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Mobile Communications

GSMA/Facebook Plan to Connect the Unconnected Leaves a Bad Taste

It’s hard not to be cynical about today’s joint initiative between mobile carriers’ representative body the GSMA and Facebook to “connect the unconnected” — that is, the billions who are neither able to access mobile phones nor the internet. Of course the idea of giving access to information and communications to perhaps half the world’s population is enormously attractive but the answer proposed — cutting taxes for vastly wealthy network owners — smacks of the worst kind of radical conservatism.

In a statement, their partnership, internet.org, said:

“While there are nearly seven billion mobile connections worldwide, there are only 3.4 billion people that currently have mobile phones,” said Tom Phillips, Chief Regulatory Officer, GSMA. “Mobile will offer many around the world, particularly in emerging markets, their only access to the internet and the information and communications services it enables. Connecting the next billion is a major goal of the GSMA and we are pleased to be working with Facebook and internet.org to make this a reality.”

How to connect the next billion (and the next billions subsequently)? The answer is a blunt one:

“The GSMA study ‘Mobile Taxes and Fees: A Toolkit of Principles and Evidence’ examined the current taxation burden on mobile in 19 countries in developing markets, revealing the significant negative impact of sector-specific taxation in these markets. The research findings demonstrate that taxes on mobile restrict the growth of the sector, as well as consumer uptake of mobile services. Facebook supports the GSMA’s recommendation that governments should take early action to reduce the excessive levels of sector-specific taxes and fees on the mobile industry.”

And yet the mobile carriers are hardly bleeding, not even in the red ink of financial losses. Here’s Vodafone making £1.5bn ($2.5bn) in half-year profits, albeit in “tough” conditions. Oh and here it is reportedly paying zero corporation tax and reporting reduced direct tax payments generally.

Ok, that’s just one company but it’s a shrill argument that the only thing preventing carriers from offering services all over the world is tax. They will follow the money and if the money is not going to come from corporate and consumer subscribers then the issue is broader than just calling for a light-touch tax regime. Bringing the internet to the unconnected is also about carriers being able to show that they understand pricing sensitivities and that long-term investments might be needed to reap eventual profits in emerging economies. It’s also about corrupt governments not handing out lucrative contracts to favoured cronies.

Tax breaks are useful carrots but by focusing on this issue exclusively and conflating calls for low taxes for telco megabrands with the billions of people who have no means of online access, internet.org leaves a bad taste in the mouth.

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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