Opinion » Readers' Editor
November 10, 2014
Updated: November 10, 2014 01:44 IST
A new template for media regulation – 1
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.
Limitations
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.
readerseditor@thehindu.co.in
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