Patrice Riemens on Wed, 9 Jan 2008 13:58:41 +0100 (CET)

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<nettime> France: Sarkozy proposes taxing new technology to finance the old (IHT)

Bwo Commons-Law mailing list/ Prashant Iyengar

Sarkozy proposes taxing new technology to finance the old
By Katrin Bennhold and Victoria Shannon
Tuesday, January 8, 2008

PARIS: In a move that could profoundly reshape the media landscape
in France, President Nicolas Sarkozy on Tuesday proposed banning
commercials from public television and making up for some of the
lost revenue with a first-of-its-kind tax on the Internet and mobile

A government tax on Internet connections would be virtually without
precedent and could be politically controversial, given that public
policy experts say that Internet access drives a country's economic
growth and productivity.

But France, like other countries around the world, is struggling to
find ways to keep cultural industries, like video and music, afloat at
a time when their traditional audiences are waning.

Sarkozy, proposing "a real cultural revolution" and stressing twice
that his proposal was "unprecedented," said: "I want us to profoundly
review the requirements of public television and to consider a
complete elimination of advertising on public channels."

Instead, he said, those channels "could be financed by a tax on
advertising revenues of private broadcasters and an infinitesimal tax
on the revenues of new means of communication like Internet access or
mobile telephony."

Analysts point out that the Internet and mobile phones are relatively
new and still-developing economic and communications tools, while
traditional television and other mass media are drawing fewer and
fewer viewers.

"This could be seen as drawing on new technology to fund old
technology," said Taylor Reynolds, economist at the Organization for
Economic Cooperation and Development, based in Paris.

Some observers cautioned that the proposal was still under review,
but others noted that the announcement contained enough information
to suggest that Sarkozy, a close friend of Martin Bouygues, whose
namesake construction company owns TF1 as well as a mobile phone
carrier, was serious about the plan.

Sarkozy's director of communications, Franck Louvrier, said the
president was determined to implement the measures this year. "The
goal is to wrap this up in 2008," Louvrier said.

Within minutes of the midday announcement, the shares of private
broadcasting companies TF1 and M6 jumped in anticipation of less
competition for lucrative advertising contracts, gaining 9.9 percent
and 4.5 percent respectively.

TV advertising in France increased by 7 percent to ???6.7 billion last
year, according to Yacast, a market research firm. TF1's channels
accounted for ???3.3 billion, while state-owned television company
France-Televisions attracted ???1.18 billion. The benefit of public
broadcasters no longer competing for advertisers would far outweigh
any tax on advertising revenue, analysts said.

This would not be the first time France has been a leader in proposing
changes in the digital economy. In 2006, French legislators approved
a controversial law that would have reduced the penalties for the
illegal downloading of music to little more than a parking fine; key
parts of the law were later overturned.

Some people in France have also lobbied for a "global license"
that would essentially levy a fee on Internet users that would pay
musicians and others in the music industry for revenue theoretically
lost because of digital music piracy.

For Sarkozy's proposal to become policy, his government would have
to draft a bill which would have to be approved by both houses of
Parliament. The Culture Ministry has set up working groups to review
a 1986 broadcast law and present a reform proposal by the spring
of 2008, an official said. The earliest these measures could take
effect is Sept. 1, but more likely, industry insiders said, was Jan.
1, because of a busy parliamentary agenda and municipal elections in

In France, competition for Internet customers is intense, resulting in
prices that are well below those of elsewhere, and an "infinitesimal"
tax would presumably not discourage potential subscribers. The French
pay an average of 37 percent less than the OECD average, or $36.70 a
month as of October, compared to $49.36 for all 30 countries belonging
to the group.

The share of residents with fast Internet connections in France
is also slightly higher than elsewhere - 22.5 subscribers per 100
inhabitants, compared to 18.8 for the OECD as a whole.

But policy experts mostly advise making the Internet cheaper and not
weighing down its growth with extra charges. The U.S. Congress last
year extended a federal moratorium on Internet taxes for the next
seven years.

While it is far from widespread, there are a few other examples of
government levies on new technologies or communications to help older
ones. In Europe, many countries tax blank storage media like CDs and
devote that money to support music. Turkey and South Korea have also
used telecommunications taxes to raise money for other industries.

Sarkozy's proposal was part of a dense salvo of measures fired off
in a New Year's speech aimed at redirecting the focus from his
Hollywood-style love affair with the Italian singer Carla Bruni to his
vision for France.

In the 45-minute speech, Sarkozy declared the death of the 35-hour    
week, suggested that large companies may have to double or triple     
the part of their profit they are obliged to share with employees     
and vowed to replace gross domestic product with a more holistic      
indicator of economic welfare that he has commissioned from two       
Nobel laureates in economics, Amarthya Sen and Joseph Stiglitz. He    
also said that he would put a state bank in charge of defending       
French industry against sovereign wealth funds and other financial    

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