The paradox of unregulated Internet: the deregulation of Value-Added Services in Brazil

1. The paradox of unregulated Internet: the deregulation of Value-Added Services in Brazil Miriam Wimmer Octavio Penna Pieranti Marcio Iorio Aranha

2. Introduction: what we will be discussing • To what extent does the concept of value-added services (VAS) remain adequate in a scenario of convergence… • specifically as far as audiovisual content distribution services over the internet are concerned? • In Brazil, the characterization of a service as VAS implies exclusion from the ordinary regulatory jurisdiction. • This tends to become controversial as new services emerge that are increasingly similar to traditional (tele)communication services, subject to State regulation. • To what degree is State regulation of the internet legitimate?

3. Why regulate audiovisual content and mass media? • 4 different approaches to the question: • The power of mass media in modern societies • Possible risks to basic human rights caused by non-regulation: freedom of expression vs. the right to communicate • National security • Spectrum scarcity and the notion of public service

4. In Brazil... • The 1988 Federal Constitution determines several principles of production and programming that must be observed by radio and television broadcasters, as well as all other “electronic social communication media”, aiming at… • Pluralism of sources • National and regional content • Independent production • Educational, artistic, cultural and informative purposes

5. Internet Regulation • Although there is a consensus on the idea that traditional mass media should be subject to some degree of regulation, the same does not apply to the internet, partly because of the way the Web evolved: • Barlow and the “independence of Cyberspace” • The creation of ICANN • Differentiation between basic telecommunication services, value-added services and audiovisual content (WTO)

6. In Brazil... • Since 1995, internet connection services were considered VAS • In 1995, the Internet Steering Committee (CGI) was created, in charge of regulating domain names • The General Telecommunication Law separated telecommunication services from VAS, excluding the latter from the Regulatory Agency’s jurisdiction • Both Anatel and CGI were concerned basically with the infrastructure that would support the internet – networks or domain names – but not with the content that would be provided, usually understood as value added service and outside both entities’ responsibilities

7. Internet Regulation in view of innovative audiovisual content distribution services • New production models and new challenges: • End-users as audiovisual content producers (YouTube) • Content-on-demand services • Online “Internet TV” channels • Different business models: ad-supported, subscription-based, hybrid models • Remarkable similarities to traditional audiovisual services • “Meta-services”, whose fruition is conditioned to previous access to the Internet

8. As traditional audiovisual content distribution services migrate to the Internet, one must question... • To what extent is the concept of VAS still adequate, considering that this implies exclusion from the ordinary regulatory jurisdiction applicable to telecommunication services? • Are there structural differences between traditional audiovisual services and internet-based audiovisual services that justify this exclusion? • Are internet-based services really “value added” to a traditional service, or are they, in fact, the basic service that the end-user seeks?

9. Ongoing debates in Brazil • In December 2009, the First National Communication Conference is expected to be held in Brasília – internet regulation is among the themes likely to be discussed • There is an important bill in the Congress concerning audiovisual content regulation, including the Internet

10. The need for new regulatory approaches • The emergence of innovative audiovisual content distribution services provide opportunities for new regulatory approaches as far as internet regulation is concerned • It is necessary to re-evaluate the concept of VAS in light of a converging environment, of rapidly evolving technology and of changing social needs • Respecting the differences between services, it is important to discuss issues such as licensing, quality of service, users rights and, especially, constitutional principles related to the contents that are distributed

11. Obrigado • Miriam Wimmer: miriam.wimmer@yahoo.com.br • Octavio Penna Pieranti: octavio.pieranti@fgv.br • Marcio Iorio Aranha: iorio@unb.br