466845/cable-tv-unbundling-verizon-espn-apple> accessed 20 Octo-ber 2016.

 

49 Agusti Carrillo-i-martinez and Agusti Peguera, Net Neutrality and other challenges for the future of the Inter-net (1 edn, Huygens Editorial 2011) 79-92.

 

21

 

Yet, contrasting views argue that paid prioritization will not necessarily disrupt the market. Indeed, according to Bourreau, it will maximize total welfare by allowing this practice within a duopoly, as it will further network performance and lead to innovation by content providers. Similarly, in Economides and Hermalin´s model, it is stated that if the model is enhanced to account for the fact that ISPS regularly invest to increase the capacity of the network, allowing them to charge different prices, will lead to further investment. Furthermore, Sidak´s and Teece´s observations in the outlined market threats are important given that they seek to conclude how they may or may not align with reality. In fact, they argue that until empirical evidence is presented showing that ISP´s incentives to disrupt competition are prevailing, imposing this non-discrimination rule seem rather feeble and overstated, as they lack a strong legal basis.50

 

In brief, balancing competing interests it can be argued that a free and open internet is the greatest technology of our time, and that its control should not be at the mercy of large corporations. Thus, stimulating ISP´s competition seems paramount for reducing their supremacy, as evidenced in other areas of law, where antitrust regulations were implemented for its furtherance. A neutral and open internet promotes the spread of ideas and protects freedom of speech, whilst helps to prevent abusive behavior by spurring on entrepreneurship and innovation, stressing the imperative need for adopting a suitable framework that reconcile the existing competing arguments toward safeguarding this precious asset.

 

The table below is worth noting, as it provides a summary of how different individuals and groups lined up for and against net neutrality. It does not include individuals and groups who took an in-between or third position.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50 TimothyJ Tardiff, 'Journal of Competition Law & Economics' [2015] 11(3) Net Neutrality: Economic Evalua-tion of Market Developments 701-721.

 

22

Table: Who Favored and Who Opposed Net Neutrality?

 

 

 

In favor of net neutrality

 

Opposed to net neutrality

 

 

 

 

 

 

 

 

 

 

 

 

Large, internet-base-companies:

 

Large,  broadband  service  providers:

 

 

 

Amazon.com, eBay, Google, Microsoft...

 

AT&T, Bellsouth, Comcast, Verizon...

 

 

 

 

 

 

 

 

 

 

Consumer/Civil Liberties: American

 

Network Equipment providers: Alcatel,

 

 

 

Civil Liberties Union, Consumer Union,

 

Cisco, Corning, Qualcomm 3M…

 

 

 

 

Free Press, Public Knowledge…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest groups: American Library

 

Interest groups: American Conservation

 

 

 

Association, Moveon.org, TechNet, Save

 

Union,

Citizens   Against

 

Government

 

 

 

the Internet.com, Service Employees Int.

 

Waste,

Communications

Workers

of

 

 

 

Union, Computer Professionals for Social

 

America,

National

Association

of

 

 

 

Responsibility…

 

Manufacturers,  National

Black  Chamber

 

 

 

 

 

 

of Commerce, National Coalition on Black

 

 

 

 

 

 

Civic   Participation,   Hands   Off   the

 

 

 

 

 

 

Internet…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2 Actual Functioning of the Internet and Arguments against Net Neutrality

 

 

 

 

Although one of the main arguments by pro net neutrality toward passing stringent rules is based on thwarting the apparent attempt of ISPS of dividing the internet into fast and slow lanes, in order to ensure the future of the internet as an open and neutral space to the benefit of all, this argument seems to be relying on an old conceptualization of the functioning of the internet. As it can be illustrated by the graphic below, today´s net is not neutral and will arguably never be, as large content providers are already bypassing internet backbones due to the large amount of traffic they move on their own. Google was the first company to expand its operation to a network of private data centers all over the world, setting routers inside some of the ISPS in order to send their data more directly to internet users (peering).

 

51 Tooley(2016) with modifications by Jeffrey A. Ha.

 

23

Similarly, they also resort to a practice widely known as content delivery network (CDN) by which servers are set up inside the ISPs. Thereby, content providers such as Netflix or Google running their CDNs are delivering their content faster and more efficiently, by minimizing their load in their backbone infrastructure.

 

Similarly, as published in 2014 by the Economist, Google has been reported to have implemented a technique to preload You Tube video clips on a user´s device before that user has pressed the play button, based on information it has about this user, increasing traffic whilst prioritizing their service.52Therefore, these practices are another manner in which the network is voluntarily configured by content and application providers, being only an option to the successful minority.

 

The rationale behind Net neutrality rules is to prevent prioritization of services by requiring ISPs to connect users to all lawful content on the internet equally, without giving preferential treatment to certain sites or services toward avoiding discrimination. Yet, in light of the arguments outlined above, this regulation will arguably fall short of their expectations, as major edge providers are currently providing enhanced delivery services, being at odds with the classic principles of Network Neutrality. It can be argued that Network Neutrality are based on a mythical arcadia, as the end-to-end principle has been always been honored in the breach.53

 

Also, it can be argued that these rules are not arguably a satisfying outcome for ISPs who are incurring all the investment, whilst edge providers are free-riding their service. They claim that exploiting demand is straining infrastructure and requiring very large network investment in response. Against this backdrop, major content providers such as Google or Facebook are arguably being the greatest beneficiary of the recently implemented regulatory framework, as they do not directly contribute for the further development of the internet, yet they reap the benefit of the infrastructure financed by ISPs.54 Hence, Consumer welfare is likely to be at stake, as investment by ISPS is arguably going to undergo a decline as a result of the overbearing effect of these regulations, given that it will be difficult to efficiently accommodate the relationship between revenue and capital investment.

 

 

 

 

52 Martin Peitz, 'International Journal of Industrial Organization' [May 2016] 46(1) Net neutrality and inflection of traffic 18.

 

53 Richard French, 'University of Ottawa Law and Technology Journal 4 U Ottawa ' [2007] 4(1) Net Neutrality 101 -121.

 

54 Frost and Sullivan, 'Net Neutrality: Impact on the Consumer and Economic Growth ' [2010] 4(13) Consumer Communication Center 5-15.

 

24

It can be further argued that the unpredictable growth of demand and cyclical variations therein make it inevitable that will be lags in investment, leading to moments in which congested networks threaten levels of services. Thus, it seems paramount that they are able to manage demand and its effect through traffic shaping toward ensuring a minimum service level for the majority of users.55

 

Content providers are also prone to suffer an investment setback. Given that the line between investing in networks and content has blurred over time, neutrality rules will bring about new challenges and uncertainties. Bandwidth-intensive content providers today draw upon CDNS such as Akamai and Limelight that allow them to improve quality of service, and accordingly demand. Yet, these burdensome rules will potentially preclude them from resorting to better or more suitable mechanisms that will allow them to fully monetize their services, discouraging investment. In other words, restrictions that limit content providers to realize the full value of the investment, also curtail the willingness to invest.56

 

Indeed, it does not seem reasonable or beneficial to forbid content providers from paying priority treatment for their content, as the alternative will be to charge consumers for faster internet if they want to get more bandwidth to avoid services as Netflix to halt. In reality, not all services are dependent on fast delivery, as consumers will not be concerned with slight milliseconds reduction in the speed of services such as emails or Facebook.57 This was further illustrated by Robert Atkinson, the president of the Information Technology Innovation foundation, who noted that services like Skype needs its bits to arrive at their destination in a tight, encouraging allowing paid prioritization.58Thereby, these rules appears to be to the detriment of consumers, as they only way a consumer can ensure faster delivery of their priority content is to pay more for all their content.

 

 

Also, it can be argued that there are not enough compelling reasons to assert that non-neutral business models will threaten the development of the market. Indeed, as stated by Paul MacAvoy, the current trend to regulate is an overly cautious step driven by the inadequacy of the utility and common carrier models to deal with partially competitive markets, which is inevitable as a result of technological changes. Others, such as Harry Trebing or

 

55 Ibid

 

56 GaryS becker , Dennis W and W Dennis, 'Journal of Competition Law & Economics,' [2010] 6(3) Net Neutral-ity and Consumer Welfare 502-503.

 

57 Dorman, Jefffrey (2015) Net neutrality puts everyone in the internet slow lane http://www.forbes.com/sites/jeffreydorfman/2015/02/27/ lane/#4feaf01029ab.

58 Eduardo Porter , 'Net Neutrality Debate: Internet Access and Costs Are Top Issues' (Business Day, 11 Novem-

 

ber 2011) <http://www.nytimes.com/2014/11/12/business/net-neutrality-debate-access-and-costs-are-top-issues.html> accessed 8 November 2016.

 

25

EdytheMiller have viewed this as an imposition of neo-classical economics, based on government control of industries and markets. Also, in light of the works done by authors such as Edwin Goddard and Horace Grace, it can be argued that this regulation and struggles may not be a result of changes in technologies, but a result of paternalistic state.

 

Furthermore, new technologies are fast-evolving challenging the adequacy of the legislation. For instance ´networks cookies´ developed by Stanford University engineers will certainly make it redundant, as it profess to be able to allow internet users to request preferential delivery from any network or content provider, thus preserving open internet. In this way consumer welfare will be maximized, as they will have the choice to decide what traffic should get favored delivery, whereas being consistent with the policy goal of ensuring that consumers have equal access to all content. As stated by the associated Stanford professor Sachi Katti, treating all traffic equally is not necessarily the best way to protect users. Indeed, they claim that the best way to ensure that ISPs do not make decisions that conflict with the interest of users is to allow users to configure their own traffic.59

 

According to Mark Cooper, it can be argued that the key issue is having a resilient and robust strategy. Although drafting a regulatory framework that changes according to the public´s use of the internet as he proposed could be regarded as a more suitable solution because of its flexibility, this seems unlikely to occur, given the number of blanket prohibitions recently issued.60 Therefore, in light of the discussion above, a light- touch approach is proposed as an arguably more efficient way of regulating the market; as it creates the conditions under which cross-sector partnerships can thrive instead of focusing on preserving a narrow set of market conditions that will potentially deter any potential collaboration.

 

The dynamic of the market leads to an increasing interconnected ecosystem, fundamentally changing the nature of competition and innovation, as evidenced by the rise of Smartphone and its inherent multi-sided features. Considering this dynamic is the result of the conditions created and fostered by the previous minimalistic approach, I am wary as to the implications of regulating the Broadband Internet Access market under the net neutrality rules recently implemented both in Europe and America.61

 

 

 

 

 

59  Tom,Glen    Abate,    martin, 'Stanford   engineers    propose   a   technology    to   break    the   net    neutrality

 

deadlock' (Stanford News, 13 September 2016)<http://news.stanford.edu/2016/09/13/breaking-net-neutrality-deadlock/> accessed 6 November 2016.

60 Suprat at 10.

 

61 Supra at 4

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.3 Controversy with Ex-ante Regulation

 

 

Ex ante rules establish a regulatory framework for anticipating and resolving actual disputes and problems. Typically, national legislation provides the law providing the basic structure under which the NRA creates policy, rules and regulations. The rationale for justifying this regulatory approach lies in the determination that an unfettered market would fail to achieve certain goals. 62

 

 

 

 

 

62 Rob Frieden, ' Berkeley Technology Law Journal 30 Berkeley Tech LJ' [2015] 30(2) Ex Ante versus Ex Post Approaches to Network Neutrality: A Comparative Assessment 1570.

 

27

Yet, ex- ante regulation entails a wide-ranging spectrum of concerns. For instance, the capture theory argues that sector-regulation can lead to abuse by certain actors since they may seek to favor their interest. Government sometimes holds a share in an incumbent undertaking, putting their interest to be at stake when pre-emptive regulations are implemented. Similarly, incumbent companies will strive to hamper the entrance of efficient competitors in the market in order to maintain their market share. Depending on the country, they may find themselves in a position which allows them to influence the independent regulators. Additionally, it can be argued that sector regulations are just transitory measures that complement competition European law, whilst markets are being liberalized, due to its greater flexibility and ex-ante effect. This transitory trend of sector regulations has been repeatedly stressed by the Parliament, commission and council, as it function and scope is aimed toward regulating specific markets, in which competition seem implausible to be achieved by ex-post legislation.

 

 

 

As asserted by Mario Monti, regulation remains to be the exception rather than the norm, as evidenced by the progressive reduction in the number of directives in the telecommunication market throughout the years. Thus, according to this line of though, sector regulations are deemed to phase out as competition evolves, as at this instance competition law will be sufficient to control the market, as arguably broadband internet access market is not different with other sectors where primary legislation suffices.63

 

In contrast, it can be argued that sector-specific regulation are expected to be an indispensable tool within the market as a result of its greater expertise and adequacy when dealing with the controversies that this fast-evolving phenomenon will potentially bring about, as it takes a broader approach which encompasses miscellaneous factors when regulating. Furthermore, the intrinsic complexity of broadband market challenges the idealized and envisioned application of the existing ex-post provisions. On the contrary, ex-ante regulation better adapts to these types of markets in which enduring dominant market players will potentially undermine competition by resorting to discriminatory practices. Thus, it can be argued that as it happened with the unexpected permanent duration the Federal Communication Commission in the US, in which sector-regulations seems to be primordial after 15 years, these net neutrality rules will most likely be an essential deal of the regulatory framework governing this area of law.64

 

 

 

63 Daniel Berhin and others, 'Sector-specific regulation in European electronic communications – meant to dis-appear?' [2005] 7(1) 7-8.

 

64

Antonio   G   Broumas, 'Necessity   of   Sector   Specific   Regulations   in   Electronic   Communications

 

 

 

 

Law' [2009] 4(3J) Journal of International Commercial Law and Technology 180.

 

 

28

 

However, ex-post regulatory response focus on evaluating specific instances of anticompetitive conduct, arguably being a better solution than ex-ante regulations that preempts a wide range of potentially welfare enhancing conducts, leading to the aforementioned type I error. Also, there is also not clear evidence of ISPS that have been vertically integrated and exercise monopoly power in any content market.65

 

Additionally, NRAs cannot be certain that the rules they adopt will be viable and effective in light of technological changes as well as the convergence and robust changes in the market. Although they will attempt to fashion rules that are flexible and adapt to changed circumstances, they might not be able to keep up with technological and marketplace changes or they make generate too much ambiguity in rules ostensibly designed to promote flexibility.66

 

The same seems to be applicable to America. Indeed, it appears that the risks of type II error are very low, 67 and in any case are mitigated by the fact that they are already potentially actionable under antitrust law. Thus, advocate for less intrusive government oversight of broadband service market support either immediate or gradual replacement of expert agency oversight with adjudication and enforcement remedies applied if and when conflicts arise. Yet, advocates of retaining ex-ante regulation argue that despite technological innovations, the broadband market cannot self-regulate and prevent anticompetitive practices that would distort the marketplace and harm consumers. They further argue that if ISPs engage in an abusive practice, ex-post remedies would apply well after the onset of harm to competitors and the public. Moreover, in United States, some courts have reduced consumer’s opportunities to seek judicial ex-post remedies by limiting their rights to form classes of similarly harmed parties. 68

 

However, all in all, is difficult to see the policy justification for ex-ante regulation. One would have to regard ISPs so socially and culturally important as to require competition policy remedies to protect their interest, even though the relevant market does not appear to meet the competition policy tests for the application of those remedies.

 

 

 

 

 

 

 

 

 

65 Ibid.

 

66 Ibid.

 

67   Type II error represents situations where the legislators do not take regulatory intervenation when the inter-vention would have increased social welfare.

 

68 Supra at 45.

 

29

3.4 Zero- Rating Implications

 

 

Zero-rating is the practice according to which data consumption of specific applications or services such as Facebook, Wikepedia or local job-sites is not counted against user´s data allowance. In some cases, this implies that the use of certain websites or service does not count against subscriber´s monthly data caps. In other arrangements, users can access the service even if they do not have a data plan. Despite zero rating´s apparent benefits, many advocates seek to ban the practice as a violation of net neutrality.

 

They regard zero-rating as an ingenious ruse for circumventing the current net neutrality framework, threatening to disrupt the functioning of the market because of its many implications. This practice allows ISPs to orientate the choices of the users, as it positively discriminate those services that are being zero-rated. Also, it can lead to a distortion of content, leading to the ´´walled garden effect´´ where a user´s experience of the internet is limited to these prioritized services due to their low or no cost. Also, some commentators have publicly condemned this practice.69 For instance, Barbara Van Schevick argues that zero-rating is the next threat to innovation and free speech online. Susan Crawford regarded it as pernicious, dangerous and malignant, whereas advocacy group and many others in the popular press call it at best a ´´dangerous compromise´´.

 

Yet, it can be argued that internet access is prohibitively expensive for over 4 billion people across the globe. Zero-rate mitigates this by closing the gap by allowing hundreds of people to use services like Facebook free basics, that allow access to sites like Facebook, Google, and Wikepedia alongside localized resources ranging from health advisory website to job-sites. Thus, this connectivity benefits arguably justify the apparent departure from net neutrality, as it allows people to communicate and improve their lives by using tools that would otherwise remain out of reach.70 However, opposing views argue that ´´Free basiscs´´ is a broader and more exploitative form of zero-rating . Indeed, this was poorly received in India where it was banned by the media regulator TRAI, as they argued that it was a violation of Net Neutrality principles. Nevertheless, after industry efforts it was announced a new consultation about the legality of free data pricing .Also, Open Web advocates have contended that this is just another example of the walled garden online, as individuals experience the internet through Facebook-colored glasses.

 

 

 

 

69    Julia Brungs, ' Search IFLA Statement on Net Neutrality and Zero-Rating (2016)' (Ifla, 11 October 2016) <http://www.ifla.org/publications/node/10700> accessed 15 November 2016.

 

70 Law Review Maryland, ' Maryland Law Review 75 Md L Rev' [2016] 75(4) Beyond Neutrality: How Zero Rating Can (Sometimes) Advance User Choice, Innovation, and Democratic Participation 986-988.

 

30

Additionally, it can be argued that net neutrality is not about achieving neutrality per se, but about advancing consumer choice and welfare, seeking innovation in the development of new services and guaranteeing participation in the public sphere. Zero-rating have real potential to attain these objectives, as it can inter alia spurs innovation by creating apps targeting poorer users, increase network accessibility or facilitate democratic participation, both by delivering users with the tools to engage in free speech online and increasing user´s educational and economic prospects so as to give them a greater voice .71As a corollary, the apparent limitation of net neutrality toward achieving distributive justice encourages policymakers and scholars to find a balance between communication laws and net neutrality´s nondiscrimination principle.

