Monday, December 8, 2014

A.S. Panneerselvan on Media Regulation

Opinion » Readers' Editor

Updated: November 10, 2014 01:44 IST

A new template for media regulation – 1

A.S. Panneerselvan

A.S. Panneerselvan. Photo: V.V. Krishnan
The Hindu
A.S. Panneerselvan. Photo: V.V. Krishnan
The news media sector, as an industry, has an unenviable record of squandering opportunities to put in place a regulatory framework that simultaneously guards the freedom of expression and ensures the ethical behaviour of media organisations. Lord Justice Leveson gave an excellent template for the U.K. media. Instead of grabbing it with both hands, the captains of major U.K. publications have opted for a much-lesser mechanism in the form of the Independent Press Standards Organisation (IPSO). The recent recommendations from the Telecom Regulatory Authority of India on cross-media ownership and the consultation initiated by the Law Commission of India under the chairmanship of Justice A.P. Shah is an opportunity before the Indian media to get its act together.
Why should we look at the legal and regulatory framework now? What are the factors that contribute to amending the existing framework? First, the news media industry has undergone profound changes in the last 20 years, and some of the governing rules for the industry are of colonial vintage. Second, the technological disruption and the emergence of convergence platforms are used by some to push for a meta-regulator for all media — print, radio, television and the Internet, without realising the nuances that differentiate the narrative logic of each of these platforms. Third, if each of them is to have its own self-regulation mechanism, what has to be done with news organisations that are not willing to join the self-regulating body? Will a forceful statutory regime be implemented for those who reject the power of a self-regulating body? Over the next few weeks, we will be exploring these questions in detail.
Market and regulation
For a change, I am not going to start with the known rights of the media that flow from Article 19 of the Indian Constitution. It may be prudent to look into the economic factors while framing the regulatory norms, laws and binding codes. This year’s Nobel Prize for economics has gone to Jean Tirole, a French economist who worked on market and regulation.
The Royal Swedish Academy of Sciences has put out a scientific background on Tirole’s work, “Jean Tirole: Market Power and Regulation”, and this column draws substantially from that publication to not only explain certain terms and conceptual framework but also differentiate the news media industry from other industries. The term “agent” in his analysis has a wider meaning to include the individual companies or the sector itself. It is drawn from the formal game-theoretic analysis.
The first element in Tirole’s exploration is about the design of the regulatory institution. He uses two terms to explain the various trajectories any institutional design may take: regulatory capture and motivated agents. Regulatory capture is a model where sector-specific regulation becomes captive to the regulated industry. In simple terms, “regulation may end up benefitting producers rather than consumers.” Tirole used various cases of collusion in hierarchical organisations to come up with a formula to arrive at an optimal response to the threat of regulatory capture. The other term, “motivated agents” goes against the models that assume that all agents are purely selfish. In Tirole’s work, some agents may want to promote social welfare or more generally “do the right thing” and had demonstrated that personal values as well as a desire for social esteem may sometimes change optimal incentives quite strongly. The Academy note puts this more precisely: “it is assumed that the agent is an impure altruist who does not primarily get satisfaction from socially desirable outcomes, but from his own contribution to those outcomes.”
Forms of competitions
For Tirole, the question here is: “how to regulate agents if the principal is uncertain about the agent’s motives. This problem is perhaps greatest when the agent takes decisions not about how hard to work but about some other action, the consequences of which appear only in the longer run. In this case, a selfish agent should ideally be tightly controlled or strongly incentivized, as before, but a pro-socially motivated agent should ideally have a free reign.” In a 2004 work, in collaboration with Eric Maskin, Tirole arrives at an interesting conclusion: “the contract is an institution that specifies: (i) who gets to make what decisions, and (ii) procedures for inducing public decision makers (informed agents) to act in the interest of the broader population (less informed principals). Their central assumption is that the informed agents are concerned not only with material benefits or other private returns to power, but also with making socially beneficial decisions and thereby leaving a valuable ‘legacy’. Since agents differ in the strength of their pro-social motives, power will sometimes be abused.” The news media can either be a regulatory captor or a motivated agent, but most often, it seems to be a combination of both.
In his study of new forms of competitions, which Tirole classifies as network competition and platform competition (sometimes described as two-sided markets), he puts newspapers clearly on the platform competition paradigm. Readers and advertisers are the two sides to which a newspaper tries to reach out and their respective expectations are very different. This twin customer base poses a range of regulatory problems too.
(To be continued)

