Abstract

The grass-roots “Digital Media in Italia” dmin.it) group proposes innovative of actions [1] in the areas of DRM, broadband networks and payment systems to unleash the potential of digital media.

According to this proposal services providers should retain the freedom to adopt the technological solutions they consider best suited to their business while service users should be given a minimum level of service interoperability if they so request.

1. Introduction

All advanced countries promote a broad market for content, hoping to reap general economic benefits and trying to promote culture and citizen participation, to strengthen the national identity inside and outside the country’s borders.

With the arrival of digital technologies applied to the mass market and especially with digital content distrib­ution, technology has significantly increased its influ­ence on information and culture consumption, on the business connected to them and therefore on society itself.

To better exploit all perspectives of development embedded in digital media[1]., it is necessary to overcome roadblocks in three key sectors related to digital content:

• Content management and protection. The need to balance a wider content distribution with safeguards for intellectual property rights in a digital context raises technological, regulatory, economical and social issues.

• Digital broadcasting and telecommunication networks are intrinsically more efficient because they can carry anything that can be digitised into a bit stream. However, different regulations, features and functions constitute barriers which may delay a full digital convergence..

• Economic transactions between providers and clients. As content loses its physical nature, quality of its fruition and flexibility of payment become key elements in the assessment of its value. Digital content favours consumption personalisation that extends to purchase modalities. End users may also be willing to negotiate, under adequate economic terms, his attention and profiling. All this requires payment systems that are flexible, convenient and secure, so as to be able to adapt themselves to fast-changing offer and consumption models.

These sectors are particularly difficult to analyse because technology constantly modifies the context. Global economic competition also plays a role because on the one hand exploitation of some proprietary technology triggers often unrealistic economic expectations for the future, on the other it motivates traditional operators to resort to protectionistic actions that simply delay market development.

The critical factors are identified as follows:

• Many content providers, in spite of the clear wish shown by end-users to retain interoperability between content and devices, adopt proprietary content protection solutions as a means to have total control over the distributed content and its circulation, even greater than that granted by current regulations;

• Many broadband network operators, in spite of the great technical and commercial success of the Internet, look favourably at closed broadband networks. They estimate that such policies will let them lock-in, force them to acquire services only from selected parties; thereby altering competion which should normally be based on service quality alone;

• Many payment service providers continue to cling on models that no longer provide an acceptable response to the needs of a digital media market that is vibrant, dynamic and pervasive. The consequence is that not only market growth stalls, but more advanced forms of financial intermedi­ation are inhibited.

Italy, like all countries that are technologically advan­ced but do not have a large market for content, suffers from the current situation. Action should therefore be taken, in keeping with market forces and constraints ar­ising from international treaties. Otherwise, the distrib­ution of national content (which also represents nation­al identity) may become economically difficult and ref­lect negatively on other segments of the national ICT industry.

This paper illustrates the content of the proposal developed by a grass-roots movement called “Digital Media in Italia” (dmin.it). The proposal has been published in September and it is now being presented and promoted in the political, industrial and commercial sectors of Italy.

2. The current digital media context

Digital technologies help creators and consumers con­nect along the value-chain. At the same time digital techniques for producing and distributing digital cont­ent modify substantially the value-chain traditional roles and operations. The importance of some compon­ents may increase or decrease while new players may carve a new role for themselves in old and new value chains.

The exploitation of the existing legislative context on the part of some rights holders has led to the failure of several attempts made in the last ten years to introduce new digital media value chains. Today, the prevailing tendency is to keep the modus operandi of traditional value chains as unchanged as possible. Technology plays a role in this, because proprietary technologies are typically used to retain control of content distribution. Unfortunately, these technologies may neutralise the innovation brought by digital technologies and remove conditions of use and interoperability that traditional value chains ensured.

The digital media landscape is amplified and strengthened by the global scope of Internet. Globalisation of digital production and distribution, coupled with a now pervasive Internet, allows the birth of global operators, who can achieve an unheard of power.

In this global setting, the small content-related enterprises of Italy cannot emerge at the international level. As a consequence, important aspects of the national culture and identity may be obscured by non-Italian phenomena.

3. The foundations of the dmin.it proposal

The dmin.it has the goal to maximise the flow of digital media, to stimulate and widen the market, by creating the conditions where known businesses can flourish and new businesses can be born. This requires simultaneous and coordinated actions in three different areas:

• The broadest possible opening of technologies to manage and protect rights for digital media;

• The broadest possible opening of broadband network access;

• The broadest possible opening of electronic payment systems.

There is clearly a dialectic relationship between providers of content, network and payment services, and users of such services. The dmin.it proposal is based on the following principles:

• Services providers should retain the freedom to adopt the technological solutions they consider best suited to their business;

• Service users should be given a minimum level of service interoperability if they so request.

The balance point that dmin.it proposes is that

• Entrepreneurs may decide to offer either interoperable only or interoperable and proprietary content, network and payment services

• Consumers can access and select the form and level of service that is more convenient to them

• The interoperable version of the services is based on specifications that are public, can be implemented by anybody interested in building devices and can be used by anybody interested in offering services

• The specifications are produced by a committee, and adopted for use within the national territory

• The governance implied by the specifications should be handled by agreements between the parties concerned.