 

In any case, this is a relatively novel practice and predictions are thus largely speculative, hindering the task of regulators that in lieu of indulging in speculations ought to engage in designing policy experiments that will generate the necessary information to test the competing hypothesis toward devising appropriate regulations.72

 

Thus, FCC opted for a light-touch approach to zero-rating, which will be judged on a case-by-case basis. A similar outcome was reached in Europe, where the BEREC said that European legislators should assess such practices on the same basis, taking account for factors such as the market share of an ISP, effects on app choice, and the scale of the practice. Yet, these guidelines prohibit zero-rating in circumstances where the data cap is reached and all applications are blocked or slowed down.

 

 

 

 

 

 

 

 

 

  1. 3.   5 Promoting a Light-Touch Regulatory Approach as the Best Way to Deal with Net Neutrality

 

FCC Commissioner Ajit Pai, a Republican, believes that the government’s move to ensure an open Internet actually had the opposite effect, by deterring investment from small broadband providers struggling to comply with the regulations, and undermining innovation. Pai argues that the regulations will ultimately harm consumers by raising the cost of Internet service. He stresses that outside the tech bubble in 2001 and the Great recession of 2008, it is the first

 

 

71 IEEE Internet Computing, July-Aug. [2016] 20(4), 79-83.

 

72 Ibid.

 

31

time the investment in broadband has been reduced. ISPs argue that their incentives to innovate will be reduced with blanket net neutrality provisions that will hamper the monetization of their investment.73 AT&T has further highlighted that this reclassification will mire the industry in years of uncertainty and litigation, thereby stalling the virtuous circle of investment an innovation.74

 

Yet, it can be argued that this is unlikely to occur in a competitive market, as if an ISP does not deliver good quality services at a competitive price, or there is blocking or elimination of relevant contents, customers will change to another ISPS, prompting further investment.

 

The FCT’s 2007 report underpins this view, as it states that absent coordination or collusion among providers is improbable to occur, provided consumers have competitive alternatives available. Furthermore, broadband content providers face disincentives to restrict access to content since that usually leads to a reduction in their number of customers. Available data shows that switching among broadband customers is substantial; indeed, it is akin to the rates observed in other telecommunication services. This can be evidenced by looking into the monthly churn of some providers such as Cablevisions or Verizon. For instance, in 2008 Verizon’s rate for video and internet access was 2.0 percent, whereas the churn among wireless telephone subscribers was 1.3 percent. Also, as it happened when 4G technology was deployed, competition is expected to become even more significant as new technologies are being deployed such as the looming 5G technology, since new broadband service providers will be entering the market in response and in anticipation of the large and ongoing increase in Internet demand that will be prompted by the increased throughput to subscribers.75

 

Given that the market is envisioned to drastically change in the upcoming years as a result of changes in technology and demand, net neutrality rules do not seem as the best manner to govern this area of law, as they would artificially restrict the ability of ISPs to keep pace with advances. They argue that the capital investment required to accommodate the rapid growth of the internet requires the commercial freedom to recover such investment. Also, other aforementioned arguments such as the lack of examples of abuses strengthen this view.76 Thus, other more flexible alternatives, as Setting a minimum quality standards or disclosure

 

73

Loubet  Marta, 'Unpacking

US

Net

Neutrality  and  Competition  Law' (Comp

Law  Blog, 22  Jun

 

 

 

 

2016) <http://www.complawblog.com/us-net-neutrality-comp-law-2016/>accessed 24

October 2016.

 

74

Kate  Cox, 'Did  Net  Neutrality

Kill

Broadband  Investment  Like  Comcast,  AT&T,  Verizon  Said  It

 

 

Would?' (Consumerist, 9

February

2016)<https://consumerist.com/2016/02/09/did-net-neutrality-kill-

 

 

broadband-investment-like-comcast-att-verizon-said-it-would/> accessed 28 October 2016.

75     Supra at 20.

 

76 Pai, Ajit The story of the FCC's net neutrality decision and why it won't stand up in Court Federal Communi-cations Law Journal, [2015] 67(2), 173.

 

32

commitments, in lieu of a blanket ban to the contested practices is suggested for foreclosing regulation, as they will reduce abuses and will not disrupt the development of efficient business models and products.

 

Additionally, the European Commission stated the significance of the types of problems arising in net neutrality is correlated to the degree of competition existing in the market. Indeed, considering the lack of widespread competitive problems of the type specified by the FCC or BEREC to date, it seems sufficient and arguably more appropriate to address these potential threats by general market competition, and if the industry, in turn, evolve into a state of overly centralized control, antitrust oversight will serve as an adequate regulation in a ‘’case-by-case basis’’,77 as explained by professor Christopher Yoo of Pennsylvania Law School.

 

Yet, opposing views argue that relying on exclusively antitrust mechanisms to solve any potential abuse would ignore the size of the internet and the spectrum of the players involved; antitrust may scrutinize the big players but it may not work to promote the small actors. Furthermore, net neutrality proponents argue that antitrust and competitions are not sufficient for internet regulation because of the traditional triggers of this regulation; such as price, usually are absent on the internet. Furthermore, they contend that this regulation would not adequately protect against the non-economic goals of net neutrality; such as the protection of free speech and political debate.78 However, experience shows that in order to preserve private-sector incentives to invest, especially in capital-intensive industry like telecom, policymakers should only intervene to correct a market failure. Even then, policymaker makers should consider the benefits and costs of new regulations on consumers (short-run) and on investment incentives ( a long-run concern).79

 

In any case, it may be concluded that ISP´s just want to be free to manage without any regulatory constraint, seeking a trade-off between expanding capacities to meet peak demand and shaping traffic to optimize service at current capacity. Indeed, provided is a sufficiently competitive market, this trade-off will be determined by the market and not by policy.80 ISP’s further argue that consumer will not tolerate being dictated to as which content or application provider will have priority on their internet access service. Moreover, they contend that

 

77 American Economic Association [2016] 30(2),  Net Neutrality: A Fast Lane to Understanding the Trade-offs

 

†.127-150.

 

78 Rebecca Curwin, ' Columbia Science and Technology Law Review 17 Colum Sci & ' [2015] 17(1) Unlimited Data, but a Limited Net: How Zero-Rated Partnerships between Mobile Service Providers and Music-Streaming Apps Violate Net Neutrality 208-214.

 

79 Litan, Robert ; Singer, Hal J’ Net Neutrality is Bad Broadband Regulation’[2010] 7(3) the Economists' Voice.

 

80 Supra at 24.

 

33

content or application providers enjoy substantial countervailing power to negotiate with them, making this regulation unnecessary. It can be argued that net neutrality is a competition and investment problem, not a regulatory issue.81 Therefore, tin view of the dynamics of the market and that the problem remains more theoretical than practical; a minimal regulation will be endorsed as a better way to deal with the implications of the Broadband Internet access service market.

 

 

 

3.5 Concluding Remarks

 

It can be argued that in light of the analysis presented above, these new rules amount to unprecedented regulation and a government takeover of the internet, and is likely to bring about even more threats than those that the market is currently facing. As stated by the U.S Internet industry association, net neutrality can be regarded as a solution in a search problem.82 Indeed, regulations based on speculative harms will potentially discourage investment in the upgrades needed to accommodate ever-increasing demand for faster and higher capacity broadband network; reducing consumer’s welfare.

 

Thus, it can be argued that light-touch regulation approach will be a more suitable approach for governing this market.

 

 

 

 

 

Chapter 4 analyzing the Underlying Reasons for justifying this Increased Regulation

 

 

In this chapter are given two different set of arguments challenging the rationale for imposing the current net neutrality rules. The first section critically analyze whether the increased regulation that the online market has undergone during the last few years is grounded upon consistent data. A number of arguments will be presented in order to determine whether adequate legal and economic arguments have been adequately justified.

 

The second section will suggest that net neutrality regulation is just an ingenious charade for crony capitalism. Thus, the aim of this chapter is to illustrate potential underlying reasons for imposing these heavy-handed rules.

 

 

 

 

81 Andrea Renda, I own the pipes, you call the tune: The Net Neutrality Debate and Its Relevance in Europe (1st edn, CEPS 2008) 28.

 

82 Jeffrey A. Hart (2011) The Net Neutrality Debate in the

 

United States, Journal of Information Technology & Politics, 8:4, 418-443, DOI:

 

10.1080/19331681.2011.577650.

 

34

 

 

 

4.1 Is the Increased Regulation of the Broadband Internet Market Grounded upon Consistent Data?

 

It must be noted that the publicly available data sources used by the FCC showing the number of competitive alternatives is not consistent. For instance, the data used in 2014 in FCC chairman Tom Wheler’s 1776 speech about fixed broadband availability, was again used in 2015 broadband report, as illustrated in the diagram below. However, this data is in stark contrast with the data released by the FCC itself just three months before the speech, which showed much higher levels of availability when measured at the census tract level, as evidenced in figure 2. Yet, and probably more importantly, when the available graphics of the last few years are compared, it can be observed a clear trend showing growth in both broadband demand and competitive alternatives. Although Tom Wheler rebutted this by displaying data illustrating that the majority of Americans only have a choice to chose between two providers, giving rise to what is known in economy as a ‘duopoly’; a market in which competition leave a lot to be desired toward achieving a competitive market, this seem again to differ from the data provided by the FCC self.

 

Also, data illustrating broadband internet access between 2010 and 2015 showed at the beginning of the period that fewer than 30 per cent of households were in census tract, drastically changing to over 86 per cent with three or more providers only four years after. Similar data can be observed with regard to speed or other quality of services, raising a number of questions: (1) what was the economic basis for imposing more regulation of the internet; (2) to what extent the predictions about the development of the market are based upon a sound theory supported by evidence; and (3) how well these predictions performed in the intervening year in the previous regulation and as to whether the reason to impose the regulation is based on the same ‘virtuous circle’.83

 

In light of the available data and the argument provided above, it seems that this decision to substantially increase regulation is unsound, considering the lack of both empirical and economic evidence underpinning the FCC’s framework and the market developments in recent years. In the justification given by the FCC it was argued that although some form of paid prioritization could be beneficial, the risk was too overwhelming to be allowed. Yet, this seems to be based on potential outcomes rather than harm that have actually occurred. They drew upon to only two examples from last decade, as most of the recent complaints did not

 

 

83 Supra at 21.

 

35

result in an enforcement action. (1) a 2005 enforcement order against an incumbent telephone company known as Madison River Communication that blocked voice over internet protocol (Voip) and (2) a 2008 order against Comcast suppressing its customers from using torrent.84

 

The underlying rationale for implementing these rules is that the FCC concluded that broadband has not been deployed in a reasonable and timely manner; however, they acknowledged that large amounts of investments have been forthcoming. Thus, it does not seem to be reasonable this significant departure from the regulatory approach that was articulated in the 1996 Telecommunication Act, where it was stressed the importance of minimum governmental regulation; as according to the FCC, they sought to remove the regulatory uncertainty that in it may discourage investment and innovation. Professor Alfred Kahn has laid out the conditions under which it makes policy-sense to impose regulation on particular sectors of the economy. They are presented as follows; (1) the service (or industry) in question is large, both in its own right and as a supplier of essential inputs into other sectors of the economy and (2) competition does not work well.

 

Although chairman Wheeler´s concern mainly revolves around the number of available competitive choices providing high speed services, which became increasingly essential within the market, the observations seem to be just taking a narrow approach, as it only take into consideration static efficiency. He focuses on analyzing the situation at a given time, by looking at the number of available competitors for a particular level of broadband access. However, he glosses over dynamic efficiency that is extremely significant in industries in which infrastructure are the genuine driving force of economic growth, as it concerns optimal investment over time in capital formation, cost-reducing innovation and product innovation. Hence, a transient underperformance in static efficiency does not justify the imposition of the strongest net neutrality rules ever, considering that if the pattern characterizing this market remains, ISP´s will provide higher speed broadband at a more accessible price, downplaying any shortfall in static efficiency.

 

From the perspective of dynamic efficiency, there are two well-established competing economic frameworks that assess how society can achieve the optimal level of innovation. Professor Joseph Schumpeter, suggests that companies with market power will have greatest incentives to innovate because of their large relative size and dominant position in the market. In contrast, Laurate Kenneth Arrow suggests that companies engaged in competition will have the greater incentives to innovate because the increased business generated by innovation will

 

 

 

84 Ibis.

 

36

come mostly from sales that formerly would have gone to competitors.85 Hence, in both frameworks innovation is driven by the desire to appropriate the surplus associated with innovation.

 

 

Thus, it can be argued that in accordance with the historical growth pattern of the provisions of broadband to date, this new reclassification of broadband services will at best be unnecessary.86

 

Europe seems to have even greater competition between telecoms, urging for the flexibility that allows bringing changes when they are needed.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85 Ibid

 

86 Supra at 16

 

87Ed        Vaizey, 'On          the          EU’s          net         neutrality          law' (Crunch          Network, 15          August

2016) <https://techcrunch.com/2016/08/15/on-the-eus-net-neutrality-law/> accessed 25 November 2016.

 

37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.2 To What Extent is Government Regulation a Form of Crony Capitalism?

 

 

Although a large deal of mid-range companies and customers are pushing for the market to be regulated by the Government toward being protected from telecoms giants, this seems as a capitalist arrangement that can lead to unexpected consequences. As asserted by Mark Cuban who is a longtime critic of the Net Neutrality push, all in all, the net has worked. Also, considering we are in a market in which technology has not become stagnant, with new advances being expected, this government regulation seem unnecessary, given that it entails enormous uncertainty and legal challenges.

 

It can be argued that advocates of Net Neutrality schemes to be imposed, are just being deluded in the idealized idea and somewhat naïve faith that selfless ´mommy´ government will make everything cheaper than greedy big telecoms tycoons who are only concerned about realizing their investment. Yet, as Heritage Foundation President Jim DeMInt and Heritage Action President Mike Needham have explained, well-connected business use lobbying and

 

38

inside influence to benefit themselves; by having government to enact special subsidies, bailouts and complex regulations.

 

These practices of preferential treatment undermine competition on the merits companies that are lacking this insider status, harming the public.88 Hence, net neutrality regulation encourages cronyism. For instance, considering the inherently vague and malleable language used for determining whether an internet business practice is acceptable , large undertakings are likely to be favored by the FCC ,by their privileged position at the Washingtion Game and their engagement in administration-approved activist or expenditures in politically correct schemes such as green projects or right campaign contributions. Furthermore, this fear is even more accentuated by the FCC dubious long-lasting behavior of shielding powerful incumbents from competition, as it maintained AT&T´s telecom monopoly for decades, by preventing other competing companies from providing video services.89

 

Thus, it can be argued that government regulations are often written according to large corporation’s interests; in the given case content providers. Net neutrality is the product of crony capitalism designed to prevent small entrepreneurs from becoming real threats to large corporations. Indeed, if telecoms were forced to compete in a truly free market, major ISP´s will be replaced by options that give us better services at a lower price. Yet, some of these new options will depend on being able to take advantage of the very freedom to charge more for certain type of Internet traffic that net neutrality is seeking to prevent. Therefore, it seems paramount to eliminate regulations that act as a barrier to entering the market toward promoting increased competition.

 

On the global front, a decision by the U.S to embrace economic and political control of the internet would legitimize the efforts of tyrants everywhere to impose far more restrictive forms of statist intervention.90Thereon, it is likely that government will use its power to create crisis that can be exploited to accumulate more power.

 

 

 

 

 

 

88

John    Hayward, 'NetNeutrality    isaproblemnotasolution' (Breitbart, 25February

 

 

 

 

2015) <http://www.breitbart.com/big-government/2015/02/25/net-neutrality-is-a-problem-not-a-solution/> accessed 8 November 2016.

 

89  Alden Abbott, 'How Government-Imposed ‘Net Neutrality’ Is Recipe for Crony Capitalism' (The Dialy Sig-nal, 30 March 2015) <http://dailysignal.com/2015/03/30/how-government-imposed-net-neutrality-is-recipe-for-crony-capitalism/> accessed 6 November 2016.

 

90 Jeff Eisenach, 'There’s Nothing Neutral About Net Neutrality' (Inside

 

Sources, 2014) <http://www.insidesources.com/theres-nothing-neutral-about-net-neutrality/>accessed 13 November 2016.

 

39

Therefore, even though regulation of net neutrality could be justified for the furtherance of the internet broad market, the dubious drive upon which governments decide to regulate markets, make me skeptical as to whether the actions are taken toward maximizing total welfare or are part of a more elaborated ulterior plan aimed at vesting major companies and government self with a greater control of this valuable market.

 

 

 

Chapter 5 what is the Future of the Broadband Internet Access Market

 

 

This chapter first seeks to anticipate as to whether the internet regulation is prone to undergo changes in America during the next few years, mainly considering the election of Donald Trump as president of the United States. Thereon, it will be analyzed the future of the European net neutrality rules, given their novelty and still uncertain applicability.

 

This last section of the chapter will be devoted to elaborating a cost-effective allocation of resources, seeking to further investment in the broadband internet market. After analyzing the main issues concerning Net Neutrality, I concluded that this dynamic phenomenon is based on legal and economic terms, making me aware as to the need of reconciling both fields toward achieving a thriving market.

 

This proposal suggests an alternative approach as to the understanding of allocation of infrastructures costs, yet it is not intended to present a comprehensive economic theory; rather it seeks to find a trade-off among all competing interests toward maximizing total welfare.

 

5.1 The Future of Net Neutrality Rules

 

 

On January 20th 2017, Donald trump will be sworn in as president of the United States, leading to uncertainty as to the future prospects of the rules implemented by the FCC in 2015. In 2014 he described the concept as a ´´top down power grab ‘that will target to the conservative media, regarding it as akin to the Fairness Doctrine.91 Although these declarations could be considered as simply Twitter bluster, it seems unlikely he will drift away from his stance of fighting against industry regulation.

 

 

Trump´s fellow republicans in congress have also heavily criticized the rules. In 2014, Ted Cruz defined Net Neutrality as ´´Obamacare for the internet´´ and ´´the biggest threat for the

 

 

 

91 It refers to the FCC rule eliminated in 1987 that required broadcasters to present contrasting views on topics of public interest.

