16.10.19

Law and order: The changing legislation of Pro AV

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Laws are inescapable. Tim Kridel explores how some new, upcoming and proposed changes will affect pro AV—for better and for worse.

Even if your company doesn’t sell to government agencies, they’re still an enormous part of your business opportunities and overhead costs. Case in point: Brexit, whose resolution will ripple throughout the European Union and the rest of the world. Although no one knows exactly how Brexit will finally play out, there are some reasonable assumptions about its effect on pro AV.

“Implications for the pro AV industry will depend on what Brexit does to the economies of both the UK—or, more precisely, Britain—and its trading partners,” says Sanju Khatri, director of HIS Markit Technology’s consulting and strategic advisory services. “There is no intrinsic demand as such for pro AV products and services. All such demand is derived from the demand for all precursor activities, such as non-residential construction or activities in all the verticals where pro AV is used.”

So when trying to predict what effect Brexit will have on pro AV, it makes more sense for AV firms to focus on the verticals they target. “It’s probably safe to say that some verticals will be less affected—because of strong internal demand—like healthcare and possibly education,” Khatri says. “But other verticals—like retail, hospitality, events, arts and entertainment, corporate, etc.—may take a hit. So I expect any negative implications of Brexit to be somewhat unevenly distributed across the economy.” Some AV pros say Brexit highlights how nuanced the EMEA market is.

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“I think ‘EMEA’ is too broad a brush sometimes, or at least needs to be differentiated from ‘EU,’” says Byron Tarry, Global Presence Alliance executive director. “It’s the EU where much of the legislative concern comes from because when the EU makes a decision, it impacts such a huge market. 

“If a single non-EU market makes a regional decision, it may cause problems, but not on a scale that anyone is particularly worried about, and we all manage on an exception basis. When the EU makes a decision, it’s not the exception anymore, it’s the rule, and the whole market has to react in Europe, EU members or not.” 

Middle East 

In the Middle East, some governments are slowly migrating their economies away from their traditional oil roots. For example, in 2017, Saudi Arabia began allowing movie theatres, which means a big, long-term market opportunity for cinema vendors and integrators. The government is also investing roughly €27 billion in entertainment complexes as it seeks to evolve the economy in ways that will benefit more than just AV firms that specialise in command and control solutions for energy companies.

“Mohammed bin Salman’s Vision 2030 aims to reduce the Saudi economy’s reliance on oil and the public sector for growth and employment, fostering development in mining, defence, retail and renewable energy,” Khatri says.  “Even partial implementation of this would open up new investment opportunities and should improve the transparency of securing government contracts and project finance. During the coming year, the crown prince will probably adopt a policy of social reforms prioritising tourism and supporting initiatives backed by the General Authority for Entertainment.”

The Saudi government has a four-year €17 billion program to stimulate private-sector activity, including housing and manufacturing, as well as export-related enterprises. “Coupled with the more prominent roles of the Public Investment Fund (PIF) and the National Development Fund (NDF) in executing capital projects in the budget plan, we expect budget execution regarding capital expenditures to further improve, boosting non-oil activity in 2019,” Khatri says. “Targeted infrastructure and development projects will help stabilise and strengthen the construction, manufacturing, trade, and transportation sectors.

“Therefore, IHS Markit also expects a more prolonged and moderate recovery in non-oil economic activity, amid signals of lackluster performances in key sectors. 

All these developments will contribute to increased opportunities in the pro AV market.”

For EMEA and the rest of the world, a major event is Expo 2020, held in Dubai from October 2020 to April 2021. Its focus includes smart buildings, so at the very least, it’s a networking and lead-generation opportunity for AV integrators and vendors increasingly targeting that space.

Expo 2020 also will spur AV projects among hotels and other businesses catering to the anticipated 25 million visitors. 

“Dubai’s preparation to host Expo 2020 should provide a further engine for growth as projects are initiated, with the expo particularly important for the construction, transport, tourism and hospitality sectors,” Khatri says. 

“Although authorities are taking a more prudent and sequenced approach to launching projects, with new regulations and improved governance, the economic boost from the expo is a leading factor in the IHS Markit forecast for UAE non-oil GDP growth through 2020, which is an average rate of about 4.1% during the next two years.”

Taxes and telecommuting 

Some AV firms use subcontractors, while others serve as subs. In 2017, the UK government began making public sector organisations responsible for ensuring that their contractors pay the right tax.

In the first 12 months, this change resulted in an additional£550 million (€617m) in Income Tax and National Insurance contributions. That windfall prompted the government to expand the requirement to the business sector. 

“This measure will apply to engagements with medium or large-sized organisations in the private and third sectors,” an HM Revenue & Customs policy paper says. “It will shift responsibility for operating the off-payroll working rules from the individual’s personal service company, to the organisation or business that the individual is supplying their services to.

“It’s the EU where much of the legislative concern comes from because when the EU makes a decision, it impacts such a huge market.” – Byron Tarry, Global Presence Alliance

This includes responsibility for deciding whether the rules should apply and deducting the associated employment taxes and National Insurance contributions.”