In the following we call iDRM the interoperable DRM system outlined above. This will remove some of the bottlenecks that prevent the birth of a horizontal market where anybody can enter as a device manufacturer or provider or consumer of content and services.

This is a new approach not only in the Italian but also in the European environment. Indeed, both the new i2010 EU regulatory framework for communications and the new Audiovisual Media Services Directive in preparation do not consider interoperability as one of the top priorities to be addressed by new regulation. Therefore no new policy has been devised to harmonise the legitimate interest to introduce innovative business models and the common interest to access digital content such as advocated by the dmin.it proposal. The European Commission is debating whether net neutrality issues and interoperability issues need regulation at all (two public consultations were launched on the matter in the past months).

An innovative policy based on iDRM – which represents the “necessary and basic condition” of the proposal – is to be integrated and supported by two further policies based on opening of networks and payment systems, as detailed below.

4. The dmin.it proposal

4.1. An open DRM system

The key component of the proposal in this area is the availability of open technical specifications. These must be developed by a committee open to all affected parties and with the mandate, assigned by a national entity with the appropriate authority, to develop the specifications satisfying the following general requirements:

• Specifications must be developed according to a well-defined roadmap;

• Specifications must allow a developer of hardware and software products, content and services to implement the specifications with the sole knowledge of specifications;

• Specifications should not be prescriptive of a particular business model and, in particular, they must allow

  • The management of forms of content release that are only managed and not protected

  • The implementation of innovative busin­ess models

  • The implementation of any legitimate intermediation role

  • The provision of differentiate security levels

• Once developed and approved through a standard public inquiry process, the specifications are made publicly available along with a reference implementation released as Open Source Software under an appropriate licence;

• The rules required to govern the use of specific­ations, including

  • Publication of specifications

  • Evolution of specifications

  • Certification process

  • Funding of the governance system

  • Determination of responsibilities

  • Dispute resolution, etc.

The openness of the specifications are also measured by the rules related to their use:

• Anybody may implement, request and obtain certification of compliant products and offer them to third parties;

• Any end-user can access any content item directly at not discriminatory conditions;

• Any content item that is released by a content provider with exclusive rights using proprietary technologies must also be released using the iDRM technology at conditions that are not discrimin­atory vis-à-vis those employed when releasing it on the proprietary technology;

• Any end-user can negotiate the possibility of enjoying content acquired against the use of the information obtained by a service provider from the end-user enjoying that content.

It is important to note that the European Commission is seeking input regarding regulations on audiovisual set top box specifications and whether these are to be included in the i2010 Framework legislation.

4.2. An open broadband network

This is based on the same general principle of maintain­ing the freedom of choice of network operators to dev­elop their digital media business through the means deemed more convenient. At the same time, network operators should be requested to offer a minimum level of interoperability, to trigger the development of a horizontal market of content. The proposal is articulated as follows:

• Two-way broadband network operators may offer access to their network bundled with other services but must offer unbundled access as well, with the technical features of their choice;

• Any network user (e.g. a content provider, intermediary or end user) can ask for and receive an unbundled access service from a network operator to the two-way “big internet”, in a “service agnostic” way, i.e. one that does not give different transport priorities to different kinds of information unless explicitly requested by the user.

• This service shall be given with the same bandwidth capacity and other technical features already offered by the operator, in non discriminating terms, i.e. comparable to other services and/or bundle offered by the operator.

• Broadband operators must guarantee interop­erability among services. At peering points, they must ensure that specific levels in terms of Quality of Service (QoS) are provided to customers who need a QoS level exceeding best effort. This would allow provision of an end-to-end QoS level to the end users. For instance, if an operator guarantees a certain QoS level on his network, he must deliver the stream to the peering point with the same QoS level. If they decide to do so, peered operators then may transport the signals with the same QoS to the other terminal point of their networks.

Note that the specific service agnostic, bidirectional, non discriminatory Internet access identified by the proposal given by an operator with the same technical features of his commercial offer (e.g. bandwidth, except the fact that is best effort) is then to be considered the minimum service level that a user can buy from each operator.

The regulatory environment to enforce this part of the proposal is neither favorable nor unfavorable in Italy and Europe. The basic principles do exist and, on those, a careful mediation by the Commission and the national Regulators could bring the operators to define an agr­eement on the regulatory and technical elements which compose the proposal.

4.3. An open payment system

An open payment system must satisfy the following requirements:

• Accessibility and ease to recognise (e.g. through payment) the value of digital media;

• Measurability of recognition of contributions made to the value of digital media by all value-chain players, end user included;

• Enabling the young segment to recognise/pay online digital media;

• Substantial reduction of costs associated to online micro-payments for digital media;

• Guarantee of privacy of personal data and transaction information.

In the dmin.it proposal a consumer will be able to open “virtual accounts” managed by account service prov­iders. Accounts will be based on guaranteed monetary circuits such as credit cards, bank accounts, prepaid cards, etc. The state of the account will be aligned to the selected payment form at regular intervals or on demand thereby decreasing transaction costs.