 

40

internet´´, contending that it will stymie private sector innovation. The republican Marco Rubio claims that the regulation is illogical, as creating faster lanes will benefit consumers by allowing highly tracked sites to accommodate their visitors. He also stresses that this reclassification as a public utility is not adequate, as it will confer great power upon an unelected, unaccountable board. Thereby, he argues that it will lead to a potential manipulation from all the lobbyist, lawyers and crony capitalist with a vested interest in the internet. 92

 

Indeed, who is the president´ s party is crucial to the future of the internet. As asserted by Ammori, three out of the five FCC commissioners as well as the solicitor general who would stand or not for the regulation in front of the courts are appointed by them. Given that net neutrality rules were passed by a 3-2 vote, having a republican government will be a determining factor when deciding how the internet is to be regulated, and considering the public statements presented but its members, it seems likely that it will lead to a rollback of the recently implemented regulations.93

 

It must be noted that US net neutrality are now US policies and even though they cannot be dismantled that easily at the whim of an authoritarian president, he could render them toothless if he simply stop enforcing them, thereby allowing large telephone and cable companies to expand controversial practices as zero rating toward circumventing the rules.

 

However, it is still early to anticipate the actions that the republicans will be taking regarding the current legal framework governing the internet broadband market, yet it is raising a strain among the different market players by their latter aforementioned stance. Thus, key times are coming, as this set of affairs will test whether the legislation is sufficiently solid to overcome the inevitable backlash inspired by the new government. Also, in all likelihood the next Supreme Court justice will have a political perspective similar to the appointing president; and this could make a significant difference on the outcome of the aforementioned appeal to the FCC rules, rendering the future of Net Neutrality even more uncertain.94

 

Regarding European Net Neutrality, its future is still difficult to predict considering its novelty and the uncertainty surrounding the guidelines issued by the BEREC, as it is not clear

 

92

Gizmodo, '  The  2016  Presidential  Candidates'  Views  on  Net  Neutrality  and  Broadband' (, 3  Janurary

 

 

2016)

<http://gizmodo.com/the-2016-presidential-candidates-views-on-net-neutralit-1760829072> accessed

 

 

11 November 2016.

 

93

Colin

Lecher, 'Net   neutrality   is   suddenly   on   the   chopping   block' (The   Verge, 11   November

 

 

 

 

2016)

<http://www.theverge.com/2016/11/9/13579800/net-neutrality-donald-trump-election-open-

 

 

internet> accessed 11 November 2016.

 

94 Supra at 16.

 

41

as to whether they will effectively close potential loopholes in the law. Also, lobby by the affected parties will challenge the resilience of these set of rules, as evidenced by the veiled threats of a consortium which includes BT, Nokia , Vodafone and many others that co-signed a manifesto ,whereby they warned that the deployment of high speed 5G could be delayed as a result of the recently implemented guidelines. They highlighted the dangers that restrictive net neutrality rules will inter alia play upon 5G technologies and business, considering they create uncertainty as to return of investments.95

 

Finally, a few remarks need to be pointed regarding traffic management measures. There is an imperative need to preserve the integrity and security of the network, services and end-users terminals. Although much of the policy debate has focused on the commercial aspects of net neutrality, the danger of surveillance is relevant in this context. In the wake of Edward Snowden disclosures, the relationship between governments and ISPs, and its cooperation to ensure cyber security and state security interest is at stake.96 In response to consumer´s loss of trust, alternatives such as ´´Shengen area routing´´ are being proposed in Europe as a better way to safeguard their rights, yet its viability is contested. However, if the government involved fail to keep online barriers between the continents low, the internet´s potential to be an engine of global economic growth will be constrained.

 

 

 

 

 

 

 

5.2 Proposal of a New Economic Approach.

 

 

The Mozilla proposal shed light as to today’s actual functioning of the internet market. It contended that the internet is two-folded, as there is whole-sale and retail market. The one formed by the ISP and the user is the so-called retail market, whereas the relation between the ISP and the content providers is the whole-sale market, coined as ´´remote delivery service´´. In two-side pricing, the ISP can charge a subscription fee to users and a termination fee to content providers for delivery of content.97

 

 

 

 

 

 

95 Rob Price, 'Europe is preparing to make a monumental decision on the future of the internet' (Business Insid-er, 20 July 2016) <http://www.businessinsider.com/european-regulator-berec-prepares-to-make-decision-on-net-neutrality-2016-7?r=UK&IR=T&IR=T> accessed 15 November 2016.

 

96 Supra at 13.

 

97  John B Meisel Development of Net Neutrality Rules: Is the Third Time a Charm? [2015] 41 (2) Rutgers Computer and Technology Law Journal 166-193.

 

42

This new conceptualization of the broadband services should be used as a benchmark toward devising a suitable approach for promoting the development of the broadband internet market. Innovation and investment in new technologies and infrastructures are regarded as paramount for this market to further evolve. Therefore, a system in which cost are allocated efficiently; rather than their cost being only born by ISPs and consumers is essential for keeping pace with this rapid-developing market. The economics of two-sided market are such that prohibiting ISPs from calibrating an optimal price structure by charging both sides of the market is likely to perpetuate additional economic harm without any countervailing effect.98

 

Given that net neutrality can be thought about the requirement that the ISP provide the same service to all content providers and users, charging a fee only to users does not seem appropriate. Therefore, it seems a better outcome to have content providers and users ‘’on board’’. This is the preferred approach in this market, considering there is large network externalities and low marginal cost. Any situation which restricts participation either on the user side or on the content provider side will be inefficient, because of the decline in the size of network externalities.99

 

Certainly, a switch from the net neutrality regime to the discriminatory regime would be beneficial in terms of investment, innovation and total welfare. Regarding investment, ISP´s will have an extra channel for extraction of revenues from content providers, whereas innovation of services will be also increased, as some congestion-sensitive CP´s that would be left out if subjected to net neutrality rules, will enter the market if priority lanes are established. Yet, considering the skepticism and general backlash surrounding this practice, the proposed alternative seeks to reconcile the interests of the different parties involved toward maximizing total welfare , and mitigate thus the fear stimuli to the inevitable development of new business models in the given capital-intensive market.100

 

Assuming ISPS are regulated by net neutrality rules; thereby limiting unfair practices that limit access to the whole internet, an analogous system as to the called high-income taxes seen in some countries for collection of funds for public services come to the forefront. Access barriers to the markets, will certainly stifle competition, as start-ups and SMB will be deterred from using this platform because of their weak economy. However, this proposal suggests that content providers will be only required to pay a carrier lien when and if their revenue reaches a minimum threshold. This will arguably lead to unprecedented investment in infrastructure deployment.

 

98 Supra at 40.

 

99 Supra at 72.

 

100Ibid.

 

43

 

In any case, this proposal will need appendixes or guidelines within the regulatory framework, specifying the basis upon which investment is conducted and as to how they take precedent. This will be the result of a market analysis, being a trade-off among all the different factors involved in the market. Therefore, this cost-efficient allocation will maximize total welfare, as they main risks potentially threatening to disrupt the market will continued to be diminished by being subject to regulation; yet the interplay between economics and law will be all-encompassing, stressing the fact that a joint effort among whole-market players to finance infrastructure, will eventually be to the benefit of all.

 

This approach will allow creating a fast lane for all content providers without any type of discrimination, given that ISPs will extract investment funds in a regular basis, exclusively to be used in improving infrastructure. Therefore, it seeks to balance the competing interest, toward furthering the development of the market. Consumers will benefit from an open net with enhanced services and at a lower subscription fee, whereas ISP´s and content providers will have higher revenues, tantamount to the increased demand that will follow. This proposal will be thus in line with ´´virtous circle´´ theory repeatedly used by the FCC to ground their net neutrality rules. In addition, they will certainly have enough resources to expand their infrastructures to remote areas with very limited access, supporting the policy goals sought and, in turn, limiting dubious practices as zero-rating, which threatens to disrupt net neutrality.

 

However, as aforementioned it can be argued that regulating this fast-evolving market with robust wide-ranging rules is risky, as it is difficult to foresee how regulations will adapt to advances in technology that may potentially completely alter today´s functioning of the market. Thus, a proposal of this kind would have to be carefully developed as otherwise it may befall that this restructuring will unwittingly bring about unwanted consequences by its inherent interventionist feature. It is worth to notice that I do not aim to provide a comprehensive theory; rather I put forward an alternative perspective as to how to accommodate the interest of the different market players in a way that could potentially increases overall welfare. However, the economic implications of the given proposal are out of the scope this paper.

 

 

 

 

 

 

 

 

 

 

 

 

44

Chapter 6: Conclusion

 

 

The internet is today´s most important socio-economic tool and an important guarantee of human rights. It removes barriers and leads to an international integration of knowledge and services, leading to an increasingly global society. Thereby, its ubiquity, ease of access and cost to consumers are all of great concern to public policy and regulation. In particular, regulators and legislators have expressed concern that operators may be tempted to discriminate in favor of their own services or those of third party partners to the detriment of competitive offerings. Therefore, in the last century it has been an ongoing debate as to the best way to regulate it.

 

The analysis conducted throughout this paper aimed at examining the different implications associated with the recently implemented net neutrality rules. It has been presented a large number of wide-ranging arguments in favor and against the increased regulatory trend that the broadband internet access service market is currently undergoing. Although it could be argued that state intervention is needed to appease the challenges and threats that the market is facing by the overbearing power of ISPs, this seem to be based on feeble assumptions that lack appropriate evidence.

 

Indeed, the recently implemented heavy-handed regulations are at odds with the initial intent of regulatory bodies to keep enhanced services unfettered, when they sought to avoid unexpected consequences from disrupting the market. This resulted in a thriving light-tough regulatory approach that made the Internet to be the important socio-economic tool that is today. The reasons for justifying today´s increased regulation is thus difficult to be explained, given that they mainly stress the common fallacies surrounding this phenomenon, emphasizing the speculative negative implications that minimal regulation may bring about and often distorting facts and drawing upon populist remarks; simplifying the debate and encouraging lobby by the general public. Hence, advocates of net neutrality seem to believe that robust regulation is overriding, whereas it seems to be at best unnecessary, considering its many shortcomings and low benefits.

 

Therefore, understanding the underlying reasons for such an increased regulation is a vexed question, as even though maximizing welfare both by protecting consumer´s rights and internet inherent functionalities as an open and neutral space appears persuasive, it does not seem to be grounded in solid data nor actual harms .Arguments suggesting some sort of ulterior drive such as state control or crony capitalism make me wary as to what sort of stimulus triggered this dogmatic set of actions, as the myriad benefits derived of controlling the internet are far-reaching , yielding arguments for skepticism.

 

45

Thus, it can be concluded that in light of the threats that the market is actually facing, a light-touch regulatory approach will be more suitable, provided a minimum level of competition is achieved. They will have a less interventionist approach with regard to the development of new business models and any potential market failure or abuse would be dealt through ex-post regulations on a case-by-case basis. Also, given its flexibility, this approach better adapts to changed circumstances ensuing form advances in technology and demand, and arguably provides higher incentives to invest, something that can be regarded as essential in this particular capital-intensive dynamic market.

 

Ultimately, after analyzing the given arguments and assessing its main implications it can be argued that net neutrality is a legal and economics based phenomenon and that their symbiotic relationship is paramount toward devising a solution that further foster the market and maximize welfare. Thereby, its multiple wide-ranging benefits could be maximized if all market players involved were willing to seek a more efficient allocation of resources that, in turn, will be beneficial to all parties. Cooperating to strengthening the ´virtuous circle´ through the proposed high-income approach rather than battling and indulging in costly lobby and litigation toward safeguarding their own interests appears as a catalyst to ensure the future of this precious asset.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 

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Julia Brungs, ' Search IFLA Statement on Net Neutrality and Zero-Rating (2016)' (Ifla, 11 October 2016) <http://www.ifla.org/publications/node/10700> .

 

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  • رضا منصورنیا
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تیر

Taking Stock of Contemporary Journalism Education: The End of the Classroom as We Know It
Guy Berger and Joe Foote


worldwide, a wide variety of non-academic training organi zations are joining “traditional” journalism schools based within higher learning institutions to supply journalismeducation. This, among other reasons, is cause for the “traditional” providers to re-think their context, community, and role. This chapter describes key developments in new education efforts (a broad concept that in this chapter generally includes “training” efforts) over the past 20 years. The emerging scenario is one in which the supply of journalism education is becoming distributed across a range of providers globally. Moreover, there is a greater specialization of services as well as a trend toward the internationalization of many programs and learners.
Context
Journalism education at the university level has never been the “last stop” for professional education. Although in much of the world university-level journalism education continues to constitute the largest provider of journalism education, especially at the entry-level. At the same time, the question of who provides journalism education and who is a journalism teacher continues to change. For example, in 2006 the UNESCO (United Nations Educational, Scientific and Cultural Organization) search for “potential centers of excellence” in African journalism education resulted in a list of  finalists including not only journalism schools based at universities, but also several based at ocational and technical-training colleges that are involved primarily in vocational training. In addition, one finalist was a commercial business and another, now defunct, was a non-government organization (NGO) with a core focus on training (Berger, 2007).


Such changes illustrate what Deuze (2008, p. 270) has called a global move toward a system of journalism education provided more by universities and stand-alone institutes than either self-education or purely on-the-job training. The current increase in university-based programs also exists within systems that are increasingly transcending national boundaries. And when one includes the providers of online courses, this profile becomes even more diverse. As journalism education clients learn and experiment with changing forms of journalism , they are increasingly being served by an array of providers and dispersed opportunities.
Developments are moving beyond scholar Jan Servaes’ call for journalism education to “break out of its national carcass and ‘internationalise’” (2009, p. 530). UNESCO’s model curriculum (adapted in
more than 60 countries and available in nine languages) is an indicator of the widening globalization of journalism education (UNESCO, 2007, 2013). A key question that merits further study and arises from these developments concerns the models of journalism education that are internationalizing, the cultural and language issues involved, and the evolution of courses that deal explicitly with  globalization and journalism (Josephi, 2010; Bromley, 2009; Holm, 2002).
For the first half of the 20th century, journalism education and training worldwide was largely confined to on-the-job learning, often in an apprenticeship style. But as mass communications grew as an industry in the second part of the century, so did the need for hiring more people and requiring more high-end skills for this industry.
Public institutions of higher education evolved to meet this need. Many countries accordingly  introduced diploma and degree programs preparing entry-level practitioners for the job market. While this was partially a response to media industry demands to supply graduates ready for a career in industry, such programs also suited universities’ institutional ambitions to swell student numbers in an area of high visibility with career-promising courses that attracted additional enrollments.
By 1950, formal journalism education at the university level was widely accepted in the United States. It did not spread widely in Europe until the privatization of media in Western Europe and the fall of communism in Eastern Europe. But it has flourished since then—both in the number of programs and the number of women enrolled in them (Nordenstreng, 2009). In the 1980s, the Asian media boom and its corresponding increase in private media created an increased demand for formal journalism education in many countries in the region. In the 1990s, there was considerable journalism education growth in higher education institutions in the Middle East and Africa. And by 2000 , university-level journalism education courses were nearly universal (Hume, 2007). In China and India, journalism education programs continue to proliferate at a mind-numbing rate. The World Journalism Education Council’s worldwide journalism education census has registered nearly 3,000 global programs on its database. By 2007, the bulk of these programs were spread fairly evenly between North America,
Europe, and Asia (World Journalism Education Congress, 2007). In areas in which university-level education was slow to gain traction, some media organizations set up autonomous “journalism schools,” mimicking some features of those within higher education. The United Kingdom, Germany, and Denmark have media organizations that follow this model.

This explosive growth of global journalism education has also attracted private sector involvement. In many regions worldwide, and especially in developing countries, commercial entities have entered the
fray. However, this emerging type of journalism education has sometimes been susceptible to riticism based on quality issues and the possible exploitation of students.

At the same time, the foundation laid in the late 1900s persists in that most countries’ journalism education systems appear to be grounded in established universities, and to a lesser extent technical
colleges, registered by their national educational departments. In this model, journalism schools are anchored within a wider academic institutional framework.

Over time, the resulting “pipeline” of university journalism graduates has affected the media. For  example, in the early 1990s, an estimated 71% of journalists in the United States had some tertiary-level media education (Medsger, 1996, p. 7). Their education often either replaced or complemented in-house or on-the-job training practices.

At the same time, industry has frequently criticized not only these graduates’ skills, but also the value of university journalism education at large.
Still, many university programs have established close ties with professional news organizations. Internships have developed as a key experiential learning component in curricula, which often favor professional skills. Industry professionals visit classrooms, and some teach as adjuncts. Because the media sector is known for its low investment in training, university-sponsored programs have ultimately been a blessing for media operations by increasingly supplying their labor needs.
In much of Latin America, higher education qualifications in journalism used to be regulatory pre- requisites for working in the media (International Federation of Journalists, 2010). This was in part due to union support, which had an inherent interest in limiting labor-market competition for media positions. But such requirements are no longer practiced due to the decline of unions in Latin America (as has been the case worldwide) and influential international opinions that position against any compulsory membership or qualifications to practice as a journalist (ARTICLE 19, 2012).

However, even with massive enrollment and output in university journalism education programs worldwide, there continues to be a significant number of journalists who have not taken these or other
foundational programs. However, these same journalists often become interested in academic and other courses when it comes to updating their skills, or learning new ones, in areas such as investigative journalism, data-based journalism, enhanced newsroom technology, and digital security. This need has helped feed a market for “further” or “continuing” education. For example, some universities have targeted certain specialized programs toward working journalists, thereby
expanding their scope of activity.

Simultaneously, industry associations, a number of individual media companies, and NGOs have also responded to mid-career training needs by elevating and formalizing ad hoc or casual training   initiatives and creating institutional academies for both continuing and new employees. Thus, some in the media industry have relied on wellfunded internal programs to help train their journalists. Examples include Germany’s Springer Group, the U.K.’s British Broadcast Corporation (BBC), All-India Radio, and China Television. In 2013, the three major print media companies in South Africa were all operating dedicated training programs, mainly aimed at filling gaps between tertiary education and the newsroom and providing higher-level education to existing employees. In 2014, however, one of these print companies, Independent Newspapers, shuttered its program. Examples
of independent providers, linked to industry rather than universities, include the U.S.’ American Press Institute and Poynter Institute and South Africa’s Institute for the Advancement of Journalism. In addition, the African Woman and Child Feature Service (www.awcfs.org) , a Kenyan-based NGO, provides short courses and training material for journalism students and working journalists in East Africa. Subjects covered include the reporting of parliament, economics, climate change, gender, HIV/AIDS, reproductive health, children and development issues, and newsroom management.

