E sccr/21/2 Original: English date: August , 2010 Standing Committee on Copyright and Related Rights Twenty First Session Geneva, November to 12, 2010

IX. ECONOMIC ISSUES OF SOCIAL WELFARE

182 In economic terms, social welfare is pursued by creating optimal choices and tradeoffs among competing demands and desires in society.⁵⁷ These include both private and public interests.

183 In basic neo-classical economics, social welfare is said to be the results of the sum of consumer and producer surplus.⁵⁸ This simplified view of social welfare in the market place is sometimes used by those with economic interests to justify arguments for limitations on state intervention in the broadcast sector. Indeed, the simplified approach to social welfare ignores the extensive contributions of neo-classical, Keynesian and Post Keynesian economics, and other economic theory to understanding of public goods, imperfect markets, and the role of states in pursuing social welfare.⁵⁹ All of these are important economic theory factors in broadcasting policy.

184 The limited and laissez-faire view of social welfare is also somewhat problematically applied to broadcasting and cablecasting because these does not rely fully on private resources and uses public resources and spaces (radio spectrum and right of ways for cable infrastructure) and often involves imperfect markets. Most nations have rejected a purely market-based approach in order to pursue cultural, political, industrial development and other social objectives through broadcast and cablecast policy.

185 Terrestrial broadcasting does not operate in ordinary competitive markets because of its public good characteristics and tendencies toward monopoly.⁶⁰ Commercial terrestrial broadcasting is also different because it involves the dual product/two-sided market (audience and advertising), and choices made involving advertising market can reduce social surplus.⁶¹

186 Historically, a number of social observers, citizens, and policy makers have argued that broadcasting is not merely a matter of private consumption because it serves both private and public needs. They reject a completely market-based approach to broadcasting policy, asserting that social welfare is not merely produced by optimizing economic outcomes, but also by creating social benefits related to issues of identity, culture, education, development, and political participation. According to their view, the market only approach produces failures in serving these social, cultural, and political needs. They argue that these market failures are particularly evident in programming involving news and public affairs, children’s programming, programming for minorities and the disabled, and individuals with lower incomes.

187 Because of these reasons, state policies have traditionally treated broadcasting differently from other industries whose products and services primarily involve serving private interests, and broadcasting has tended to engender more government intervention than most industries.⁶² States have gone beyond mere technical regulation of broadcasting to create state-owned or state-supported public service broadcasting organizations or government broadcasters. They have also sought to regulate broadcast market structures and prescribe and proscribe behaviour of commercial firms.⁶³ This is less the case with cablecasting, but some countries do maintain social obligations (e.g., public access channels) on these operations.

188 Issues of social welfare involving broadcasting are complex because multiple and sometimes conflicting objectives are pursued. Social objectives of connectedness to the community, state, and world and reductions in disparities of access to news, information, and entertainment are pursued; cultural objectives promoting domestic culture and identity and reducing reliance of foreign content providers are promoted; political objectives of creating an informed and consenting population are supported; media development objectives—a form of industrial development policy—designed to encourage private investments that create and strengthen domestic media and systems are often put into place; national economic policy that encourage wealth creation and economic growth are desired; and consumer welfare objectives include ensuring that monopolistic tendencies in related industries do not unduly harm consumers.

189 This array of policies means that pursuing the optimal social welfare outcome requires a careful balancing of the multiple objectives in order to ensure equitable distribution of benefits and costs. It is far more difficult than just weighing choices on a balance scale or lever and pendulum but more akin to balancing a board to obtain simultaneous but different outcomes on a ball (See Figure 4).

190 Achieving the optimal balance requires some tradeoffs. Pursing universal access to broadcasting may involve providing as full access to public service or state broadcasting as possible, but allowing commercial providers to serve only areas that are commercially viable. Promoting development of strong commercial players may be traded off for anti siphoning rules for sports and other major national events to ensure their universal availability or availability on free to air television. Promoting consumer welfare may involve controlling regulating prices and services of cable television.