1 - Introduction: the future of economic regulation in broadcasting markets  pp. 3-10

Introduction: the future of economic regulation in broadcasting markets

By Jürgen Von Hagen and Paul Seabright

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This book is about how the dramatic technical changes impacting the nature of broadcasting are affecting, and should affect, our ideas on the role of public economic regulation of the markets in which broadcasting transactions take place. Broadcasting used to be considered a classic public good, in that it was impossible to exclude viewers who had not paid. There were two solutions to the public good problem: one was public provision, nearly always by a publicly owned and funded organisation such as the BBC; the other, often coexisting with the former, was private provision funded by advertising revenue. In addition, scarce spectrum capacity and high fixed costs of programme making ensured that in many countries there was little competition between channels. And there was little direct competition, likewise, between broadcasting and other forms of information transmission, such as newspaper publishing or the commercial cinema.

The rapid evolution of broadcasting technology, and especially the move from analogue to digital means of processing and transmission, has transformed the landscape of broadcasting beyond recognition. The main features of the new landscape are as follows:

  • Broadcasting signals can now be encrypted, meaning that exclusion of non-payers is possible for the relatively small cost of a set-top box. Radio broadcasting remains free but that is because of listeners' relatively low willingness to pay; television broadcasting has to all intents and purposes ceased to be a public good, except where the authorities (or private benefactors) choose to supply it on terms appropriate to a public good.
  • Digitisation of the signal has enabled much greater compression of content into the available spectrum. Spectrum scarcity is no longer a significant constraint upon entry into broadcasting markets.
  • […]

1

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