UNESCO has responded to the need for short specialist course modules with publishing a series
titled A Compendium of New Syllabi (2013, 2015), covering topics such as global journalism, gender and journalism, media viability, reporting human trafficking, and reporting sustainable development.
The very developments that call for upgrading the knowledge and skill levels of working journalists have also put pressure on entry-level journalists. Ten years ago, it was not essential for journalism students to know much about entrepreneurship, intellectual property, managing social networks, curating content, or digital security. And although it has become important for students to learn about such topics, many higher education sector journalism schools do not have the curricular flexibility to teach them in depth. On the other hand, several U.S. journalism programs have taken a step beyond the traditional use of books to teach such content by using software-learning exercises offered by
online companies like Lynda.com and w3schools.com.

Furthermore, there has been the development of instruction linked to the rise of what may be called the “development aid industry.” This “industry” evolved during the Cold War era and intensified with
Western attempts to foster democratic capitalist systems in place of the failed political systems in Eastern Europe, Africa, and elsewhere. As a result, a sub-industry of short-course providers emerged to supply training to mainly working journalists (along with the promise of equipment, capital, and support for legal reform) (Hume, 2004; Nelson, 2010). Numerous cases of cross-border journalism education also occurred.
For example, students from emerging democracies were funded to study in the United States, while “parachute professors” have historically often deployed to work abroad (Ognianova, 1995). In addition, British providers, including the Thomson Foundation and the Reuters Foundation (merged in 2008 into the Thomson Reuters Foundation), were prominent exporters of journalism education. American provider counterparts included Internews and the International Research & Exchanges Board (IREX). Large foundations, such as the Sorosfunded “Open Society” institutes, supported journalism education and training activities in many countries. German foundations, such as the
Konrad Adenauer Stiftung and Inwent, provided journalism education to thousands of people in, or from, developing countries. In many world regions, major broadcasters have also set up facilities, such as the Radio Netherlands Training Foundation, which provide, among other things, a range of courses to an international constituency. The German international broadcaster’s Deutsche Welle Akademie provides extensive training as part of its general media development work.

In addition, some NGOs are providing a range of specialty courses usually relating to their particular causes, such as AIDS prevention, conflict resolution (for example the NGO “Search for Common Ground”), and transparent and fair elections. The World Bank Institute also provides courses in reporting on finances and corruption.
In the wider landscape of multiple providers of journalism education, institutions, such as the U.S.-based,nonprofit Poynter Institute, have included university faculty as clients in the hopes of updating and/ or improving journalism education within the academy. Partnerships between industry and universities are also beginning to appear. For example, the Deutsche Welle German broadcasting system has partnered with the University of Dortmund, the University of Bonn, and the Bonn  RheinSieg University of Applied Sciences in innovative master’s degree programs. In 2010, The New York Times, as a part of its new business model, partnered for a short time with Ball State University to sell certified online journalism education services.

And in Australia, one public broadcaster asked university journalism schools to produce online editorial training modules for its internal use (Chadwick, 2009).

Online Initiatives
Online options in journalism education have helped make the increasingly crowded online field more universally accessible. The rise of the Internet has created a platform in which journalism education
can be provided almost seamlessly across borders. The International Center for Journalists’ website (www.anywhere.icfj.org) says it provides instructors who can teach journalism classes in local languages and that the site will translate comments among different-language speakers. For its part, the U.K.-based Commonwealth Broadcast Association, serving former British colonies, has set up a “Media Trust” that provides online courses in media leadership and management. And CNN announced an online learning opportunity for university students in September 2010.

And after operating in-person journalism training programs at its headquarters in St. Petersburg, Florida, for more than 30 years, the Poynter Institute established, in 2005, an online “university,” News University. News University now offers more than 400 online short courses for journalists and journalism students and has more than 390,000 users (www.newsu.org/about). It also provides  programs ranging from sequenced courses to one-time webinars, which are available to anyone anywhere as long as they (students, bloggers, working journalists, etc.) have an Internet connection, and, in some cases, a few dollars to spare. In 2009, the Poynter Institute demonstrated a strong interest in taking its free offerings global, and in 2010 its News University announced it would serve as a clearing house for journalism education-related global curriculum exchanges.

In 2011, UNESCO began to roll out a platform of “Open Educational Resources” based on adaptations of its model curriculum (www.unesco/webworld/en/oer). And in 2005, when a British controversy led to the resignation of the BBC’s top leadership, the organization created a BBC academy and put considerable resources into it.

In 2009, after four years of developing training material for in-house use, the BBC decided to make many of these materials available to the public through a third-party online vendor and Oxford University Press. Such material was “delivered” through paid online access at the BBC College of Journalism (http://bbcjournalism.oup.com). Yet in July 2014, the BBC College of Journalism suspended its paywall for a year and announced that it was making hundreds of training modules available free online. Perhaps the paid subscription model for educational materials was not as robust as the BBC originally thought (Looney, 2014). Its video and print resources, already available in 11 languages, are being translated into some 16 more to supply all 27 languages in which the BBC World Service broadcasts (Looney, 2014).

Many journalism teachers around the world are also making their course outlines and resources freely available online. One of the most prominent of such figures is Rosental Alves and his Knight Center for Journalism in the Americas based at the University of Texas, Austin.

His service provides thousands of Spanish-language online courses in journalism, and his pioneering use of Massive Open Online Courses (MOOCs) for mass delivery of journalism programs has proven to be especially effective. Other well-known journalism education offerings include information provided by Alves’ colleague, American journalist/journalism educator Mindy McAdams  (http://mindymcadams.com/), the U.S.-based Association for Education in Journalism and Mass
Communication (AEJMC, www.aejmc.org), and J Source, the Canadian Journalism Project (www.J-Source.ca). Even YouTube has a channel called “Reporters’ Center” (youtube.com/reporterscenter), which hosts video tutorials on subjects such as investigative journalism, citizen journalism, journalism ethics, and how to conduct an interview. In addition, there are countless websites emanating from a wide range of sources worldwide that offer journalism instruction in various forms and/or engage in sharing knowledge—through debate, discussion, or demonstration—about the “hows” and “whys” of practicing journalism today.

Another emerging player in the journalism education online marketplace is iTunesU, sponsored by Apple. iTunesU is a free repository that encourages university faculty in a variety of fields to share their courses and tutorials online. Initially, iTunesU had few offerings in journalism and mass communication, but as of 2015 several courses have been added.

Beginning in 2012, several companies (e.g., Coursera, Udacity, edX) were formed to offer MOOCs to global audiences. Most of these courses are free, but some are proprietary and can be taken for university credit. The presence of journalism and mass communication courses will most likely follow the surge in courses in computer science and business.

In short, the range of actors providing journalism education continues to greatly expand over time, and the relationships among different constituents continue to evolve. In addition, transnational cyberspace initiatives continue to increase. This new reality has a bearing on the value of a traditional academic journalism education, the former bastion of supply, as well as on the range of media practitioners’ opportunities for empowerment.

Issues

All these developments in journalism education and media training have exponentially expanded choice across universities and providers. Besides the formal courses offered, today’s range of informal and indirect educational opportunities in journalism is vast.

One result of such developments has been an accelerated blurring between journalism training and journalism education (the “hows,” “whats,” and “whys”). Another has been an evolution of mutual respect between media professionals and educators. For example, formerly in the United States the distrust between practitioners and academics was palpable. However, the last two decades have seen a virtual love fest between the two. One reason that the Poynter Institute has been so successful in the United States is this relatively new, strong sense of interdependence between professionals and educators that allows the two to be blended easily into the Institute’s training offerings. Its staff seem to recognize the value of time spent with academics as much as they do with journalists. Yet, tensions still exist. A vigorous debate has occurred over how extensively a “teaching hospital” model should be applied to journalism education. Several prominent American foundations involved in journalism education have advocated the hiring of more professionals, regardless of academic credentials. While most American universities have adhered to this approach, several academics have criticized extensive use of it.

In much of the developing world, journalism professionals’ lack of respect for university journalism education remains a formidable challenge and impedes a closer relationship between professionals and the academy. Only when these barriers begin to crumble in more countries will increased connections among professionals, universities, and other training organizations blossom. In addition, in many developing countries, university-educated graduates are able to command higher salaries in communications work outside of news media organizations.

Such higher salaries contribute to a relative disconnect between academy and industry in many developing countries. In recent years, universities have felt a need to nurture connections among themselves. In 2002, a group of communication associations interested in journalism education began planning for a World Journalism Education Congress to be held in Singapore in 2007. This first meeting, and related conference, emphasized the commonality of issues facing university programs in this burgeoning field. The momentum gained from this meeting attracted 28 member organizations, which became known as the World Journalism Education Council (wjec.net) (Foote, 2008). During its formative days, the Council’s member organizations decided to exclude training institutions, focusing only on problems/issues confronting university-level programs specializing in journalism education (Berger, 2010). Now that this informal group has defined itself as a coalition of specialized academic organizations, it is much more comfortable interacting with organizations devoted exclusively to journalism training. When the second WJEC convened in South Africa in 2010 (wjec.ru.ac.za), the relationship between the two types of providers received considerable discussion.

While training groups and university institutions continue to sort out their relationships, the proliferation of new players continues. In part this reflects the widening universe of actors who generate journalism outside of formal news media, and particularly those using social media platforms for text, audio-visual, graphic journalism, etc.

The knowledge and skills to publish or broadcast online are necessary, but not sufficient, to do journalistic work online. But the relationship between the two domains of knowledge and skill has opened up a hybrid of capacity building that emulates aspects of journalism education and training. There are today innumerable tutorials on the Internet offering a range of learning outcomes that are relevant to practicing journalism (as well as other forms of communication). The upshot of all this is that journalism education’s crowded marketplace is now demonstrating the need for traditional university-based journalism education suppliers to specialize in order to differentiate themselves better and remain competitive.

Overall, both online and off-line forms of dedicated, and often formal, journalism education have  thrived. Journalism education has become one of the fastest growing academic fields in the world,  even though enrollments often outnumber job opportunities within the formal media sector. As a  partial result, most university journalism programs are over-enrolled. However, the proliferation of private media in the fastest-growing economies, combined with growing “internetization,” is also presenting vast new job and, therefore, educational opportunities. Although the crisis facing newspapers in many developed economies has created a different set of challenges and possibilities,
the thirst for structured journalism education seems undaunted—even when journalism education itself needs to be reimagined.

The traditional and newer suppliers of journalism education are not only competitors, but also potential allies. Some of these partnerships have been noted above. There seems to be a common interest among providers to promote journalism education in general and to build upon shared public domain knowledge to enhance what is offered. However, much university-based journalism education risks being out-flanked by providers in areas such as distance learning and in the creation of high-end multimedia instruction modules that transcend national and public/private boundaries.

Implications and Future Directions
Because media industries have been changing so rapidly, it is imperative that all journalism education organizations become especially nimble. Journalism education at universities has been under considerable pressure to change and update itself, especially in the area of converged media. This reality presents a good opportunity to assess the unique value that institutions in higher education bring to the cause of better-educated, empowered journalists. Higher education assets that are not easily replaceable include experience in the business side of education, the accreditation of systems, and the generation of research.

Universities are particularly good at setting standards, providing consistency and continuity, presenting conceptual frameworks, and exposing students to broader academic studies.

University research requirements ensure the continuous examination of a broad range of topics in ways that the media industry and many NGOs do not. However, higher education can be painfully
slow to change, and it often takes stray paths and finds itself at dead ends. That said, its competitive edge lies in its knowledge-based focus , which helps update important ideas and skills. Even university-based journalism educators who are not also journalism researchers have unique access to resources of scholarly colleagues engaged in the study of journalism and the changing global communications environment.

Journalism educators can also draw upon research skills and activities from like-minded academics in cognate disciplines within their broader institutions. In addition, in theory at least, university-based journalism education practitioners are less likely to be vulnerable to “silo-ization” than journalism training providers based outside of higher education.

This is due to university collegiate activities, such as research conferences and peer review practices, that can stir the intellectual pot. The significance of this aspect of universities as institutions has been highlighted recently by research stressing the need for journalism education programs to acknowledge the role of dominant ideologies, such as those based on class, race, gender, and nationality. Such  ideologies work to benefit the status quo by leaning professional practice of journalism in favor of power, such as in coverage of international conflicts or economic policies (Jensen, 2014; Patterson, 2014).
Another key university-level journalism school advantage is the ability to experiment journalistically without enormous investments. Journalism school programs, which primarily exist to educate rather
than to produce media, are often more concerned with creativity and generating knowledge than financial risk. When journalism schools do generate media products—even when they make a profit and/or serve the public—they usually state their motives as educational and journalism-outcome based rather than profit or dissemination-based.

Nevertheless, during the last decade, it has become more common for journalism schools to partner with media organizations to produce content. At Arizona State University in the United States, the Arizona Republic maintains a working newsroom within the Cronkite School of Journalism and Mass Communication. This newsroom handles most of the web-based breaking news for the newspaper. At the University of Oklahoma, students at the Gaylord College of Journalism and Mass Communication produce a weekly 30-minute sports program for a regional American sports network, Fox Sports Southwest. With industry resources becoming scarce, more of these types of content contribution partnerships are likely to emerge.

What is also important in assessing the future of university-provided journalism education is the  notion of higher education having a degree of autonomy from the media. As Bollinger (2002/2003) has written, “A great journalism school needs to have some distance between itself and the industry which it serves.” This is a critical factor since industry itself, in some aspects, has become a self interested, rival supplier of journalism education, and one that is often instrumentalized for short term needs rather than having a longer term, broader capacity-building rationale. The very externality of university based programs from industry could be a strength that not just stimulates independent minded journalism education, but also allows for necessary criticism when media institutions miss opportunities, suffer ideological myopia, or exhibit ethical lapses. Such externality is also a relevant factor when, as with the U.S. print media, jobs are scarce, and it becomes journalism schools’ onus to empower would-be journalists to start their own media enterprises.

But university-based journalism education can also be manipulated to promote protectionist industry  tendencies. For example, in Kenya the media industry and leading journalism schools have experienced a move toward creating a “closed shop” through steps toward licensing the institutions that would be permitted to offer journalism education (Berger, 2009). Similarly, the Tanzanian government also considered licensing which individuals could work as journalism teachers, although this move did not ultimately materialize (Berger, 2009). Such cartel-minded measures ignore the reality of global providers beyond national jurisdictions, and they could only be effective if citizens were banned from using journalism-related international learning resources. They also contradict the notion of journalism as a specialized exercise under the broader right of free speech. As Hartley (2008) argues, journalism should be taught primarily as a human right rather than merely a means toward an institutional career. When governments license which institutions can teach journalism, with the stated motive of upholding standards, they actually create “closed clubs” based on self serving models of journalism and who may teach them. This is close to the situation in Rwanda in the recent past, where at one point only individuals with government-approved qualifications were allowed to practice journalism.

In contrast to such controls, genuine university training in journalism is not only a practice within the rubric of academic freedom. It should also (and often does) operate to promote freedom of expression
rights and access to journalistic skills and platforms to gain such rights.

Another journalism education-related freedom is the freedom to use education provided. Journalism skill sets are easily transferable to other fields. In some cases, students study journalism with no intention of entering the profession. Instead they learn high-level information and communication skills to further their liberal arts studies or to pursue a related profession. It is not unusual to find journalism graduates contributing unique journalistic values to careers in law, public service, marketing, and other information sectors. Only totalitarian-leaning practices would seek to bind journalism graduates to working in media industries, although this is a complex issue when public resources are used to subsidize young people’s education. Freedom to practice journalism should be matched by the freedom to not practice it, even if the general goal remains that journalism education should contribute to journalism.

An additional issue that merits discussion is that of the ultimate goal of journalism education: Regardless of its provider, journalism education needs to empower not only students, but ultimately journalism itself. In other words, quality journalism education is supposed to have an impact on the quality of citizenship and society. Similarly, journalism education can promote what UNESCO calls media and information literacy (UNESCO, 2014), by building capacity for journalistic participation among non-media professionals, such as with community media volunteers and social media users.

Programs with such goals have become important factors in journalism education in a number of countries. For instance, South Africa’s Rhodes University, with Knight Foundation support, has provided (via established higher education routes) courses in citizen journalism to local residents who, for various reasons, would make journalistic contributions without becoming part-time or full time journalists (thenewsiscoming.ru.ac.za). Around the world, many universities now require a media literacy course for all students. Such courses are seen as a way to help students become better media consumers, and, in some cases, to help them practice citizen journalism and to promote democratic change. In the West, where journalism enrollments are starting to decline, serving a broader university community via courses such as media literacy can also provide a valuable expansion of traditional
missions and combine strengths of both journalism schools and their media studies or communications counterparts within the university.

Conclusion
This chapter attempts to sensitize readers to the changing landscape of journalism education and its relationship to the production of journalism. It also serves to raise citizens’ ability to generate journalism and to understand it. It casts no judgment on whether one kind of education is better than another. Instead, it acknowledges a wide range of knowledge and skill-development systems in operation, all of which can help journalists provide a better service to society. This broad approach calls to mind Deng Xiaoping’s famous aphorism that a cat’s color is not as important as whether it can catch mice.

The business model of journalism education influences, and is influenced by, all the above. Most legacy providers (i.e., university-based schools) have not been giving away their services free of charge. In fact, students and their parents are paying ever-increasing tuition fees, and journalism education enrollments continue to grow in most parts of the world. University providers and others able to cross borders through online space are also experiencing remarkable growth. Yet the unquestioned success of journalism education also exposes its vulnerability.

Because many university programs, especially in developing countries, have more students than they can handle, there has been little incentive to maximize strengths—to update and innovate—even when facing competition.
At the same time, some educators have been constructing content that possesses nearly universal utility or at least holds such value while also being amenable to being adapted to local languages and conditions. As more content is released online for free or at attractive prices, pressure could push traditional academic providers to adjust their delivery systems and/or their fee structures. Most journalism education programs have robust co-curricular opportunities that would be difficult to replicate without students being in residence. Yet, some aspects could easily be delivered in alternative ways by alternative providers.