Between 2002 and 2006, Jean Tirole and Jean-Charles Rochet explored the platform markets in depth. Their work covered a range of industries that have platform markets — portals and media, credit card and debit card payment systems, and the Internet. This column will restrict itself to their contributions to the media market alone.
Mr. Tirole and Mr. Rochet were quick to point out that the demands from advertisers on the one hand and viewers or readers on the other can be very different. For instance, they point out, advertisers might desire that there be more viewers or readers while viewers and readers prefer less advertisements. This, they argue, could transform certain pricing policies that are clearly anti-competitive in a one-sided market into a highly competitive one in a two-sided market. For instance, they established that offering newspapers for very low prices might be a sign of predatory pricing if the newspapers’ source of revenue came from the readers alone. But it may be consistent with competitive pricing if advertising revenues play a major role.
The theory spelt out by Mr. Tirole and his colleagues makes immense sense in the media markets of the developed countries. In the U.S., cross-media ownership restrictions are imposed on the basis of the number of independently owned media voices in the market. The Federal Communications Commission (FCC) acts as a regulator. The U.K. model works on a different principle — restrictions there are based on influence, which prevent one person from owning different types of media over specified market share levels. Countries like Australia and Canada have a blanket restriction on entry into more than one or two media segments.
No restrictions in India
But price wars in India can turn predatory quickly, as there are no restrictions in terms of cross-media ownership. In 2008, the Ministry of Information and Broadcasting asked the Administrative Staff College of India (ASCI) to study cross-media ownership. ASCI submitted the draft report in March 2009 and the final report in July 2009. The report found a pattern in the accumulation of interests and growing instances of cross-media ownership that included print, television, radio and even carriers like multi-system operators (MSOs) and DTH platforms. It used the Herfindahl-Hirschman Index to measure market concentration and the effect of competition in a market. It called for the formulation of cross-media restriction norms across print, television, radio, cable and new media after a detailed study of the relevant markets of each of the mediums. Not much happened in the form of follow-up action to the ASCI report while the Indian media scene underwent a profound change. Apart from cross-media ownership, India also witnessed both horizontal and vertical integration.
This in reality means that some of the dominant players can no longer invoke the logic of the platform market.
Paid news scandal
The issue of media ownership became a topic among policymakers when the ethical foundation of the news industry was rocked by the paid news scandal. This newspaper played a key role in exposing the paid news phenomenon. The Parliamentary Standing Committee on Information Technology’s 47th report tabled in the Lok Sabha on May 6, 2013 was an indictment of sorts for the media industry. It identified corporatisation of media, disaggregation of ownership and editorial roles, decline in autonomy of editors/journalists due to the emergence of contract system, and poor wage levels of journalists as key reasons for the rise in the incidence of paid news. It expressed concern that the lack of restriction on ownership across media segments (print, radio, TV or Internet), or between content and distribution, could give rise to monopolistic practices. It asked the Telecom Regulatory Authority of India (TRAI) to look into the matter and come up with a set of recommendations. The committee also urged the Ministry of Information and Broadcasting to take conclusive actions based on TRAI’s recommendations on a priority basis.
However, the Ministry had asked TRAI in May 2012, a year before the Parliament Standing Committee’s report, to evolve a comprehensive approach to balance the technological and business logic of vertical integration and cross media holdings with the need for pluralism and diversity and the need to protect the citizen’s right to credible choice and competitive pricing of the media he/she consumes. In August 2014, TRAI released its recommendations after many rounds of consultations with various stakeholders. It sought a regulatory framework that has two distinct segments: to preserve external plurality (diversity of ownership) and to ensure internal plurality (diversity of content) in the media ecology of India.
The defining element in TRAI’s recommendation is that it managed to look not only into the ownership issues, but also the “control” over media outlets. It reads: “There may be thousands of newspapers and hundreds of news channels in the news media market, but if they are all “controlled” by only a handful of entities, then there is insufficient plurality of news and views presented to the people. Thus, it is essential to know the actual number of independent voices in the market to determine the extent of plurality. Also, there are numerous ways by which “control” can be exercised over a media outlet. Therefore, it is imperative to clearly define what constitutes or can amount to ownership and/or control of a media owning entity.”
TRAI’s recommendation is rich in its analysis of what is wrong in the media. It documents the failures of the existing legal and regulatory arrangements. It looks at vertical integration in the media but fails to take note of horizontal integration. At the policy level, the recommendations have certain limitations and shortcomings.
(To be continued)