Therefore the proposal has the following features:

• An account with positive balance needs not have a supporting monetary circuit;

• An account may have one or more than one holder (physical or juridical person);

• A single physical or juridical person may hold an arbitrary number of accounts;

• All forms of dispositions (cashing and payment) of traditional bank accounts can be performed on an account;

• An account service provider will offer all infor­mation, e.g. movements, settlements, conditions applied that are offered for bank accounts;

• Euro movements from/to the accounts can be performed;

• An account can be based on more than one supporting monetary circuit, i.e. the relationship between accounts and supporting monetary circuits is many-to-many;

• An entrepreneur may decide to offer account services at published economic conditions and declaring whether the service offered conforms with nationally defined specifications

• An entrepreneur may decide to offer “virtual multibank” services with functionality comparable to those offered in the corporate banking market.

The same governance rules that apply to the open DRM system will be needed to define and manage the open payment system specifications.

In the European Union, the Electronic Money directives are enacted in most Member States (includ­ing Italy). According to such directives, the Bank Authority of each State will authorise subjects who wish to offer electronic money services with the limit that credit services (e.g. loans) may not be offered in such fashion.

Therefore, transactions in electronic money must be based on a prior payment.

5. Use cases

5.1. DTT/Satellite broadcasting with pay services

5.2. IPTV

5.3. WebTV

6. Advantages of the proposal

6.1. Open DRM system

The following advantages can be mentioned:

• End-users: would be able to overcome the current lack of interoperability between content and devices and reward interoperable and multiplatform devices. There would be more pay per view and pay per use offers with higher returns and easier comparisons between offers;

• Creators and producers: will be able to reach a broader audience with less intermediation. Current intermediaries will operate in a more competitive market;

• Current content providers on proprietary platforms: will be able to broaden their client portfolio, not necessarily constrained to a single business model and, potentially, multiplatform. They will be able to exploit the opportunities of freeing cash, now sunk in proprietary platforms, to innovate their products.

• Service providers and ICT companies: the national scope of the proposal opens new business opportunities to those who can provide effective and innovative solutions along the entire value chain. The critical mass achieved by the national market will offer opportunities to export their solutions;

• Consumer electronics companies: the broad and homogeneous national market will make the digital media market a true mass market, thereby providing a launching pad to export;

• Network operators: a large content transport market will be opened. Content providers using iDRM technologies to distribute their content will be able to rely on a specific network operator or choose the best offer from a number of operators offering different terms for capacity, QoS and cost.

6.2. Open network

The following advantages can be mentioned:

• A network allowing access to any digital media offer from any access point is a technology enabler for the development of the digital media market;

• Such an infrastructure plays the role of a flywheel for the development of new and dynamic client-provider relationship, leading towards new e prized forms of service provisioning (e.g.: up-down symmetry, semi-pro applications in ASP configuration etc…);

• The growth of a content offer in distributed fashion (or even fine-grain distributed fashion as in the case of self-produced content) decreases the importance of both large concentrations content providers and large service centres that are usually associated to them. This reduces the need of large infrastructure investments that are required to support this business segment. At the same time the importance of raw broadband, peer-to-peer networking, directory functions, user identity certification – elements that contribute to add value to the network infrastructure – increase;

• A horizontal market gives the consumer the ability to autonomously acquire the network terminals that are best suited to his needs. This has the beneficial effect for anybody wishing to offer digital media on the network to substantially cut the level of investment required to offer such services;

• Finally the new business models that can be triggered in such a horizontal market can hardly be forecast a priori. This is a new plus because the business experiences issues from the national market will have the possibility to become references exportable to other market. 

6.3. Open payment system

The following advantages can be mentioned:

• It will be possible to significantly reduce the financial intermediation costs as all commercial exchanges will happen within the account circuit;

• It will be possible to enable scenarios where only consumers are passive and only producers/distributors are active. In other words it will be possible to move from the very few-to-many to the many-to-many communication model;

• It will be possible to incentivise the young segment to the legal use of digital media, e.g. by offering a new form of account that can be easily created/accessed and by economically ricognising

  • the contribution of consumers to the success of digital media;

  • the value added by consumers to digital media;

  • the use data of individual consumers who are willing to do so;

  • the use of storage (hard disk) and bandwidth (upload) resources.

7. Conclusions

So far many of the potential benefits of digital media have been slow to materialise. The current trend is likely to lead to a few global digital media operators none of which will come from a small-to-medium size country like Italy. This will have not only serious economic consequences to the country but will also lead to the loss of important element of the national culture and identity.

The proposal developed by Digital Media in Italia aims at creating a large – by today’s measures – digital media market where end-users will be able to choose between content and service offers that are either based on proprietary or on interoperable technologies. Far from being only to the benefit of end users, the proposal will provide opportunities for all players of digital media value chains.

8. Acknowledgements

This paper reflects the work of many people, besides those listed as authors, who have been active in the dmin.it group.

Their contributions are gratefully acknowledged.

9. References

[1] Proposta di azioni per dare all'Italia una posizione leader nei “digital media” (proposal of actions to give Italy a leading position in digital media), http://www.dmin.it/proposta/ (English translation available soon)