One response to this challenge, which also reflects academia’s interest in expanding student horizons beyond national contexts, has been the “pairing up” of elite journalism schools across borders. A key
example is the Erasmus Mundus master’s degree, which is earned in different European countries (www.MundusJournalism.com). More recently, a partnership has been formed between the journalism schools at Columbia University and the University of the Witwatersrand in South Africa. In addition, Northwestern University’s Medill School of Journalism has an offshoot program in Qatar, and Australian universities with communications programs, such as Monash University, have similar initiatives abroad. All parties can gain value from such connections. Such initiatives could be analyzed as defensive or expansionist maneuvers, indicating a kind of fortress mentality among strong
programs aiming to establish a closed eco-system of bastions elsewhere.
But they also have great potential to engage in open, porous interactions within a global market, enriching and transforming the “mother ship” and becoming more internationalized along the way. One area that journalism schools have yet to adequately address is the separation between content creation and content delivery. Universities have seamlessly combined the two for centuries. The same
autonomous professor who creates content for a course also delivers it. Little distinction has been made between the two functions. Any challenge to this premise would shake academia’s cultural foundation.

However, for-profit universities and training institutions are increasingly discovering the profound distinction between the two and are realizing the great value of doing so.

For example, by investing sizable sums in creating content, for-profits can produce inherently valuable courses and modules that can then be delivered by lesser-skilled teachers/trainers at a lower cost. This process can, at least in theory, translate into higher-quality products and wider distribution at lower costs. By investing in high-quality content—with multifaceted areas of output— organizations can leverage their expertise far and wide. After an initial investment, institutions can repeatedly deploy a course at a limited expense. An additional plus is an ongoing ability to control quality. Some universities are realizing that they cannot match the quality of content being offered by NGOs or commercial providers in specific subject areas, especially in sub-specialties (such as multimedia or climate change reporting) that may not be economically feasible to deliver even if they could create the content. If an NGO or industry provider is doing an excellent job providing learning resources in these or other subjects, there is little reason for a school to duplicate these efforts.
Partnerships with a distributed model can provide a rich and coherent journalism education service.
Universities are entering a time when hybrid solutions are demanded. They can certainly no longer operate under the assumption that they are the kings of all journalism education content and practice. Yet, there is no need for them to step aside from the majority of  their domain. Instead, schools should gravitate toward areas in which they can provide high-quality content, processes, and relationships for
themselves and for distribution worldwide. They should also be more open to using content originating from training organizations, educational content creators, and peer institutions. Although universities may continue to deliver most of the pedagogical process themselves, they will not  necessarily create all content themselves. University journalism schools should recognize and credit excellent work completed outside the academy. They could even assist such work by offering their own expertise in areas such as pedagogy, curriculum development, research resources, and linkages.

Through such relationships , journalism schools can also improve in areas they may be lagging.
For example, journalism education can partner with industry to learn how to better deliver, monitor, and evaluate long-distance training. Beneficiaries would be multiple learners of journalism, which would provide a wider value to society. The situation in journalism education today mirrors the situation that individual media consumers face with increasing amounts of content choices. Such consumers also have increasing opportunities to produce their own content, which often involves self-education on an individual or shared social basis. This type of self-education becomes one of many options for students. This chapter is based on the premise that journalism education is primarily about journalism, not the institutions through which much of its educational practice has been historically based. The objective of journalism education should not be to focus exclusive attention on journalism courses for students within mass media courses, as has often historically been the case. A wider vision is needed of empowerment of all people who want to do journalism. This indeed means providing campus-based students with the skills of journalism, although not in isolation of other knowledge bases relevant to the practice of journalism. It also means, however, that journalism education ought not to ignore the needs of off-campus learners and the learning resources availed by off-campus providers. From a journalism-centric viewpoint, journalism education should be based on a wide range of journalism education activities and content, conceptual and practical, serving a range of actors on and off campus, and coming from many diverse quarters and channels. The result can be a richer production and consumption of journalism. And reinforcing this scenario is the reality of increased complexity in the practice of journalism (such as subject knowledge, data analysis, verification standards, etc.) and the knowledge that traditional journalism educators alone can no longer provide all the journalism education/training needed.

In conclusion, journalism education should be seen as a means to an end, not an end in itself. And the landscape of journalism education providers should be viewed as a subsidiary matter in relation to this
bigger picture. The broader global context and community increasingly calls for every person interested in the future of journalism to pay attention. This is particularly relevant when one considers how the complex, multiplayer whole affects the diverse individual parts—especially when it comes to university-based journalism education.

 

 

 

 

 

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TAKING STOCK OF CONTEMPORARY JOURNALISM EDUCATION

  • رضا منصورنیا
۲۲
خرداد

Attention, Crowd: We Need Your Money!
Start-Ups’ Communicative Appearances on Crowdfunding Platforms
9
Sabine Baumann and Hendrikje Bruning


9.1 Introduction


The increasing number of projects and amounts of money raised (cf. Asghari,Wilgeroth, & Rink (2015), F€ ur-Gr€ under.de, 2015; Institut f€ ur Mittelstandforschung Bonn (2015); WirtschaftsWoche, 2015) as well as the growing number of crowdfunding platforms (cf. GoGetFunding.com, 2013) indicate the developing importance of crowdfunding as an entrepreneurial tool. Crowdfunding developed in a twofold manner: Initially, it evolved within the creative industries, at first mainly enabling musicians to produce their songs, then other creative sectors followed, and soon all kinds of artists and media producers availed themselves of crowdfunding platforms to start, complete or expand their productions (cf. Moritz & Block, 2013, p. 2). Beyond the funding of artistic projects, crowdfunding also emerged to be a financial option for setting up start-ups. This development corroborates the increasing importance of publicly cooperating with a crowd of unknown business partners.
Although there is a broad discussion on entrepreneurial strategies in terms of business funding, this paper refers to the funding of single projects. When comparing projects competing for funding on crowdfunding platforms some projects seem to be noticeably more successful than others. With regard to the German crowdfunding platform startnext.com (cf. Bartelt, 2015), the range of options to present a project is limited and the platform itself demands particular content from the project founders. Against this background, this paper addresses a central

question: What and how do the project founders have to communicate to become funded successfully? This research question already hypothesizes that content and communicative methods are crucial factors in the funding process. However, due to the inductive approach, the researchers also considered the possibility that regardless of the communication activities the idea itself may be the only decisive factor for the success of a project in the funding process. The aim of this investigation is to provide an explorative overview of crucial factors in conveying convincing content. This paper contributes to the field of entrepreneurship and start-up strategies by factoring in crowd communication activities into start-up funding. Furthermore, the results serve as a basis for further investigations, especially in the context of structures and influence routes in communication in enterprise and social networks.
Insights into successful communication strategies on crowdfunding platforms thus contribute to developing a new kind of enterprise network as well as business models with a crowdfunding community for businesses in global digital media.
In order to closely examine communicative activities on crowdfunding platforms, the paper applies qualitative content analysis, taking into account different communication elements required on startnext.com. This includes the different sections of the startnext.com profiles where project founders present themselves through text, video and images.
The paper is organized as follows: Section 2 focuses on recent developments in the growing sector of crowdfunding and develops the conceptual framework of the study. Section 3 presents the method and the categorisation framework derived from the content analysis followed by the results which are presented in section 4. A detailed discussion in section 5 addresses potentials as well as limitations of the investigation and its results and also reveals perspectives for future research in this novel sector of communication research.

9.2 Conceptual Framework

Crowdfunding has significantly increased in both the number of projects and the financial volumes invested (cf. Brandt, 2013; Gierczak, S€ ollner & Leimeister (2014)). Accordingly, the interest in this field of research has intensified.
Crowdfunding is especially prominent in the creative industries which are defined as all activities that refer to culture and media and which include traditional media sectors such as movies, books, music, broadcasting, etc. (cf. Wiesand, 2010). The literature review indicates how broadly the idea of involving the crowd has developed and that a distinct description and differentiation of involvement is necessary to distinguish between such strategies as crowdfunding, crowdsourcing, crowdinvesting, etc. (cf. Ebner & Sch€ on, 2011; Moritz & Block, 2013). This paper applies the following definition as a basis for understanding the concept of crowdfunding: ‘Crowdfunding involves an open call, mostly through the Internet, for the provision of financial resources either in the form of donation or in exchange for the future product or some form of reward to support initiatives for specific purposes’ (Belleflamme et al., 2013). Relying on money provided by a crowd proves to be an alternative to traditional ways of financing projects or 108 S. Baumann and H. Bruning € companies (cf. Schenk (2014)). It is based on a general change towards a more involved society due to Web 2.0’s participation opportunities. These also create communicative relationships between funding and funded persons and include aspects of donations, different ways of being rewarded and profit-sharing (cf. iwd, 2013; Schramm & Carstens (2014); Sixt, 2014). Because of the manifold potentials underlying the idea of crowdfunding, the dynamics and differences in terms of geographical and personal influences, for instance the founder’s existing networks, are part of the discussion (cf. Mollick, 2014). Other studies focus on general factors of successful funding on crowdfunding platforms and indicate the communicative presentation and choice of media as another relevant factor (cf. Will & Br€ untje, 2013 p. 66). Coherently, the project founders’ direct interaction with such an extensive number of potential funders also opens up new opportunities in terms of market research (cf. Wenzlaff, 2015).
Besides early stage funding the networking effect of creating contacts with the crowd is another factor for start-ups’ success later on. The figures concerning crowd investments in start-ups indicate that some companies excel in attracting funds while other lag behind. For instance, whereas the overall amount of money invested by crowdfunders noticeably increased, the number of financed projects remained almost on the same level (cf. Grieß, 2014). Therefore, it is vital to determine which communication elements influence the willingness of the crowd to offer their money on crowdfunding platforms.


9.3 Method and Codebook

This paper takes into account communicative applications as factors of success for attracting crowdfunding. It investigates the communication elements start-ups applied on crowdfunding platforms in order to determine the influence of communication measures in convincing the crowd. Besides listing the different communication media employed, the investigation includes a qualitative analysis of content to explore crucial factors. Additionally it considers further aspects such as incentives, number of supporters and investment amounts.
Due to the media’s business model of producing and distributing content, the creative sector is highly suitable to serve as an exemplary case for investigating communicative applications. This paper uses a sample of German film start-ups that employed startnext.com, a crowdfunding platform with a special media focus. The sample contains 28 movie projects which were all in the stage of funding within the two week timeframe of coding. Selecting a restricted time frame and a single sector (movies) ensures similar conditions in which the start-ups created the profiles for their projects.
In order to examine the communication applications through which project founders communicate on the crowdfunding platform, this paper applies a qualitative approach, analysing the content following mainly Mayring’s concept (Mayring, 2015). This method generally refers to documented and recorded
communication such as texts, pictures, etc. and all related steps of analysis refer to theory-based systematic guidelines. The content analysis systematically structures content and allows conclusions on the intentions and impacts of communication (cf. Mayring, 2015, p. 12). In order to identify elements that are beneficial in crowd communication, this papers aims at revealing possible factors and their frequency in the communication of successful projects. Due to this quantitative aspect within the study, this paper applies the content analysis’ version focusing on frequencies addressing several steps: Phrasing the central question, determining the sample, identifying and defining the categories, defining the material with units of analysis, units of codes (minimum text elements being coded) and units of context (maximum text elements being coded), coding, calculation of frequencies and presentation as well as interpretation of results (cf. Mayring, 2015, pp. 15, 62).
The central question of this paper refers to what and how project founders have to communicate on a crowdfunding platform to reach their goal and become funded. Because of a very inductive approach, a small sample serves as a starting point for research in this novel field. As a first step a review of the sample for its  different kinds of content in the communication application revealed an identical structure in all project presentations. The categories (see Table 9.1) were then derived from the different elements in each project presentation demanded on startnext.com. The values for each category originate from the first overview, in
many cases already answering the question of what the project presentation encloses. The codebook combines the categories and values and defines the range of possible codes for each variable with a nominal scale. The purpose of the values is to define as precisely as possible what kind of content the different elements deal with. To ensure an exact set of values, the codebook was revised after coding a few projects with values being added and renamed in a more concise manner. For instance, the categories video content and video style show that the project funder employed the video format while the values for video content specify what the video is talking about (about the producers and their personal motivation to start the project? About the story itself and what funders can expect from the movie? Or about a certain event that was the occasion to start the project?). In order to explicitly assign the different content elements, the researchers always referred to the main tendency of each content element in case it could not be coded separately.
Due to the small sample and rather short communication and text elements, the differentiation between unit of codes and the unit of context was not always applied.
For instance, the codes do not refer to the single elements of pictures, but instead the whole picture is a unit of code. Within the text elements, it was possible to have more than one unit of codes which was defined to comprise at least parts of sentences consisting of more than three words. The unit of context depicts the
maximum of the whole text element, depending on a given length.
The same coding process was applied for videos. For videos one occurrence may be that the main part deals with several instances, for example with the persons producing the movie and their motivation, but also a certain event. In this case, only “About producer personal motivation” would appear as code if that was the primary focus. Very few elements referred to two values in equal measure which then were both coded. A guideline combines each value to several quoted exemplary expressions indicating which value to choose.1 The status quo of funding in each project was noted only once, but all content elements were coded twice and independently from two different researchers. Besides the structured coding, both researchers noted additional overall impressions on the style of language and the communicative appearance.

9.4 Results

In order to identify the crucial factors, the projects were ranked on the basis of the status quo of their funding success. Based on this ranking, the comparison of the categories and occurring values reveals certain tendencies that appear to stimulate the crowd’s willingness to be involved. Such values derive from those projects that are (likely to be) successfully funded given their status of funding during the examined timeframe. Eight of the initial 28 videos had already reached a funding status of 75 % or more, these were selected to be examined in more detail.
As far as the videos are concerned, four out of eight videos are about the producers and their personal otivation and the other four focus on the story.
This indicates that it is relevant how authentic the project founders are. As for video style, personal interviews and separate movies introducing the topic appear equally. Not all of the top eight videos employ pictures, but those who do succeed with pictures from scenes, pictures of the persons related to the project or pictures
illustrating the topic which conveys the interest in the movie itself and the persons producing it. This is also true for the elements representing the topic: successful projects mostly employ details about the movies’ story, two cases add information on the persons.
With regard to the described targets, the results differ. Entertainment occurs three times, social education twice, getting started in business twice and one project aims at adding a special technical feature to an already existing movie. Furthermore, four of the videos define a special target group, three refer to a general target group and one video does not indicate any target group.
The project presentations name different reasons why someone should support them. Most often, in three cases, they inform visitors about the individual benefit they will receive if the project were realized. Two projects do not specify the reasons. Instead, they solely ask for support. Social importance, documentation of a special event and supporting the movie are further reasons requesting for support.
However, seven out of eight projects explain they would use the money to realize their project which they could not do in case they were not funded. Only one project intends to use the money to finalize the project.
The description of the people behind the project varies. In most cases (five), the personal experience is part of the description combined with names or a general description of the group. In two cases, the professional rank or function or a short curriculum vitae replace references to personal experience. None of the top eight videos repeat their motivation in this part of their presentation.
As far as the overall impression is concerned, it becomes obvious that the successful projects use concise and clear language as well as specific descriptions in almost all elements. They avoid being too emotional or spiritual, hence avoiding the impression of a mere “begging for money”. Instead, they explicitly describe and
specify their target on a factual level. In the case of movies, the employment of pictures does not seem to be decisive. Including personal references, however, appears to be convincing so that the personal experience can be assumed to create trust in the project founders. Furthermore, projects seem to succeed when the explanation of the individual benefit for each funder is included instead of just generally addressing all possibilities and  persons.
9.5 Discussion
The results reveal an influence of communication on the success on crowdfunding platforms. The findings  derived from the analysis of the top eight videos of the sample indicate different factors such as a concise and rather factual presentation appear to be supportive in terms of convincing a crowd. In contrast, rather motionally addressing, begging or unclear content elements do not provoke a willingness to be involved. However, this is only a basic impression based on the given material and an extended, more detailed analysis of language level, word choice etc. should be added to validate the impression. Nevertheless, some elements appear to be crucial: For instance, for the movie projects studied, to include videos that focuson the topic and its producers is an essential element that the successful projects included in their profile. Thus, regarding the central question of this paper, it can be concluded that communication elements and the choice of content are relevant for funding success. Still, further research needs to consider more closely to what extent the basic idea is the decisive element and furthermore, to what extent it limits the possibilities of what the project founders can communicate at all. Project founders should avail themselves to the full range of content elements provided by startnext.com which enables them to be convincing. The exceptions are pictures which are the only elements that seem not to be crucial. Furthermore, founders should pay attention to how they differentiate their presentations within these
boundaries. Even little differences have an impact on how the crowd reacts to a project.
However, these results can only serve as initial indications because firstly, the communicative application depends to some extent on the project’s basic purpose and secondly, the close examination limited the number of projects considered to a relatively small sample. Additional research with an extended sample and timeframe would enhance then findings. Furthermore, future studies would need to enhance the codebook and the guidelines. As for this sample, the differentiation within quotations guiding the codes was difficult because of the available amounts of content. The given structures on startnext.com often are very similar and only differ slightly so that few variations occurred between both coding results. Due to the small sample they only caused uncertainty of tendencies within a single element, that is, whether to code one or two values in a category so that both results always included a common value. Nevertheless, with regard to an extended sample these uncertainties and variations can be eliminated.
Additionally, further research needs to include other (international) crowdfunding platforms to verify if the indications from this paper are transferable to other platforms and with a global audience. A global scale allows for an investigation of cultural differences. Another aspect is the impact on the participating crowd members which could be part of further studies to validate the findings. For both, scientific and practical approaches the communication with a crowd is decisive so that the project’s success can rely on the originality of the idea
and does not fail because of communication activities being unsuitable or of minor value.

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ADVERTISING IN MEDIA MANAGEMENT AND ECONOMICS
Louisa Ha


Advertising in Media Management and Economics



the advertisements and buy the advertised product instead of paying for the media content directly. It has become the lifeblood of media with the largest audiences, such as broadcast TV networks and social media. The free or very low price further increases the reach of the media. The large audience of editorial media is what attracts advertisers to pay for the advertising space or airtime. Consequently, the media industries become the drivers of popular culture (Anderson & Gabszewicz, 2006).


Media managers can choose their revenue model, relying on either indirect payment income, such as advertising, sponsorship, commission on sales or government and organizational funding, or direct payment income, such as subscription fee or single copy sales or a mix of both.

