Developments in the TMT Sector
Current trends & emerging legal issues
Dr Martyn Taylor
Partner
March 2017
Overview
• ‘Software eats the world’: global disruption caused by digital platforms
• Technology: ‘Big Data’ - legal issues in data security and sovereignty
• Media: disruption to content business models and recent law reforms
• Telecoms: The outlook to 5G mobile and the future of the NBN
• Emerging issues in particular sectors: fintech, energy, transport
2
‘Software eats the world’: global disruption
caused by digital platforms
3
The confluence of enabling technologies
4
Broadband
High-speed Internet access
ADVANCED DEVICES AND COMMUNICATIONS
Smartphones
Affordable pocket
supercomputer
Digitalisation
Digital encoding
algorithms
SOPHISTICATED OPERATING SOFTWARE
iOS / Android
Operating system
software
E-commerce
Transactions via digital platforms
SIMPLE AND USER-FRIENDLY INTERFACE
Apps
User-friendly application
software
The ‘digital platform’ as a driver of disruption…
5
Software
Telecoms
Software
Content
Software eats the world
6
Technology: ‘Big Data’ – legal issues in data
security and sovereignty
7
8
‘Big Data’ is
(i) the capture of information on a large scale,
(ii) the application of powerful analytical computing to that information, then
(iii) the use of that analysis to generate value.
What is ‘Big Data’ ?
Big Data as the fuel for innovation
9
"Now we stand facing a new industrial revolution: a digital one. With cloud computing its new engine, big data its new fuel. Transporting the amazing innovations of the internet, and the internet of things. Running on broadband rails: fast, reliable, pervasive “
“Take all the information of humanity from the dawn of civilisation until 2003 - nowadays that is produced in just two days.”
“That is the magic to find value amid the mass of data. The right infrastructure, the right networks, the right computing capacity and, last but not least, the right analysis methods and algorithms help us break through the mountains of rock to find the gold within.”
Capture of information on a large scale…
10
Data privacy
• Data privacy laws focus on the collection, storage, use, disclosure and retention of personal information.
• Australia’s Privacy Act 1988 (Cth) regulates the handling of ‘personal information’ about individuals.
• ‘Personal information’ is information or an opinion about an identified individual, or an individual who is reasonably identifiable.
• Examples: name, signature, address, phone number, date of birth, medical records, bank account details, commentary or opinion about a person.
• Requires compliance with Australian Privacy Principles.
Storage of that information…
11
Data security
• Ensuring the security of information is a key legal issue, raising issues of responsibility and risk allocation.
• Consequences of a data breach can extend well beyond legal liability to include reputational damage, cost in management time, loss of business.
• A new Australian law was enacted in February 2017, known as the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth).
• Under the Privacy Act, affected individuals and the Australian Information Commissioner must be notified of a data breach.
• Applies to entities regulated by the Privacy Act (>$3m turnover).
• Applies to data breaches affecting personal information that are likely to result in serious harm to an individual
Processing of that information….
12
Data sovereignty
• The export of personal data from one country to another country can present unique challenges.
• In an environment of cloud computing, the export of data to offshore data processing centres is a reality of 21st
century commerce.
• Integrated telecoms products and services may have a cloud computing or data processing component
• Export of data can be affected by employment laws, healthcare legislation, banking laws, and laws specifically passed to block the transfer of information for certain purposes.
• Location of information is also relevant to the operation of statutory notices in regulatory investigations.
Generation of value….
13
Information secrecy
• Contract: contractual protections to maintain confidentiality and prevent misuse of information.
• Secrecy: IP can be practically protected by maintaining secrecy
Databases
• Copyright: is a database a literary work and therefore subject to copyright protection ?
Software and algorithms
• Copyright: source codes and object codes; sometimes algorithms
• Patents: software and algorithms normally cannot be patented
Protecting IP rights
Media: disruption to content business models
and recent law reforms
14
Disruption - any platform can deliver any content
Device can
accept all
forms of
digital content
and deliver to
consumer
Content
Consumer
Internet historically enabled a decoupling of platforms and content services
The media market has moved from local markets comprising bundled
content, platforms and delivery to a global market for the supply of
unbundled digital content that may be accessed over the Internet
Media sector is experiencing dramatic reform…
Historically, advertising supported the delivery of subsidised media content. Now, a proliferation of business models exist. The following diagram from 2010 is already well out of date in 2017 (eg Netflix).
Media law reforms – addressing cross-ownership
17
Australian media ownership is currently subject to four key controls:
• Merger rules
• Foreign investment rules
• Media diversity rules
• Suitability rules
The media diversity laws were amended in 2016 to remove two key tests:
• The ’75 percent reach’ rule that prevents individuals or companies from controlling a total license area that exceeds 75% of the Australian population – capital city networks already reach much more than 75% of the population.
• The ‘2 out of 3 rule’ that prevents mergers that involve more than two of three regulated media platforms in any commercial broadcast license area.