The legal provisions for the freedom of the press are clear. Freedom of the press is not recognised as a fundamental right but is folded into the freedom of speech and expression. When it comes to the media’s responsibilities, governing rules are murky, the regulatory framework is weak and the onus of holding the media accountable is left to a byzantine maze of enforcement mechanisms that fails the credibility test. This series on media regulation seeks to widen the debate and get the voices of the readers and the viewers: the final consumers of news and information and hence major stakeholders in media ecology.
My task is cut out by the prescription provided by the eminent historian Romila Thapar. Knowledge, according to Professor Thapar, requires the teasing out of complexities which cannot be done by insisting that the answer to a question is either this or that. She calls that approach the “one bite answer.” She points out that nuances push ideas forward and encourage explanations. In the first two parts, we looked at the field as it were, and shared some of the recommendations that have come up so far to create a framework that can place the rights and the responsibilities of the media on an even keel.
TRAI recommendations on cross-media ownership have some good suggestions but some real limitations too. Two young media law scholars, Smarika Kumar and Siddharth Narrain, point out the shortcomings of TRAI’s overdependence on competition laws’ definition of “relevant market.” Their main argument is that “Competition law exists to protect competition and not plurality…it applies generically to all markets and is not specialised to specifically address the peculiar implications of media. That is why there is a need to find, outside of competition law, a framework for horizontal ownership regulation, which addresses the unique plurality needs of a media environment.”
Kumar and Narrain further argue that while under the Competition Act, 2002, “relevant market” is defined as a market determined with reference to the “relevant product market” or “relevant geographic market” or both, TRAI has identified only the news and current affairs genre as that which needs to be regulated under cross-media ownership rules, and has recognised these as part of the “relevant product market.”
They make a valid point when they say that there is a limitation in the demarcation of the “relevant geographic market” — that it is only on the basis of language and States. They cite the case of the Reliance-Network18-Eenadu deal, which consolidated news channels in English and several other regional language news channels under a single ownership by reasoning that concentration of media ownership is not measured across language markets, but only within language markets.
One would have expected TRAI to advocate public interest broadcasting codes, an autonomous governance structure and an independent editorial functioning, which is binding and not subjected to political and bureaucratic pressure. But it has recommended barring newspapers and television channels from being owned by political bodies, religious bodies, Panchayati Raj, urban, local and other publicly funded bodies, Central and State government Ministries, departments, companies, undertakings, joint ventures, government-funded entities and affiliates. This negates the space for resourcing for a meaningful public broadcasting structure. It failed to look at the modalities of the British Broadcasting Corporation, the National Public Radio, the Canadian Broadcasting Corporation, the Australian Broadcasting Corporation and the Deutche Welle. What is TRAI’s perception of, say Rajya Sabha TV, which has some of the finest programming in the subcontinent?
More issues to address
The domain expertise of the regulator, which is meant to address the questions of carriers like telecom services, DTH and ISP providers is not enough to devise a regulatory framework for the media, which is essentially a content provider. The conflation of rules for content and rules for the carrier not only complicates the discussion but also fails to disaggregate the specific requirements of media on content, on issues of privacy, defamation, trial by media and the right to information. Further, the consolidation of ownership in an integral manner, where the same firm becomes both the content provider and the carrier, is not addressed adequately.
It is vital to understand the difference between a media carrier and other forms of carriers. For instance, a power grid is a carrier that transmits electricity from the generating point to the end user. Though there are many forms of power generation — hydro, thermal, nuclear and renewable — the content from one source seamlessly merges with the content from the other. A media carrier on the other hand can play the role of either promoting or inhibiting a particular content source depending on a range of issues — ideology, politics, preference, urban bias, among other things. In the era of convergence, the new regulatory framework must ensure that the carrier is a neutral pipe that will not prohibit smaller players. The digital revolution should not be the preserve of those who can afford a hefty carriage fee.
(To be concluded next week.)