The importance of advertising as the income revenue for the media industry is paramount in capitalist markets, such as the United States, Japan, and South Korea. Government-owned media are more a niche service in these markets. Corporations are the major sponsor of media content. In the United States, advertising expenditure in 2017 was estimated to reach 210 billion U.S. dollars (eMarketer, n.d.). All major media either are funded solely by advertising income, such as broadcast TV and radio, or have a substantial portion of income coming from advertising, such as newspapers, magazines, and basic cable TV. The maximization of the value of the advertising inventory and advertising sales management are important topics for media management. Advertising inventory is perishable and can be available only once, similar to a seat on an airplane. Furthermore, if the advertising space is unsold, the media organization must fill it with editorial content and lose revenue. The lost sale of the unused advertising space cannot be recuperated at a later time. Although these topics are not commonly found in published research, media managers have their own internal training on how advertising value can be maximized by putting a premium on space and airtime with the highest demand and filling the rest with a low advertising price.
Apart from being the primary source of funding for commercial media, advertising is also part of the media content. In television, there are paid programs and infomercials that fill the fringe airtime of television. The Sunday inserts of newspapers with coupons and shoppers are what attract people to buy Sunday newspapers. The amount of advertisements determines the amount of newsholes (news editorial space) to fill for newspapers and other news media ( Jones & Carter, 1959; Lacy, Robinson, & Riffe, 1995).


This chapter will focus on research about advertising’s influence on editorial content and its implications for media management. Research on this broad topic can be subdivided into five categories: (1) the economic nature of media, (2) importance of advertising revenue in different media, (3) revenue models of media, (4) ommercial pressure on media and influence of advertising on editorial content diversity and independence, and (5) dvertising clutter and perception of editorial quality.

Economic Nature of Media as Goods


The study on the economic nature of media sheds light on how media product and services should be provided to the public. There are three forms of goods: public goods, mixed goods, and private goods (Blümel, Pethig, & von Dem Hagen, 1986). Not all forms of media products are the same in economic nature. Broadcast and online media are public goods or near public goods because they are non-rival in consumption and are almost non-excludable (Hoskins, McFadyen, & Finn, 2004; Owen & Wildman, 1992). Non-rival consumption means that someone consuming a broadcast TV program will not diminish another person consuming the same program at the same time. Everyone can simultaneously consume the same program without additional cost.

 Broadcast radio and TV are also non-excludable because anyone with a receiver will be able to receive the  terrestrial broadcast within its footprint. Online content is basically the same as broadcast. As long as people have Internet service, they can access the online content without diminishing others’ use of the digital content because the Internet service provider does not control what content is accessed by the users. To exclude omeone from accessing online content for free requires extra effort and cost to the content provider, such as a paywall or authentication system that blocks people from using it, similar to cable TV. Cable TV makes the program ervice excludable through the set-top box’s scrambling of the cable transmitted signals. Movies shown in cinemas and pay cable are mixed goods because consumers can consume the content at the same time (non-rival) but they are excludable through the ticket admission and cable subscription and provision of set-top box to display the TV signals. Online entertainment content, such as Netflix, can more easily achieve online subscription because of the on-demand convenience, binge watching possibilities not available offline, exclusive original shows, and much lower price compared to high cable subscription fees and movie tickets. Print books are private goods as one individual can read only one book at a time and others have to read another hard copy of the book. Typically, people cannot share a book at the same time. Based on the economic nature of the media product  format, for public goods such as broadcast TV and radio, the government is the natural funding source because of the difficulty of excluding people from use and also the strategic importance for the government of having a mass medium to communicate with the public. But government is a natural monopoly.

Many government-funded media become the propaganda machine for the government.

 If we want competition of media products and diversity of content, and to have the media serve a watchdog function for the public to monitor the government’s performance, then they have to be provided by private sectors. Public broadcast networks, such as the BBC, are a still monopoly because public revenue such as broadcast license fees cannot support multiple public broadcasters competing for the same revenue pool. If the private sectors are to provide public good types of media product formats, they have to use an indirect form of consumer payment to compensate for the cost because no one will pay for the service as broadcast and online content is non-excludable and non-rival in consumption. Advertising becomes the best form of funding support or revenue for these media forms because the public nature of these media means they will reach a large number of audiences at no additional cost to the media. They can charge advertisers a high price for access to the large audience. Advertisers themselves lack the independent editorial content and the audience base of TV networks and popular web sites. They have to pay for that access to audiences. The extremely high price of Super Bowl broadcast TV commercials in the United States is an example of the provision of a highly popular sports game to give advertisers simultaneous reach to the largest national audience with a very high profit margin for the network that owns the broadcast right. The protection for the broadcast TV network is the exclusivity as the only source for the commercial airtime and the live broadcast for all audiences.

In general, people are unwilling to pay for media content when there are substitutes available for free, even though those substitutes may be of lower quality. Ha and Zhang (2017) discussed the parity readers or audiences who care less about the quality and the importance of public good property of news content, especially online content, when access to free alternatives is easy for Internet users. The rise of free tabloids and free newspapers in the United States and other parts of the world which are totally supported by advertising shows that the concept of free news content is well accepted by consumers (Gabszewicz, Laussel, & Sonnac, 2012;Tennant, 2014). These free newspapers operate on a public good basis to serve parity news readers. Although these newspapers probably are perceived as lower quality than the elite newspapers, they are seen as functional substitutes for news to many mass audiences. Despite readers’ annoyance about advertising, they would still rather get information and entertainment for free than pay a high price. Chyi’s (2012) study of U.S. adults online regarding news payment found that how users are charged does not make much difference—whether they are charged does.
Bleyen andVan Hove (2010) examined the revenue models of different Western European online newspapers and found that elite quality papers more likely to charge subscription fees online than the popular press. Similarly, in the United States, the newspapers that reported success using subscription models for online newspapers are limited to the elite papers, such as the Wall Street Journal and the New York Times. Most paywalls of U.S. newspapers were not successful (Ha & Zhang, 2017; Mutter, 2015). In fact, the media market will be much smaller if the direct pay model dominates because only a few news media outlets are able to command a price people are willing to pay directly.

 

 

 

Importance of Advertising to Different Media


Because of the different economic properties of media formats, the importance of advertising is different for different media. To those media formats that are more of a public good in nature and for which it is easy to find substitutes, such as broadcast television, radio and online media, advertising is the most important source of income. Peitz and Villeti (2008) show how broadcast TV stations that have no mechanism to collect money from consumers and have to rely totally on advertising resulted in an advertising nuisance, while pay-TV, such as cable, can have dual sources of revenue and is less likely to have market failures. Advertising is supplemental and not the primary income for cable TVservice . Pay-TV service already compensates the welfare of the viewers with highly differentiated programs and the role of public broadcasting is deemed unjustified to correct market failure. Evans (2009) explicates how online advertising provides two potentially significant economic efficiencies:
online advertising allows the economy to reduce the amount of resources devoted to creating content for aggregating and sorting potential buyers. Online advertising increases the accuracy of  the match between the buyer and the seller with user data so that the seller has greater ability to target consumers who are likely to buy, and the consumer is more likely to receive useful messages and less likely to receive time-consuming but irrelevant messages. Based on these economic functions, advertising should be the primary source of income for online media. Using a Marxian critical approach, Robinson (2015) explains the success of Facebook and Google as a nonpaying sphere coexisting with a capitalist enterprise by how the relationships with other capitals together with the loyalty of their users are crucial factors in their ability to accumulate capital to be attractive to advertisers. Their dependence on advertising income means they create value produced elsewhere in the economy
instead of charging the users.

One important question for media managers is what factors affect advertising revenue. In an early study on newspaper advertising, Glover and Hetland (1978) found circulation is the most important predictor of advertising revenue, more than the advertising rate. Although studies such as Kalita and Ducoffe (1995) found no impact of advertising revenue on the price of magazines, they cannot deny the importance of advertising as an income for consumer magazines. These results show only that magazine price is independent of advertising income. Depken II and Wilson’s (2004) study of 95 U.S. magazines found mixed results. For about half the magazines, advertising intensity correlates with higher magazine price and higher number of subscriptions, but for some other magazines, advertising intensity lowers the cover price and the number of subscriptions. Entertainment magazines
benefit the most from advertising. Indeed, the price of consumer magazines now is very hard to study because of the deep discount practices of magazines in selling their subscriptions and the great difference between single copy and subscription prices. Most importantly, some trade magazines totally rely on advertising. In addition to the magazine’s readership size, Wirtz, Pelz, and Ullrich’s (2011) study of German magazines demonstrated that advertising revenue performance can be substantially affected by the advertising marketing competence of the magazine.
Kind, Nilssen, and Sørgard’s (2009) economic analysis shows that the scope for raising revenues from consumer payment is constrained by competition which offers close substitutes. They proposed that the less differentiated the media firms’ content, the larger the proportion of their revenue from advertising. However, when the number of competing media products is large, the firm’s ability to get revenue from advertising is lowered and would facilitate the growth of direct payment. For many traditional media, their online websites are still just a complementary service of existing traditional media (the clicks and bricks) of broadcast and cable TV, playing just a supportive role Louisa Ha 148 rather than a full-blown content service or a primary revenue generator (Chan-Olmsted & Ha, 2003,Ha & Chan-Olmsted, 2004). By operating on an additional online platform, the advertising income from the offline traditional media supports both the offline and online operation because typically
online advertising does not generate sufficient income for the websites.

 

 

Revenue Models of Media

Because the media industry has dual product markets, revenue models of media products highly vary. They can range from completely free to consumers (supported fully by advertisers) to completely paid by the consumers, such as premium cable service, like Home Box Office (HBO). Advertising allows people who cannot afford or are unwilling to pay for media content access to information and entertainment. Free content can maximize audiences because there is no monetary risk to the audience. So, for media that strive to achieve the largest audience, the free model supported by advertising is the best way to go. This indirect payment revenue model is a win-win situation for the two sides of the media markets—the advertisers, who need to find ways to communicate to a large or specific audience, and the audience, who wants to get content for free. Media get profits from advertising and serve both advertisers and audiences as customers. Several studies on the “free” model of media content payment supported such benefits of advertising as the revenue source of media. Halbheer, Stahl, Koenigsberg, and Lehmann’s (2014) econometric analysis of free, sampling, and full paid content models of online newspapers shows that a paid content strategy is optimal only if advertising effectiveness is sufficiently low compared to prior quality expectations. For intermediate levels of advertising effectiveness, the publisher should use a sampling strategy. The publisher should switch to a free content strategy once advertising is sufficiently effective compared to posterior quality expectations. The free sample strategy (metered paywall) should be kept even if paid content is used to engage the readers. Kesenne’s (2012) study shows that media companies earn more by charging advertisers rather than consumers in sports programming, entertainment content, and news. After analyzing the business practices of 48 leading webcasters in the United States and South Korea, Ha and Ganahl (2004) found that both clicks-and-bricks and pure-play webcasters in both
countries have a similar reliance on advertising as their major source of revenue, even though they employ different content strategies to their own media’s advantages. Ha and Ganahl’s (2007) study of the business models of webcasters worldwide found that indirect consumer payment is most prominent in all types of leading webcasters in their study of 16 countries and the Arab region. Those that do not receive a parent organization subsidy or government support rely on advertising to provide the free webcast service. Very few of the leading webcasters were able or willing to charge consumers for their content except in download and exclusive entertainment content. This is especially important for all new media services as free content reduces risk perception and encourages trial. Consumers have more latitude for technical problems and other issues when it is free.

 In online media where no geographic protection is afforded to the media content providers, content providers compete on offering unique content and better packaged content. Podcasts and mobile apps use the same free
trial concepts to maximize trial and use. In fact, more than 90% of mobile apps are free and many are advertising- supported (Ruiz, Nagappan, Adams, Berger, Dienst, & Hassan, 2016). Basically, all popular social media run on a primarily advertising-supported model to maximize their audience. The only exception is LinkedIn, a professional social media site, which uses a combination of advertising (recruiting service for companies) and  subscription at the premium level.

Media managers have to face the reality of finding revenue or funding support for their media content. Although Waterman and Ji (2012) painted a gloomy picture of overall revenue decline of the U.S. media industry as a percentage of GDP and the shift toward direct market payment of media products and services from advertising, other scholars see media technologies bringing new business models and opportunities for media companies.

 Kumar and Sethi’s (2009) study of web content providers concludes that pure revenue models, such as free-access models and pure subscription feebased models, are not sufficient to support the survival of online information sellers. They advocated hybrid models based on a combination of subscription fees and advertising revenues to replace the pure revenue models. Using the optimal control theory, they identify optimal levels of subscription fees and advertisements for web content over time. It is especially important for a monopolist or  market leader to choose a hybrid model to capture the market (Lin, Ke, & Winston, 2012).YouTube, the largest video portal, now employs a hybrid model, offering YouTube Red, which is free of advertising for U.S.$10 a month, and regular YouTube with advertising for free. It was reported that six months after its launch it was able to get 1 million paid subscribers, and another 1.5 million subscribers were on free trial. The bulk of its audience is still the free users (Singleton, 2016). This is following Anderson’s (2009) freemium model, in which digital products can be provided as free at a basic level and also at a premium for those willing to pay for them with higher-quality or exclusive content. As Tag (2009) shows, companies that allow a package without advertising provide a good-quality experience for their subscribers, but those consumers who chose to have the free ad- supported version received an increased quantity of ads, which created a bad experience for consumers. These tactics were employed to drive them to the ad-free version. Pauwels and Weiss’s (2008) study of an online service provider changing from a free to fee model concludes that the failure was caused by pushing for the change before the momentum in fee subscriptions has materialized, when they set prices higher than the level the consumer is willing to pay for their content, when they are up against a dominant competitor with better (perceived) content and/or lower price levels, when they charge fees for all (previously free) content, and when they fail to ramp up marketing communication efforts and execute them effectively. Should media managers just choose between two extremes—an extremely annoying ad-supported media environment and a clean ad-free environment—or can we find a good compromise? More importantly, should advertisers be denied a healthy and credible editorial media to communicate their messages to their consumers? Finding the right balance is a challenge for media managers and advertisers.


Variations of Advertising (Sponsored Messages)


Due to public skepticism toward advertising and audiences’ skipping and avoidance of commercials and advertisements, advertisers try to attract attention to the brand and advertising messages via integrating with editorial content (hybrid advertising formats), such as product placements and sponsored content (von Rimscha, Rademacher, Thomas, & Siegert, 2008). Product placements can take the form of prop placement putting the brand product in the background or planned integration into the editorial content. Sponsored programs attach the brand name to a TV/radio program. In 2014, product placement revenue reached 6 billion U.S. dollars and is expected to grow to 11.5 billion by 2019 (Lafayette, 2015). But many of these product placement packages include commercial spots. These variations of advertising are all sponsored messages that have a commercial intent to promote a brand or a product. These sponsored contents are not skippable or blockable by adblocker  programs and DVR skipping functions. They become forced brand message exposure to the audience.

But in von Rimschaet al.’s (2008) interviews of 20 advertising industry experts, including agency executives, advertisers, and media company executives, they did not think these hybrid forms of advertising were as effective as traditional TV commercials because of the many limitations of using those formats and advertising creativity was very limited. These hybrid forms were seen as useful supplementary materials to reinforce the product commercials. Surprisingly, the media companies were more eager than the advertisers and agencies to offer integration of editorial content and advertising messages. Their study shows that both advertisers and media company executives believe that advertising should be editorial content itself in a longer form so that commercials themselves are attractive to the audience and do not rely on editorial content to support them. Ham, Park, and
Park’s (2016) national study of 21,944 U.S. consumers found their responses to product placement in television and movies highly varied from apathetic, negative, entertainment, information value to ambivalent with mixed feelings. Those who are more positive toward product placement are also those who are positive toward advertising. Hence product placement does not mitigate the negative attitudes toward advertising. It is still preaching to the choir.


Native ads, also known as sponsored content (Wojdynski & Evans, 2016), are getting more and more traction as people avoid advertising in editorial media, especially online. Business Insider estimated U.S.$4.1 billion was spent on native ads and forecast that 74% of all digital advertising revenue by 2021 would be from native ads, which include native in-feed ads on publisher properties and social platforms (Boland, 2016). Wojdynski and Evans’s (2016) experiment found very few participants can distinguish native ads from editorial content. They also found that a middle-positioned disclosure attracts greater visual attention and likelihood of fixation compared to top- and bottompositioned disclosures, which have been believed to have stronger attention. Nonetheless, recognizing the advertising disclosure negatively affected the credibility of the native ad as a news story. But
in general, most people did not know the content was sponsored. The persuasive effect is also low for sponsored content. Their study results indicate the need to develop sponsor disclosure standards based on empirical evidence to avoid lowering the credibility of the media. Carlson’s (2015) case study on a controversial Church of Scientology native advertisement on the Atlantic website shows that the acceptance of native ads is not just a desperate attempt for online sites to receive sufficient advertising support or about how to properly label the sponsored content, but it also presents a challenge to publishers and advertisers to provide native content that matches and blends well with accompanying editorial content. The nature of native ads is still a philosophical debate about whether advertising should be part of the editorial content.


Commercial Pressure on Media and Influence of Advertising on Editorial Content Diversity and Independence
Because the advertiser’s interest is to gain access to its target audience to push for its products and the media’s interest is to satisfy such needs of the advertisers to reach the largest audience (popular content) or the most profitable consumers (young or affluent consumers), media executives have been accused of not trying to develop innovative content and of going for the least objectionable programs and “dumbing down” programs to appeal to the masses (Brown & Cavazos, 2005; Eastman & Ferguson, 2013). Blasco and Sobbrio (2012) called this commercial media bias the inherent limitation of advertising-supported media.


Does commercialized content result in lower quality or diversity of content? Many studies on mass media blamed advertising for homogeneous and mass appeal programs and media content. Einstein’s (2004) study of U.S. commercial broadcast networks’ programs found advertising drove the program development of these networks and reduced the diversity of program content. Picard’s (2004) study on commercialism’s impact and newspaper quality found advertising-supported newspapers lower their quality by emphasizing content of social value less and appealing to sensationalism and other questionable practices. Lischka’s (2014) study of German newspapers shows those which have more advertising revenue are more likely to report less about the economic crisis and unemployment problems than those which have less advertising. Nonetheless, Pires (2014) purports
that the size of the market determines if advertising promotes diversity in political ideology in news media. When the market size is small, advertising will reduce the diversity, but when the advertising market size is large, news media compete with multiple political ideologies to capture readers and adapt more to the political preference of the audience.


