Collaboration

EU telecommunications director not solidly behind Internet tax

At a Munich conference, European Union telecommunications director, Viviane Reding, said that a proposal by France’s President Nicolas Sarkozy to implement a tax on Internet and cell phone networks was not the best way to expand access to new media.

At a Munich conference, European Union telecommunications director, Viviane Reding, said that a proposal by France’s President Nicolas Sarkozy to implement a tax on Internet and cell phone networks was not the best way to expand access to new media.

From the International Herald Tribune:

"I believe the taxation of the new technology might not be the right way in order to arrive at the goal of seamless use of new communication by all citizens," Reding said during an interview. She characterized Sarkozy's proposal as "the beginning, not the end of the discussion."

There has been a wide range of reaction to Sarkozy's unprecedented proposal, part of a plan to use the new revenue to counterbalance a ban on advertising on French public broadcasters. Reding has been unexpectedly successful in moving her pro-consumer proposals through the political process, much to the dismay of many of the largest telecommunications companies in Europe. Withholding her support for what could amount to another cost to the industry should allay some corporate anxiety.

Sarkozy’s plan was announced on Jan. 8, 2008, as a way to leverage emerging technologies to bolster France’s two public television stations and allow them to run free of advertising. He called the tax “infinitesimal.”

From Time:

The announcement came Tuesday during Sarkozy's first full-blown solo press conference at the Elysée palace. As part of his plan for rationalizing the state's sprawling audiovisual empire, the President suggested "we consider the total suppression of advertising on public channels", and that income lost from the ad ban be compensated in part by "an infinitesimal sales tax on new communication methods, like internet access and mobile telephony."

Freeing state television stations from ratings-sensitive advertising, Sarkozy said, would allow public TV to quit trying to match the popular but mind-numbing game shows and reality television that now dominate the schedules of private broadcasters for what Sarkozy called "purely mercantile" reasons. Instead, public broadcasters could focus on quality documentary, educational, and fiction programming. "This is a revolution that, by changing the economic model of public television, would change the entire nature of cultural policy in our communication society," Sarkozy said.

The snag in the idea is that taxing web use is widely stigmatized as a sure way to stunt economic growth. "Generally speaking, taxing the Internet is considered a bad idea, and a potential brake to net use and development," says Audrey Mandela, founder of the independent London consulting agency Mandela Associates. "But without knowing the details of the French proposal, it's difficult to say how problematic an Internet tax there would be."

It is difficult to see how this would stimulate emerging technologies. It would seem that an Internet tax, regardless of size, would tend to push people in the other direction. What are your thoughts? Would you be willing to pay an additional tax for your Internet and cell usage to support television -- even PBS?

6 comments
BALTHOR
BALTHOR

The Government can't make anything more expensive than it already is.

Tig2
Tig2

Can you see how taxing the Internet would stimulate emerging technologies? It would seem that an Internet tax, regardless of size, would tend to push people in the other direction. What are your thoughts? Would you be willing to pay an additional tax for your Internet and cell usage to support television ? even PBS?

woodcock.ceo
woodcock.ceo

Instead of finding new taxes for new media France would be better served in building a first class broadband infrastructure. Thank goodness Mr Sarkozy has developed a reputation for not following through with "suggestions". This must surely not proceed