The ‘Convergence Review’ under the Labor Government in 2012 had proposed more radical reforms:
• Broadcasting licences replaced by content licensing
• Media diversity based on minimum number of owners
• ACMA replaced by new Communications Regulator
• Refinements to minimum standards for content
• Remove content quotas and instead provide subsidies
Telecoms: The outlook for mobile and the future
of the NBN
18
M2M and Internet of Things (IoT)
19
Internet of Things
• Moore’s law is unleashing low cost, high processing, tiny chips that can go in anything from power outlet to water pipe.
• ‘Things’ can be controlled by an Internet-activated micro-chip with IP address.
• Wireless technology is lowering the cost of telecoms to the point where ‘things’ can be connected inexpensively.
• ‘Big data’ enables low cost storage and rapid processing of large-scale data.
• Now economic to integrate ‘things’ with processors and connect to the Internet, enabling real-time data and control.
• Significant potential for innovation across a diverse range of sectors in the economy – see next slide.
Machine to Machine (M2M)
• M2M are a range of technologies that permit information to be exchanged automatically between machines or devices, without human intervention.
• M2M has existed for many years (eg SCADA). However, growth of IoT is driving innovation and rapid M2M market growth.
Emerging legal issues in telecoms
• Permanent international roaming SIMs
• Embedded/programmable mobile SIMs
• Spectrum management for IoT
• Cross-border device certification
• Anachronistic laws in a dynamic world (eg sale of a car with integrated telecoms services – is a telecoms licence required)
IOT provides huge potential for innovation
MVNOs and M2M – Mobile telecommunications in 201520
Australia’s National Broadband Network
21
Fibre to the premises (FTTP)
Fibre to the node (FTTN)
Fibre to the building (FTTB)
Hybrid Fibre Coaxial cable
(HFC)
Fixed wireless services
Sky Muster satellite services
2016 Statement of
Expectations
“The Government
expects the network
will provide peak
wholesale download
data rates (and
proportionate upload
rates) of at least 25
Mbps to all premises,
and at least 50
Mbps to 90% of fixed
line premises”
Increasing speeds driving different applications
500kbit/s to 1Mbit/s
VoIP
SMS
Basic e-mail
Simple web browsing
Low-quality video
1 to 5 Mbit/s
Complex web browsing
Email with attachments
Remote surveillance
IPTV SD (1-3 channels)
Simple telecommuting
Digital broadcast (1 ch)
Streaming music
5 to 10 Mbit/s
Complex telecommuting
Large file-sharing
IPTV SD (many channels)
Switched digital video
Video on demand SD
Broadcast video SD
Video streaming (2-3 ch)
Video download HD
Low-quality telepresence
Gaming
Basic medical file sharing
Basic remote diagnosis
Remote education
Building management
10 to 100Mbit/s
Telemedicine
Educational services
Broadcast video SD/HD
IPTV HD
Complex gaming
Complex telecommuting
Complex telepresence
Surveillance HD
Intelligent buildings
100Mbit/s to 1 Gbit/s
Telemedicine HD
Multiple educational
Broadcast video full HD
Full IPTV channel support
Video on demand HD
Gaming (immersion)
Full telecommuting
1 to 10 Gbit/s
Research applications
HD telepresence
Digital cinema streaming
Complex telemedicine
Scientific remote control
Virtual reality
Terabyte file sharing
Remote supercomputing
BASIC BROADBAND HIGH SPEED BROADBAND SUPERFAST BROADBAND
Australia with the National Broadband Network
Developments in telecoms law due for 2017
23
Competition and access
regulation
Licensing of infrastructure
and services
Social policy obligations
Radiocommunications
and spectrum
management
National Broadband
Network
Telstra Corporation
ACMA
Miscellaneous
• Repeal of Part XIB telecommunications sectoral competition regulation (including ‘competition notices’ issued by the ACCC).
• Potential regulation of domestic mobile roaming by the ACCC to deliver mobile network competition to regional Australia
• Reform of the Australian Communications and Media Authority (ACMA) in conjunction with progressive reforms to update the regulatory framework.
• Recommended reforms for the universal service obligation once NBN rollout is complete.
• Reform of radiocommunications law and spectrum management to simplify and streamline processes.
• Amendments to the regulatory regime for the NBN to create ‘provider of last resort’ obligations and establish a Regional Broadband Scheme to subsidise uneconomic fixed wireless and satellite services.
Emerging issues in particular sectors: fintech,
energy, transport
24
Emerging legal issues in ‘fintech’
25
• Regulatory compliance is fundamentally important.
• Regulators face the challenge of permitting innovation while preserving the stability of the banking network.
• Cross-border fintech models face different forms of regulation in different jurisdictions.
• Data privacy, data security and data sovereignty are all important to fintech.
• Legal protection of IP is critical, but needs to be balanced against ‘network effects’ from widespread adoption (eg Blockchain).
Emerging legal issues in energy
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Emerging legal issues in transport
27
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Contact us
Dr Martyn Taylor
Partner
Norton Rose Fulbright Australia
+61 2 9330 8056
nortonrosefulbright.com
2185357228
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Our global footprint
29
New office that will arise from the global merger with Chadbourne & Parke LLP later this year.
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