In contrast to the common perspective of advertising’s negative effect on content, there are other studies that show that improvement in diversity and content actually attracts more advertisers. Li and Thorson (2015) found that when newspapers increase the proportion of news content and diversity, they improve both subscription and advertising revenue. Sun and Zhu’s (2013) study compared the change in content of blogs with ad revenue and those did not adopt ad revenue sharing programs and showed that those blogs participating in the ad revenue sharing program indeed shifted toward popular topics, such as the stock market, salacious content, and celebrities, to attract audiences and advertisers. But they did not find a decrease in quality. They found the quality also increased with popularity. So, advertising as a revenue actually professionalizes media content by improving quality as well as popularity.


In addition to advertising effects on editorial quality, advertising’s negative effect on editorial independence and self-censorship practice has been studied quite extensively by researchers. Soley and Craig’s (1992) survey of news editors who perceived pressure from advertisers showed that 90% of them reported advertisers’ attempts to influence their news coverage. Yet most of them would still report news that is negative about the advertisers. Another study by An & Bergen (2007) from the perspective of advertising directors of newspapers shows similar pressures from advertisers, especially at small newspapers and chain-owned newspapers. Germano and Meier (2013) found that newspapers are more likely to not cover negative news about their advertisers through self-censorship.
Rinallo and Basuroy’s (2009) study of newspapers and magazines in the United States and several European countries shows that advertisers indeed have an advantage in positive news coverage of them in the news media and publishers that depend more on a specific industry for their advertising revenues are prone to a higher degree of influence from their corporate advertisers than others. But is the advertiser’s pressure that high on news reporting? Price’s (2003) study of U.S. TV networks’ news correspondents found only 7% of the respondents felt pressure from advertisers. Owners’ pressure is more important than that of advertisers but still in general they perceived they have a high degree of autonomy in their reporting. Colistra’s (2014) study on TV reporters demonstrated that pressures from advertisers predicted reporters’ perceived instances of agenda cutting (reducing coverage or omission of items) in news decisions. So, these studies show that advertisers’ influence on news editorial content depends on how much the newspapers rely on the specific advertisers and the autonomy of the editorial staff. Front-line news people seem to be less susceptible to influence from advertisers than the advertising sales staff and editors. In general, advertisers are found to be a threat to editorial independence. Usually the editorial staff is unwilling to compromise while the advertising sales staff is torn between clients and editorial colleagues.
However, studies on business news coverage show the press is much more independent from advertisers or the business sector than those studies that examine the influence of advertising on editorial content. Zhang’s (2014) study on the food industry’s news coverage in the United States found that major firms in the food industry have all been reported about negatively in regard to food safety. Another study on the negative coverage of the BP oil spill (Watson, 2014) and a recent CBS report on the Ford Explorer’s exhaust leakage on 60 Minutes and CBS News (CBS News, 2017) seem to indicate news media give higher priority to public interest than protecting businesses in news coverage. Although these studies did not focus on advertiser pressure on editorial content or measure the advertising spending of these large firms on the newspapers under study, these large firms under
study are all large advertisers for news media. Negative reports on them risk losing their advertising support. So, these are counterexamples of commercial pressure on news media. Public interest and inter-media agenda setting can override the advertiser’s pressure on news coverage.


Advertising Clutter and Perception of Editorial Quality


Advertising clutter has been defined as the “a large amount of non-editorial content in an editorial medium” (Ha & McCann, 2008, p. 570). It is more about the density rather than the quantity of such noneditorial content. Goldstein, Suri, McAfee, Ekstrand-Abueg, and Diaz’s (2014) experiment studied the economic and cognitive costs of annoying online display advertisements and concluded that media lose their audiences by accepting annoying ads. As Ha and McCann (2008) pointed out, advertising clutter can be the objective physical presence of advertising (actual amount of advertisements) and the subjective perceived amount of advertising (which varies by individuals). Different people have different expectations or acceptance level of advertising. The advancement in digital technologies allows a more sophisticated way of presenting and customizing advertisements based on
location and other user data. To media managers, advertising clutter is both an evil (possible irritation to the audience) and a blessing (more advertising revenue and indication of a high demand for advertising for the media company).
Based on prior studies on advertiser pressure on news media mentioned earlier and newshole and press performance studies which assume that a larger amount of advertising will lower the readers’ perceived editorial quality (e.g., Lacy & Fico, 1991), Ha and Litman (1997) examined whether an increase in advertising clutter in consumer magazines results in a decline in circulation and diminishing returns in advertising revenues of those magazines using a longitudinal analysis. They indeed found diminishing and negative returns of advertising clutter for circulation of leading consumer magazines in the United States, which may reflect consumers’ perception of lowered editorial quality when the magazine has too many ads and consumers’ lower inclination to buy the magazine. They recommended media companies set a maximum amount of advertising based on the optimal point
before diminishing returns for circulation, which is about half of the total pages for entertainment oriented magazines.
Ha’s (1996) experiment on the three dimensions of magazine advertising clutter found only negative effects of perceived quantity and intrusiveness on readers’ attitudes toward the advertising in the media. Schumann, von Wangenheim, and Groene (2014) found lower click-through rates among consumers who reported higher ad clutter in their experiment. Lee and Cho’s (2010) experiment found that for a highly cluttered web page, frequency of the target ad facilitates the memory but not recognition of banner ads. Bellman et al.’s (2012) study found that there was a marked decline in online ad recall and recognition beyond three minutes of commercials within the prime-time shows online. Zanjani, Diamond, and Chan (2011) confirmed that online information seekers are more likely to feel intruded on by ad clutter than surfers. Ha (2017) points out that the increasing consumer avoidance of advertising with the aid of technology such as digital video recorders (DVRs) to skip advertising and other adblocker software is a serious warning for advertisers and media managers to create a healthy advertising environment. They have to make advertisements more informative and entertaining for the consumers.

Ads may not be perceived as clutter when consumers are the one who requested the information/ads (pull), such as a product search on Google. But when ads are unsolicited (push), then they are easily perceived as clutter unless they offer consumers other value, such as entertainment. An optimal advertising environment should make advertising available on demand and offer entertainment and information value to consumers.

Research Agenda for the Next Decade


Advertising is a moving target as a research subject because it continues to evolve in format with the advancement in technologies and acts as an indirect payment for many editorial media. This author proposes five topics on advertising that are important for media management and economics researchers to study in the next decade: (1) Is blurring or mixing editorial content and advertising a good thing for advertisers, media, and consumers? (2) Is advertising the culprit or scapegoat for editorial quality/integrity problems in media? (3) What is the audience’s receptiveness toward new forms of advertising in different media? (4) Should advertising still be the primary source of revenue for commercial media or is direct payment a better way to ensure quality content in the consumer’s interest? (5) Regarding advertising clutter, what is the optimal amount of advertising and acceptable
advertised product types in editorial media?


Is Mixing Editorial Content With Advertising a Good Thing?


The foregoing discussion on the latest trends in advertising format variations points to advertisers’ worry about dwindling exposure to advertising when people can skip ads and are skeptical of traditional advertising formats.

The effectiveness of such advertising variations remains to be seen and empirical studies actually point to the ineffectiveness of native ads on brand recall and preference. In fact, empirical evidence shows that consumer attitude toward product placement is similarly as negative as it is in advertising. This trend of mixing editorial content with advertising to increase exposure and credibility is quite troubling. On the one hand, making ads more like editorial content means that they should be more informative (advertorial/native ads) and true to the actual use of products (as in product placement) and relevant to the editorial content consumption. On the other hand, by hiding the advertising purpose of the content, this runs into the ethical question of deceit.


Why do advertisers hide their advertiser identity if they have legitimate products to promote? The revival of branded TV programs, such as Redbull TV, and custom publishing of branded magazines, such as Rhapsody (for United Airlines), is another trend for researchers to study. Are they effective in building brands? Are consumers receptive to the concept of content created by advertisers only? The experimental study by Cole and Greer (2013) shows consumers rated branded magazines as having lower credibility than non-branded magazines. But more research is needed on TV programs and different types of branded content. The inherent promotional nature of advertising of native ads and branded content apparently contradicts the impartiality expectation of third-party editorial media.


The more advertising is mixed with editorial content, the more likely editorial content of media may lose credibility, which will damage their reputation and lower the support of the audience. These are important media management questions that media managers should weigh in on, and researchers should provide guidance with empirical research from both ethical and pragmatic perspectives to determine who the true benefactors of native advertising in the short and long term are.


Is Advertising the Culprit or Scapegoat for Editorial Quality and Integrity Problems in Media?


While there is ample research evidence of advertisers putting pressure on editorial media to gain positive coverage or minimizing negative coverage of themselves, and the inclination toward content with mass appeal to maximize audience, advertising is not the only culprit for unsatisfactory media performance in society. The increasing distrust in media and concern about media bias probably indicate a bigger issue (Tsfati & Cappella, 2003). If advertising is the only culprit for lower editorial content quality, then all state-owned or non-advertising-supported media should have the highest editorial quality. More importantly, who determines editorial content quality? The elites and the intellectuals? Or the media managers and editors who serve as gatekeepers for media organizations? Or the consumers at large, who have different interests and backgrounds?

We want to make sure that advertising does not become the easy scapegoat for media’s own problems and that advertising provides a win-win solution to providing media content to the largest audience with choices for the audience. If media are only favoring advertisers, then they will lose credibility and audience, which is to the detriment of advertisers and media ultimately. Advertisers need editorial media that have the trust and support of their audiences. So, researchers should identify specific conditions when advertisers cross the line between the church and the state distinction between editorial content and advertising and when advertisers have unruly influences on content that jeopardize the trust of audiences and perceived bias of media. Most importantly, how the audience perceives these interfering advertisers has not been studied. Putting the audience into the equation will help advertisers and media managers understand that they are running the risk of losing the audience. In addition, those studies that examine advertising’s (negative) effect on editorial quality should control for other  structural and organizational factors, such as a media organization’s investment in the newsroom, number of large advertisers (advertiser concentration), ownership of the media, the editorial staff’s perceived autonomy, journalistic norms, and competitive environment in the market. Defining editorial quality and integrity clearly with consistent measures for both information and entertainment media is an essential step toward this direction.


Audiences’ Receptiveness Toward New Forms of Advertising in Different Media


As discussed regarding the different media forms and research on clutter, audiences’ receptiveness toward advertising in each form of media varies. This may be due to tradition and expectations.

However, new forms of advertising are not within the common expectations of the consumers.


How receptive they are to those new forms of advertising, such as native advertising, programmatic advertising, and location-based advertising, is still largely unknown. Promoted tweets resemble regular tweets and how consumers respond differently to regular tweets and promoted tweets is not fully understood. Product placements integrate the advertised product with editorial content and directly influence the content through the use of the products in editorial content. However, for unknown brands, product placement has minimal effects because consumers cannot recognize the brand in the placement. But for well-known brands, product placement is a good way to remind consumers that popularity of the brand is a part of the prop of the program. Would consumers welcome a disclaimer that the product placement is paid for in the program credits rather than the natural use of the product in the program? Would consumers have a positive or negative attitude toward paid product placement if they knew about it? How much can consumers learn about the product in product placement? There are certainly limitations in product placements as a form of advertising. How about paid explicit endorsement of products by YouTubers who are popular personalities? These are all important questions for researchers to answer in studying audience’s receptiveness toward new forms of advertising.


Should Advertising Still Be the Primary Revenue Source for Commercial Media?


Although prior research has shown that direct payment will lead to more customer satisfaction providing either niche or exclusive premium content that consumers cannot get otherwise, media managers still have the option to capitalize on the dual product market of media. Media managers have to choose whether they provide content free to consumers using advertising (broadly defined as any sponsored content, including infomercials and home shopping channels), charge consumers a highly subsidized low price (charging consumers, but below cost and subsidized by advertising), or offer a metered use with free samples or fully paid by the consumers directly.

Each type of payment model has found success. However, as the media environment is getting more and more competitive with more entrants to the markets online as either user-generated media, mobile apps, or over-the-top (OTT) streaming, the landscape may be tilted more toward a fully advertising-supported model and other forms of indirect payment as these news digital media entrants are all by nature public goods, as discussed earlier. As media consumers can be broadly divided into parity consumers, who do not care so much about exclusive and unique content, and non-parity consumers, who care about the quality of the experience, media managers should increasingly consider a hybrid model that serves both types of audiences differently if they want to maximize the impact of their media content while preserving an advertising-free environment for those consumers who have high demands and resent advertising. Because of the unwillingness to pay for online content in general and the higher willingness to pay for entertainment content by consumers (Yang, Fang, Abuljadail, & Ha, 2015), the
perceived substitutability among different types of online news content versus entertainment and reasons for such perception will be an important study area. Media management researchers should study managers of different media regarding their beliefs about the type of model most profitable or best suited to the media form and how such beliefs influence their content strategies. Content analysis comparisons of different media forms with different revenue sources can also assess the impact of advertising on content quality and content diversity.


Advertising Clutter, Optimal Amount of Advertising, and Types of Acceptable Advertised Products in Different Types of Editorial Media


As long as editorial media still accept advertising, advertising clutter will continue to be a concern because consumers consider it not as part of the editorial content and as interfering with their editorial content consumption. Advertising clutter can affect their perception of editorial content quality and resentment toward advertising. Traditional media, such as television, radio, and newspapers, still heavily rely on advertising as income; then the task for media managers is to study the optimal amount of advertising in their type of media. Ha and Litman’s (1997) study shows entertainment-oriented and information-oriented magazines have different thresholds of diminishing and negative returns of clutter for circulation and advertising revenue. We need more research on other media to find out the optimal amount of advertising to maximize the exposure to the advertising while maintaining editorial quality perception for the consumers. Comparing the optimal amount of advertising in different types of media will be a fruitful way to help media managers set their advertising limit policy and for legislators and industry associations to set up guidelines for industry to follow. More research should also be done on advertising inventory management and how media companies optimize the advertising rates to ensure a healthy amount of advertising. In addition, consumers should be educated on the contribution of advertising to the provision of free media content. As Schumann et al.’s (2014) study demonstrates, once consumers are reminded of such benefit, their negative attitude toward advertising is greatly reduced. Apart from setting the maximum amount of advertising, developing norms for types of products and services and execution quality that are acceptable for advertising should also be explored. Advertising executions that are annoying and below standard quality should not be accepted. Products that are hazardous to health or advertisers that have bad records in the Better Business Bureau should not be allowed to advertise. Such standards may vary by the type of media. User-generated media and mobile media may be the focus media in future studies as they contain the most consumer information for advertisers and media managers have the least control of when and how ad content is shown because many ads are programmatic and automatically fed to the screen. These proposed research topics will
ultimately foster the development of an optimal media environment for advertisers, media companies, and the audience.


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بنیاد نیکوکاران شریف به ۱۰۰ نوعروس مددجو در تهران ، گیلان و سایر نقاط کشور، حواله جهیزیه اهدا کرد.

رضا منصورنیا مدیر ارتباطات و توسعه ­بنیاد نیکوکاران شریف در گفتگو با خبرنگار خبرگزاری صدا و سیما با بیان اینکه ۳۰ نفر از این نوعروسان، مددجویان تهرانی و بقیه از دیگر شهرستان‌ها هستند، گفت: از جمله اقلام جهیزیه اهدایی مهمترین لوازم زندگی شامل یخچال، اجاق گاز، ماشین لباسشویی، سرویس ظروف تفلون، یک تخته فرش، سرویس خواب و چرخ خیاطی است که همه این لوازم برای هر عروس سه میلیون و ۵۰۰ هزار تومان تمام شده است.

وی افزود: این جهیزیه‌ها که همه ساخت داخل هستند به همت خیران و کارخانه داران نیک اندیش اهدا شده است.۱۰ هزار مددجو تحت پوشش ­بنیادنیکوکاران شریف هستند.

لینک اصلی خبر : http://bit.ly/2PAPddF

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بیست و سومین نمایشگاه مطبوعات و خبرگزاری های ایران در حالی پایان یافت که مصلای تهران در مقایسه با سالهای قبل بیشتر میزبان رسانه های دولتی و نام های کمتر آشنای مطبوعاتی بود .

بحران مطبوعات در ایران از چند سال قبل و با بالا گرفتن تب شبکه های اجتماعی در ایران حتی برندهای مطرح را هم در نوردید و اگرچه در ظاهر هنوز هم بخش بازرگانی برخی نشریات تیراژهای فرضی را برای حفظ مشتریان خود به آنها می گویند ولی در واقع سیر نزولی اقبال مردم به رسانه های مکتوب ، چیزی فراتر از اینها است .

نمایشگاه مطبوعات 96

با روی کار آمدن دولت تدبیر و امید ، برنامه هایی برای برون رفت از این بحران از سوی معاونت مطبوعاتی وزارت ارشاد ایران در قالب ارایه یارانه های مطبوعاتی به رسانه ها و همچنین ترغیب مخاطبان در قالب طرحی با عنوان " اشتراک نیم بها " به اجرا رسید که بعلت اجرای بسیار ضعیف و پاسخگو نبودن بموقع مجریان توزیع نشریات ، نارضایتی اغلب مخاطبان را در پی داشت و اکنون با ترک مجلات روزنامه های معتبر از این پروتکل ، چهره ای مشابه نمایشگاه مطبوعات 96 نیز در تارنمای اشتراک دات آِی آر دیده می شود . همچنین در قالب طرحی دیگر نیز بخشی دیگر از معاونت مطبوعاتی برای توزیع مجلات برگشتی در سطح مراکز کم برخوردار و ارایه سوبسید به ناشران ایجاد شد که همچنان در حال فعالیت برای پوشش کسری شدید منابع مالی در رسانه های مکتوب ایرانی است .

از نکات عجیب دورهمی سالانه مطبوعات ایران به عدم حضور رییس جمهور در افتتاحیه یا اختتامیه این رویداد و حضور سایر شخصیت های سیاسی در رده های بعدی مملکتی اشاره کرد که به نوعی از ارزش آن کاسته است . ریزش شدید مطبوعات و مجلات حاضر در سالهای گذشته و حضور اغلب رسانه های حوزوی و دولتی و چند رسانه نوپای در جستجوی نام حکایت از این مهم دارد که بحران مالی حتی این اجازه را نداده است که یک رسانه رقمی حداقل معادل یکصد میلیون ریال را برای مهمترین عرصه قدرت نمایی و ارتباط رو در رو با طرفداران خود را با طیب خاطر انتخاب کند .  

