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The Economics And Politics Of The New Media, Vol. 6 - 1999, No. 3

Deciphering Convergence. Impact of The Digital Revolution on the Media and Communications Industries

, , , , pages: 29-48

The world's media, telecommunications and information technology industries are undergoing a period of unprecedented and profound change. Dramatic technological advances combined with market liberalisation and globalisation have together engendered the “digital revolution.” A dramatic consequence of this is “convergence,” a ubiquitous but loosely defined term commonly understood to denote the blurring of boundaries between the media, telecoms and information technology sectors. There is broad consensus between academics and practitioners that technological advances are bringing these sectors closer together and have the potential to transform them entirely. Tools for analysing these developments include Porter’s (1985) value chain and the technologically-based “layer” models developed to ensure interconnection between networks (OSI 1977-84; Grove 1996; Bradley and Nolan 1998). This paper explores the relevance of these concepts as tools to analyse convergence by applying them to a range of affected sectors. It finds that the utility of the value chain concept resides in its ability to highlight in detail the dramatic changes that have already taken place as a result of convergence. However it does not comfortably accommodate the non-linear, dynamic, cross-sectoral processes that are emerging as convergence gathers pace. Conversely, the chief benefit of layer models is to offer a vision of the future, of the potential endpoint of convergence. However they are arguably too sweeping and technologically determinist to provide a basis for analysis of developments at sectoral or organisation level. The paper proposes a new model for analysing the impact of convergence, which draws on the strengths of the value chain and layer models.

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