The new requirement takes effect in April 2020. For more details, visit https://bit.ly/2lvvrqm.

The UK also is considering changes to encourage telecommuting and other flexible workstyles under a bill proposed by MP Helen Whately.  That could be an opportunity for collaboration vendors and integrators if it spurs even more spending to maximise productivity of distributed workforces. The demand is there on the employee side.

“Recent research from the TUC (Trades Union Congress) finds that regular working from home has increased more than a quarter in the last decade, with around 4 million more UK workers wanting the option to work from home,” says Nichole Izzo, Logitech’s head of marketing for northwest Europe. 

“A government initiative to encourage flexible working by default is likely to further speedup these changes and put more pressure on businesses to transform their HR policies and work practices to accommodate this trend.”

Flexible-work style laws in the UK and elsewhere also could affect office requirements, such as even more demand for huddle rooms. 

“As traditional, larger office spaces are likely to become less of a focus for businesses, there maybe a move towards organisations investing in spaces at co-working offices or downsizing to smaller locations,” Izzo says. 

“Businesses may also be more likely to implement hot-desking policies or embrace break-out areas without designated desks as fewer employees work from the office five days a week.”

Drone flexibility 

Drones are an emerging market for a variety of pro AV applications, from event lightshows to video surveillance. Night operations, flights over people and allowing piloting beyond visual line of sight (BVLOS) are among the restrictions that many countries worldwide could relax over the next few years. 

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“Currently, if a drone has a technical failure, there are no in-built safety measures to stop it from dropping out of the sky, damaging the drone and potentially injuring people.” - Markus Waibel, Verity Studios

“Europe has recently adopted a specific operations risk assessment (SORA) process that enables drone operators to fly BVLOS and over crowds of people if specific requirements are met to reduce ground and air risk,” says Markus Waibel, COO of drone light show specialist Verity Studios and president of Switzerland’s drone industry association. 

“Among others, these requirements include appropriate safety measures for technical failures and validating you aren’t flying in restricted airspace. The SORA process is an excellent step forward in both enabling innovative use cases of UAV technology while maintaining a lower level of risk.”

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Several new regulations will take effect in 2022. “Market standardisation still has to occur, but the regulation reads as if drone manufacturers will have to ensure their vehicles can still be safely controlled if they have a technical failure,” Waibel says.

“Currently, if a drone has a technical failure, there are no inbuilt safety measures to stop it from dropping out of the sky, damaging the drone and potentially injuring people. 

We look forward to seeing which safety measures (whether it be parachutes or something like our fail safe algorithm) are adopted by manufacturers like DJI to meet these requirements in the future.” 
For updates on these and other regulations, visit the European Aviation Safety Authority’s website (www.easa.europa.eu) or the Association for Unmanned Vehicle Systems International(www.auvsi.org).

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“Government initiatives to encourage flexible working by default will put more pressure on businesses to transform their HR policies and work practices to accommodate this trend.” - Nichole Izzo, Logitech

Video surveillance 

Facial recognition technology is getting more sophisticated and getting more controversial. US cities such as San Francisco have restricted video surveillance applications involving facial recognition. Similar restrictions are afoot in EMEA, such as the UK’s House of Commons Science and Technology committee recommendation that police curtail their tests and deployments until regulators could catch up.

“I would say that these are isolated instances,” Khatri says. “In London, whilst MPs are calling for a halt to live facial recognition (LFR) trials, HIS Markit does not expect this to take effect.”

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Most private and government video surveillance systems don’t use LFR. But that big market segment is still vulnerable to LFR-related privacy concerns. It’s possible that some public and private organisations hold off adding or upgrading video surveillance systems until the LFR backlash subsides.

“They don’t want to be mixed up in the hot potato that is surveillance and the use of biometrics,” says Jason Tooley, techUK board member and Veridium chief revenue officer. What could be the effect on sales of video surveillance across the board? “It’s too early to tell,” Tooley says. “We’ll know probably in the next three to six months.”

Although most of the LFR debate has centred on law enforcement agencies, it’s now expanding to businesses. In August, London Mayor Sadiq Khan wrote a letter to the developer of King’s Cross Central about its use of facial recognition technology. “That’s the first time we’ve seen private sector being written to by the public sector saying, ‘I’m very concerned about your use of technology,’” Tooley says.

The privacy concerns also tie in with the EU’s General Data Protection Regulation (GDPR). 

“Given that this is a relatively new technology for the police, there is currently not a fully complete legal policy,” Khatri says. “GDPR only covers certain aspects, whilst the Police Directive—The EU’s Data Protection Reform Package—covers other aspects, but there is not currently a standard policy that specifically focuses on LFR. 

“This is why in London, additional trials are being called for by the former Home Secretary Sajid Javid, whilst other MPs are calling for a halt.

They both want the same thing: A complete set of rules for equipment manufactures and the police to play by. But one side believes we should stop until we have the policy, whilst the other side believes that we should use trial and error to develop the standard.”