In the last three columns, we looked at the available literature on media regulation, the limitations of some of the recommendations, the desire to have a soft touch approach that will not undermine the agency of journalism and its investigative quest, some of the shortcomings within the profession and the fault lines within the existing regulatory framework. In this context, the ongoing consultation by the Law Commission of India assumes significance.
There are many salient points in the consultation paper. First, it recognises the limitations of the existing self-regulation mechanisms within the three self-regulation bodies — the Press Council of India (PCI) for print, the Broadcasting Content Complaints Council (BCCC) for channels other than news and current affairs, and the News Broadcasters Association (NBA) for news and current affairs channels. It also recognises that the legal challenge of Section 66A of the Information Technology Act, which many view as violating free speech. There are many instances in the recent past where this Section has been arbitrarily invoked to block access to content allegedly objectionable.
The Law Commission has raised some pertinent questions: “Do the existing self-regulation mechanisms require strengthening? If so, how can they be strengthened? In the alternative, should a statutory regulator be contemplated? If so, how can the independence of such a regulator be guaranteed? How should members of such a regulator be appointed? What should the eligibility conditions of such members be? What should their terms of service be? How should they be removed? What should their powers be? What consequences will ensue if their decisions are not complied with? Should any such change be uniform across all types of media or should regulators be medium-specific?”
Potential pitfalls
There have been many suggestions to the Commission. It is important to spell out some of the potential pitfalls before suggesting some solutions. First, the Commission must refrain from recommending a meta-regulator for the four forms of media — print, radio, television and the Internet. There should be different regulators for different forms of media. Each media platform has its own sets of problems that are neither transferable nor replicable. Second, it should come out with clear implementable and binding codes, for each of the media, which draw from Articles 19 (1)(a) and 21, and that provide an effective complaint redress mechanism and its enforcement. The first tier of regulations should focus on course correction rather than being punitive in its approach. Third, there should be space for arbitration to resolve some of the issues. The idea of arbitration is to make the redress system accessible to the general public both in terms of costs and time. The legal recourse, in the event of unsatisfactory outcome during the arbitration, should be at the level of the High Court. The PCI’s demand for an empowered Media Council, whose decisions can be reviewed only by the Supreme Court, will pose more problems to citizens than media houses. Fourth, the Commission must attempt a triangulation method, as in the social sciences, to incorporate suggestions from different quarters and disciplines in order to come up with a set of rules that do not prioritise one element of freedom at the cost of others.
Tiered and platform-specific
I am convinced that the need of the hour is to create a robust self-regulation mechanism that is two-tiered and platform-specific. The first tier should be within the news organisations — an ombudsman, a readers’ editor or a public editor. This will give a chance for a reader or a viewer to get relief and recompense without going through the time and resource consuming legal path. Tier two should be at the national level and it should be closer to what Lord Justice Leveson suggested for the U.K. press: It should be independent self-regulation that takes an active role in promoting high standards, including having the power to investigate serious breaches and slap sanctions on newspapers. It should have a legal underpinning to make it binding. The regulatory body should be backed by systems designed to assess whether it is doing its job properly.
Lord Leveson also suggested a legislation to enshrine the legal duty on the government to protect the freedom of the press. He recommended that media outlets that refuse to join the self-regulation mechanism, with statutory underpinning, could face direct regulation by the media watchdog, Ofcom. In India, that power can be given to the Telecom Regulatory Authority of India (TRAI) for organisations that refuse to join the mechanism. The most defining element of his recommendation is that the regulating body should be independent of serving journalists, the government and commercial concerns, and not include any serving editors, government members or Members of Parliament. The body should consider encouraging the press to be as transparent as possible in relation to the sources of its stories, if the information is in the public domain. He also suggested a whistle-blowing hotline for journalists who are under pressure to do unethical things.
I am also convinced that it will be easier to arrive at a perfectly acceptable regulation for the legacy media — both print and broadcast — than for the digital platforms and social media. The substantial narrative in social media falls between the personal and the public. Any regulatory framework for this young, vibrant, and sometimes problematic, media needs a balancing act between these two distinct domains.

Copyright© 2014, The Hindu 

...and I am Sid Harth

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