PhilippeV
PhilippeV

This is another attempt to change the status of public TV, this occurs with every president or shift of majority in legislatures in France. Can't they leave public TV independant of such political interaction in the way they finance themselves so that the public medias can plan thei activities to longer time than the next legislature? They know that the public broadcasting tax is very unpopular. Last year the tax paid per TV antenna was replaced by a tax collected with household taxes, forcing people that did not pay it since many decenials (retired people) to start paying it. We've seen reforms in the payment of taxes or in the management of these groups, or in the control of TV&Radio broadcasters since ever. This announcement does not change things: the president tries, unexpectedly because it was never announced before and not negociated with anyone, to correct the defects that the recent change in the way taxes are now collected. Anyway, taxes that finance the public broadcasting groups (France Television group, and Radio France) are much less than what is paid in Europe (less than what is paid in Britain for BBC). The alternative to the proposal is clear: France Telecision will have to be split once again by privatizing France 2 (after TF1, two decennials ago). The problem is that banning ads on France Television may benefit to TF1 and M6 private television groups, but will reduce the national platform for TV advertizing. So may be it could provide more revenues for internet sites and private groups of radios and other medias (NRJ, Lagardere, RTL...), so Lagardere could still benefit from the aquisition of France 2... But consumers will have to pay the price and all private medias will become new tax collectors. This hides in fact a raise for the total cost of these spreaded taxes, and inefficiency in the tax collection system that will be spread and will need much more complicate control. And what would seem beneficial to private media groups (because of the report of advertizers on them, would finally be loosy for them) Really, the yearly tax collection per TV was probably not perfect, but it was cost effective in term of efficiency. Why does the BBC succeeds in collecting its taxes that are even higher than in France? Looks like a bad good idea. It's admissible that the old tax collection system per TV antenna/household had to be reformed so that it would be paid by fiscal household: simpler to control. But really, if things had to be done, it was to simplify this even further, to simplify the control and the cost of the collect, and increasing it for those that can pay more. But spreading the collection by forcing all consumers to pay it everywhere and multiple times will just complicate things, and will generate even more problems. Sarkozy should have better proposed to correct the defects introduced last year in the new system based on household taxes only, but not on revenue or status with a better repartition. This new tax will just mean more money lost in the tax collection itself and its control, and lots of complication in accounting as it will be based on products or classes of services, some of them being now essential: mobile phone and internet access for everyone. Isn't it enough that we already pay taxes on every storage media for paying private producers? Now we would do the same for paying the public sector in the least efficient way where everyone pays it multiple times? Oh, my God! Can't they make it simple and keep the public broadcaster independant and organize their activities on longer terms than just the next legislature? This certainly won't help the creation of content and investments. Advertizers need national channels for their contents. Reducing the platform will certinaly not help. Final note: France TV is more than 2 channels: - France 2 - France 3 national edition - France 3 in regions (the largest network in terms of employed journalists in Europe) - France 4 created on internet just before the launch of TNB (TNT in French) - France 5 created after the collapse of private TV "La Cinq" - France O manged jointly with Radio France and that presents programs created in French overseas - participations in ARTE (shares an analog channel with France 5, but emits 24/24 on TNB and internet) - participation in France 24 (a 24/24 news chennel in French) - some other minority participations in specialized channels on cable and satellite The public sector also comprizes (out the France Television group) Radio france that manages 4 national radios (including France Info", a 24/24 news radio) on long waves and/or FM, plus many regional radios in the "Radio Bleu" network

RFink
RFink

Given our government's track record for lying through its teeth I say no. If our goverment would wean itself of pork, corruption and mismanagement it wouldn't need a tax increase. Until the day the government does this, then I say NO to all tax increases.

PhilippeV
PhilippeV

Adding taxes just to remove ads would just mean more troubles for everyone (and it's not sure that private media groups would really benefit). French people do not hate ads on TV. They prefer seeing it than paying more. And the commercial sectors really needs large national platforms for publising their ads. This idea would just reduce the advertizing market. What is probably needed is to reduce the requirements made on private TV channels for the creation of content, in exchange for them to reduce a little their ads, so that internet medias (which are constantly growing) can get a larger share of ads compaigns. This is really needed because the no-cost internet model will not continue to expand and needs more money from advertizers. But in exchange they would also be able to create more content themselves: the internet is very creative and allows cheap distribution and direct sales that are cost effective. Let's favor this evolution and realize that TV and radios will be declining, so that there will be less advertizers. But at the same time, both the public and private TV and radio media sectors are investing for their presence on the internet where they compete equally: the audience they gain on the internet is motivated by the creation they make and publish there. The sum of this evolution is not negative. France Television and Radio France will be in some future, only on the Internet (on either fixed or mobile networks). Some day, it will make no sense to continue paying the tax, because there will be no more difference between the public and pricate sector, competing more equally, and with the same objectives: giving the best content for viewers/auditors, and they also compete more internationally. TV and radios networks will be things of the past. It's time to think differently and pave the way for Internet-only medias, where ads are unlimited, and content is the best thing that helps getting the audience and financements from advertizers. Do we ever need taxes? Not sure. But we need more ads and more confidence of consumers about the advertized products: may be it's time to think about regulating instead the advertizing on Internet, and fighting against the abusers that don't respect the rules and steal the space reserved by others. Time to invest in the fight against spammers, so that advertizing on Internet becomes more attractive (it is already more cost-effective than TV, radios, and printed medias)

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