در مصاحبه ای که با یکی از مدیران مجلات مطرح ایرانی داشتم از برنامه قطعی این رسانه برای تغییر کاربری مؤسسه به حوزه دیجیتال و مطالعه برای برون رفت از بحران دربرگیرنده این مجموعه سخن به میان آمد که مبین بخشی از واقعیت ریزش مخاطب به شمار می آید . مخاطبی که تا دیروز محبور بود برای تهیه مطالب چند هزار تومانی را هزینه کند امروز هر صبح و شام از طریق برنامک تلگرام به رایگان صفحه نخست مطبوعات را میبیند و به روز ترین مطالب علمی انگیزشی ، فرهنگی اجتماعی و سیاسی را به چشم بر هم زدنی مرور می کند و به روز ترین پادکست ها و موسیقی ها را می شنود بدون اینکه نگران مسؤولیتی باشد که در کشورهای توسعه یافته از آن به کپی رایت یاد می شود .

در یک جمع بندی کلی شاید بتوان علیرغم گزارش تارنمای رسمی نمایشگاه مطبوعات که به رشد 30 درصدی مخاطبان از این نمایشگاه اذعان داشته است ، آن را ضعیف ترین و بی انگیزه ترین هم آیش رسانه ای ایران در بعد از انقلاب به حساب آورد . از امروز تا یک سال بعد معلوم نیست شاهد چه میزان از تعطیلی ها در این بخش از کشور باید بود ، اما آنچه در افق اطلاع رسانی ایران بیش از هر چیز خودنمایی می کند ، لزوم فعالیت هدفمند بر روی ایجاد رسانه های دیجیتال و هوشمند برای مخاطبی است که با حجم وسیعی از اطلاعات بر بستر تلفن همراه در حرکت است .

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شهریور

معاون ارتباطات بنیاد نیکوکاران شریف از اقدامات این بنیاد به برنا می گوید؛

آیین اهدای جهیزیه به زوج¬های جوان در آستانه سالروز پیوند آسمانی حضرت امام علی (ع) و حضرت فاطمه زهرا (س) صبح امروز در بنیاد شریف تهران برگزار شد. در این مراسم ۵۰ جهیزیه و کمک هزینه ازدواج به جوانان نیازمند اهدا شد. 25 جهیزیه به نیازمندان در تهران و ۲۵ جهیزیه به نیازمندان ساکن شهرستان ها تعلق گرفت.

به گزارش خبرنگار اجتماعی برنا ، دکتر شیوا محمدی نیک ، مدیر عامل بنیاد امور خیریه نیکوکاران شریف در پاسخ به سوال خبرنگار گروه اجتماعی خبرگزاری برنا  درباره سابقه این بنیاد و چگونگی جذب نیازمندان در این بنیاد می گوید : «این بنیاد از سال 1393 کارش را شروع کرده و زیر نظر پلیس امنیت  کل کشور فعالیت می کند. نیازمندان را یا خودمان شناسایی می کنیم یا توسط حامیانی که که با بنیاد همکاری می کنند، به بنیاد معرفی می شود و یا از طریق تبلیغات بنیاد جذب می شوند. بعد از این که  درخواست متقاضی ثبت شد، تیم بازرسی ما می رود و بررسی لازم را انجام می دهد تا واقعا فرد مقابل نیازمند باشد و شرایط لازم را داشته باشد .سپس تدارکات لازم برای تهیه جهیزیه انجام می شود و این جهیزیه ها به دست نیازمندان می رسد . کل اقلام به شکل اهدایی است و هیچ کدام از نیازمندان هیچ مبلغی پرداخت نخواهند کرد. »

محمدی نیک درباره توزیع جهیزیه ها به شکل  نقدی و غیر نقدی می افزاید : «پنجاه جهیزیه ای که در نظر گرفته ایم،25 عدد در تهران با وانت درب منزل نیازمندان برده می شود و 25 متقاضی شهرستان از طریق واریز مبلغ معادل که بین دو نیم میلیون و سه میلیون تومان است ، این کمک صورت می گیرد . غیر از این ، کمک هزینه ازدواج هم داریم که بین 500 تا یک میلیون در نظر گرفته می شود. »

طبیعی است که یکی از دغدغه های متقاضایان تهیه مسکن باشد . محمدی نیک در این باره می گوید : « چون اغلب به طبقه پایین شهر تعلق دارند،اجاره خانه خیلی اندکی می پردازند و معمولا از طریق همین مبالغی که کمک می شود،تامین خواهد شد.»

رضامنصورنیا معاون ارتباطات بنیاد نیکوکاران شریف،مهمترین تلاش بنیاد را کمک به استقلال نیازمندان عنوان می کند: « اغلب از یک تا چندین سال تحت پوشش ما  هستند. نیت و نگاه ما این است که حداقل زمان ممکن این آدمها را به استقلال مالی برسانیم.بیشتر سعی می کنیم به آنها ماهیگیری یاد بدهیم تا اینکه ماهی به آنها هدیه دهیم. »

مدیر روابط عمومی بنیاد شریف درباره کمک بنیاد بعد از ازدواج به نیازمندان می گوید : اگر پتانسیل و توانایی لازم را داشه باشند با مددکاران صحبت می کنیم و وام های کارآفرینی به آنها تعلق می گیرد.

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فروردين

عام‌ترین تعریف از سرانه مطالعه را می توان میانگین مدت زمان مطالعه یک نفر در یک شبانه ‌روز دانست . این معیار در هر کشور متناسب با فرهنگ مستقر در آن اقلیم متغیر است و آنچه این مهم را به چالش های افت و خیز دار می کشاند، سیستم تربیتی است که نهادهای حاکمیتی هر سرزمین از سالها قبل برای آموزش و خودشکوفایی ملت متبوع خود در میان مردم تزریق می کند .

از نظر ارسطو دولت وظیفه دارد علاوه بر تأمین نیازهای مادی شهروندان، بستر رشد اخلاقی و معنوی آنان را فراهم سازد، بلکه دست یابی به خیر اخلاقی هدف و غایت اصلی تشکیل مدینه و دولت شهر است . حال سوال بزرگ اینجاست که در کشور ما به چه میزان برای نهادینه کردن فرهنگی که می بایست از رهرو آموزش و مطالعه به دست آید برنامه ریزی شده و جایگاه ما در میان سایر ملل دقیقا کجاست؟

چندی پیش در رسانه های الکترونیک خبری درز کرد بدین مضمون که سرانه مطالعه در ایران 2 دقیقه در سال است که البته بیشتر به یک شوخی شبیه بود؛ اما در همان زمان دبیر کل نهاد کتابخانه‌های عمومی اعلام کرد که آمار مطالعه در ایران ۷۹ دقیقه در روز است! این مقام مسوول همچنین اعلام کرد که در این میزان، سرانه مطالعه کتب درسی، کتب ادعیه، قرآن، صفحات مجازی و هر چیزی که به خواندن ربط داشته باشد، لحاظ شده است.

این آمار خوش‌بینانه که اعتراض بسیاری از رسانه‌ها و چهره‌های فرهنگی را به دنبال داشت ، در نهایت توانست چند دقیقه‌ای از آمار نهاد کتابخانه‌های عمومی را کم کند و دست آخر اعلام شد آمار سرانه مطالعه ایران ۷۵ دقیقه و ۳۴ ثانیه محاسبه شده که ۱۵‌دقیقه و ۱۷ ثانیه به کتاب، ۲۱ دقیقه و ۳۱ ثانیه برای قرآن و ادعیه، ۳۲ دقیقه و ۳۶ ثانیه روزنامه و پنج دقیقه و۴۲ ثانیه به نشریه‌خوانی اختصاص پیدا کرده است که شامل هر دو فضای مجازی و مکتوب می شد .

طبق آمارهای جهانی، آمریکایی ها ۲۰ دقیقه، انگلیسی ها ۵۵ دقیقه و ژاپنی ها ۹۰ دقیقه از این سرانه را به خود اختصاص داده اند و آماری قابل تامل از سوی یونسکو هم اعلام می کند ژاپن از نظر عادت به کتابخوانی جایگاه نخست را در جهان دارد و ۹۱ درصد مردم این کشور به طور معمول کتاب، روزنامه و مجله می خوانند؛ برای مثال یک ژاپنی در سال بین ۴۶ تا ۴۷ کتاب می خواند و ۶۵ درصد مردم کره جنوبی نیز عادت به مطالعه دارند.

صدالبته در دقت آمارهای متفاوتی که از سوی نهادهای داخلی در این باره منتشر شده است ، همچنین تکثر نهادهایی که در کشورما می تواند در این باره اظهار نظر کنند حرف بسیار است ، اما اگر ملاک 15 دقیقه را برای مطالعه کتاب معتبر شماریم به نیکی میتوان دریافت که به چه علت میان ما و کشورهای پیشرفته جهان فاصله افتاده است .

امیدوارم روزی هستم که جدا از آنچه سالهاست می گوییم بوده ایم به فکر نسل های آینده باشیم تا جای خالی امروز را تجربه نکنیم .

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مدیر روابط عمومی مجله موفقیت به بهانه نخستین نشان ایثار و رسانه:

برنامه‌ریزی مدونی برای ترویج فرهنگ ایثار نداریم

(دوشنبه ۳ آبان ۱۳۹۵) ۱۲:۴۲

 

به گزارش پایگاه اطلاع‌رسانی خانه فرهنگ ایثار و مقاومت؛ ایثار و دیگرخواهی از دیرباز در ایران به عنوان ارزشی غالب و پذیرفته شده مطرح بوده است و همواره ایثارگران در حافظۀ جمعی مردم این دیار زنده و جائید می‌مانند از فداکاری آریو برزن در برابر لشکر اسکندر تا دهقان فداکار برای نگه داشتن قطار. رسانه‌ها به عنوان یکی از تاثیرگذارترین بخش‌های فرهنگی همیشه در معرفی، شناساندن و تحریک افکار عمومی موثر بوده‌اند به همین دلیل برای نخستین بار امسال در بهمن ماه نشان و جایزه ایثار و رسانه به برترین‌های رسانه در بحث ایثار تعلق خواهد گرفت. به همین بهانه با رضا منصورنیا مدیر روابط عمومی مجله موفقیت به گفت‌وگو نشسته‌ایم که در ادامه می‌خوانید:

به عنوان یک روز‌نامه نگار نظرتان راجع به راه‌های گسترش فضای عمومی ایثار چیست ؟

حلقه مفقود این قضیه بخش فرهنگ‌سازی است. یعنی یک اُرگانی باید در رابطه با جاری و ساری شدن این فرهنگ برای مردم کار کند. عملاً خیلی از نهادها متولی هستند ولی برنامه‌ریزی مدونی در این قضیه نیست. من فکر می‌کنم این بزرگترین ضعف ما است. در حالی که منبعث از فرهنگ و دین ما است. در جای جای دین مبین اسلام و فرهنگ ایران بحث ایثار وجود دارد ولی عملاً به علت عدم برنامه‌ریزی مشخص در نهاد‌های مختلف ممکن است نمی توانند کار خود را به درستی انجام دهند. مثلاً در در ارتباط با تکریم فرهنگ شهادت بنیاد شهید و وزارت ارشاد  و خیلی نهادها درگیر موازی کاری هستند . ممکن است هر کس به لحاظ دید و تفکرش به خاطر مسئولیت اجتماعی که درقبال با مردم و اجتماع دارد کاری انجام دهد. من فکر می‌کنم نبود ساماندهی مراکز مرتبط با این مهم ،  در این سی‌وچند سال اخیر یک جور موازی کاری ایجاد شده است. همه سعی می‌کنند کمک کنند ولی خروجی مشخصی نداشته است.

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هشتاد میلیون انسان در جغرافیای بزرگی به نام ایران گرد هم آمده اند و متحد و یک صدا برای ایجاد فردایی بهتر تلاش می کنند. پس از انقلاب بزرگ اسلامی ایران به رهبری امام خمینی (ره) از میان آرای مردمی نظامی برگزیده شد تا با عنوان "جمهوری اسلامی ایران" فضایی یکدست را برای همه گروه ها و اقوام ایجاد کند تا بتوانند در چهارچوب قانون اساسی ای که به تایید ملت رسید نقشه راه آینده را ترسیم وضمن تعریف اصول و موازین به رفع موانع اهتمام ورزند .

 

در اینکه آن چه در کشور، نه فقط در این عرصه که در همه حوزه ها  - چه آن که در اختیار دولت است و چه آن که در اختیار معترضان و باقی اختیاراتی که در دست بنیادها ، نهادها و سازمانهای عریض و طویل است – در حال وقوع است ، آن مطلوب نسبی و گاه مطلق نیست شک شبه ای نیست اما هر چه هست بهترین ممکن است که گاه نمودی فاجعه بار دارد که تمامیت ارضی ، استقلال سیاسی و اقتصادی کشور را با خود به زیر می کشد و گاه هم در نقطه عکس عمل کرده و موجبات بالندگی ایران اسلامی را فراهم کرده است .

 

برابر اصل یکصد و سیزدهم قانون اساسی ، رییس جمهور به عنوان عالی ترین مقام کشوری بعد از مقام معظم رهبری مجری قانون اساسی و همچنین اداره کننده امور جاری کشور شناخته می شود . برابر اصل یکصد و چهارده این رجل سیاسی با رای مستقیم مردم در جریان انتخابات آزاد به این پست می رسد و به گونه ای تبلور نظر اکثریت مردم برای جهت گیری برنامه های یک دوره چهار ساله در کشور است . در همین راستا نهادهایی چون مجلس نیز با رای مردم بر سر کار می آیند که در کثرت بیشتری از افراد و صدالبته پلورالیزه شده به لحاظ افکار سیاسی ، اجتماعی ، فرهنگی و دینی منصوب می گردند . کارآمدی نهادهایی چون مجلس در تصویب قوانینی است که از سوی دولت ، قوی مقننه یا برخاسته از متن نمایندگانش در دفاع از حقوق ملت واقع می شود .

 

این روزها برخی علما در شهرهای مقدس مشهد و قم به صرف قصد یا برگزاری کنسرت موسیقی یا حتی آنچه به روایت دولت ، صرفاً هم سرایی خوانده شد شکستن حرمت حرم حضرت ثامن الحجج امام رضا (ع) و همچنین بانوی مطهره حضرت فاطمه معصومه (سلام ا... علیها) را محکوم کرده و بر آنچه سیاست های کشور در حوزه فرهنگ و هنر است می تازند . در اینکه آیا وجود بقاع متبرکه امامان و امام زادگان دلیلی بر ایجاد حرمت برای یک جغرافیای خاص شود جای تاملات بسیاری است و توجه به این مهم را می طلبد که آیا در تجریش ، شهرری ، شیراز و بسیاری از شهرهای ایران که  افتخار میزبانی وجود متبرک این امامان همام را دارند نیز طراز و معیار علمای ایشان نیز باید به همین سختی و برندگی باشد؟ مگر در همین پایتخت سالنهای متعددی برای اجرای برنامه موسیقی وجود ندارد و مشابه آنها در شهرهایی که ذکر آنها پیشتر رفت به اجرای چنین رویدادهای موسیقیایی نمی پردازند ؟ چگونه می توان جمعیت بسیاری که به سبب قسمت و نسبت در شهری خاص متولد می شوند و نسل اندر نسل در منطقه ای زندگی را ادامه می دهند ، قانون وضع کرد و به هر علت بخشی از حقوق حقه ایشان را نقض نمود یا از آنها سلب تابعیت نمود و بالاجبار ایشان را به جلای وطن محکوم کرد؟

 

در اصل نهم قانون اساسی می خوانیم : "هیچ فرد یا گروه یا مقامی حق ندارد به نام استفاده از آزادی، به استقلال سیاسی، فرهنگی، اقتصادی، نظامی و تمامیت ارضی ایران کمترین خدشه‏ای وارد کند و هیچ مقامی حق ندارد به نام حفظ استقلال و تمامیت ارضی کشور آزادی های مشروع را، هر چند با وضع قوانین و مقررات،سلب کند."

 

آستان مقدس شاه خراسان حضرت رضا (ع) ، آستان مقدس حضرت فاطمه معصومه (س) ، آستان متبرک حضرت شاه عبدالعظیم حسنی (ع) ، آستان مقدس حضرت صالح بن موسی الکاظم (ع) و آستان حضرت شاهچراغ (ع) همه نور منوّرند بر تارک آسمان ایران زمین ، امامان شریفی که دم مسیحایی شان از عشق می گفت ، از نور حقیقتی که خدای متعال بر قلوب رحمانی ایشان تابانده بود و چون منشوری آن را بر جان میلیونها انسان منتشر نمودند . لذا گفتار به نام ایشان و صدور حکم به ذم ایشان مردود است . نظارت و صدور حکم در این باره و درباره بسیار مواردی که امروز در پهنه سرزمینی ایران زمین در حال وقوع است با عنایت به حقوقی که سالها قبل در مر قانون گذرانده شده و به تصویت آحاد ملت رسیده است  در وهله اول در اختیار بالاترین مقام کشور به لحاظ سیاسی و دینی یعنی ولی فقیه بوده و در رتبه بعد در دستان رییس جمهور است . قانون برای تمام یک میلیون و ششصد و چهل و هشت هزار و صد و نود و پنج کیلومتر مربع ایران که وجب به وجب آن مدیون خون صدها هزار شهید است یکسان است و ترویج هرگونه قومیت گرایی و گروه گرایی در این میان بیم فئودالیزه شدن کشور و خطر تجزیه آن را نه در این امور معمول که بعدها در سطوح بالاتر را تشدید می کند که این نیز نیازمند توجه ویژه دستگاه حاکمیتی برای برخورد منطقی و قانونی برای خاتمه به اینگونه اختلافات نظر شخصیت ها یا گروهایی خاص است تا با مدلیزه شدن نحوه رسیدگی بتوانند در روندی مشخص به اعتراضات مشابه رسیدگی و اعلام نتیجه نمایند .

 

در پایان جای توجه بسیار دارد که شخصیت ها با توجه به موقعیت سیاسی ، مذهبی ، فرهنگی و اجتماعی ای که در میان مردم دارند از مشوش کردن اذهان عمومی بشدت احتراز کنند چراکه همه هشتاد میلیون ملتی که خود را ایرانی و مسلمان نامیده اند دغدغه ای بس بالاتر از ایشان برای حفظ اصالت دین و فرهنگ خود دارند و اگرچه همانند عده قلیلی که دارای تریبون های مختلف هستند بلندگویی برای فریاد زدن ندارند ، لذا رییس جمهور و مجلسی برگزیده اند تا مدافع حقوق ایشان باشد .

 

امید که حق مطلق را مدافع باشیم .

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