Leaders argue about money for public broadcasting: good ideas or none

Michael Hedges April 6, 2008

A proposal to fund public broadcasting in France with a tax on internet and mobile phone services met another round of criticism from EC Info Society and Media Commissioner Viviane Reding.

The idea was floated by French President Nicolas Sarkozy as part of a general shark-up of public broadcasting. In January he horrified the public broadcasters and their unions – and delighted commercial broadcasters – by saying French public broadcasting make do without advertising and suggested an “infinitesimal” tax on internet and mobile phone access.

More recently he said French people needed better broadband access. 

Commissioner Reding disagreed with President Sarkozy’s tax plan to fund public broadcasting, saying to a press gaggle in Paris (Thursday April 3), “I think that goes against any logic and I say it loud and clear. One cannot wish to solve the problem of broadband penetration in France and want to create a tax on broadband at the same time.”

At a Munich conference a few weeks ago, she opined that the Sarkozy tax plan might not be such a good idea. "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," she said.

Others have suggested that President Sarkozy may have taken leave of his senses; when it comes to broadcasting, that is. So far he has not commented publicly on Commissioner Reding’s criticism; perhaps too busy sending SMS’s.

A vote is nearing on Commissioner Reding’s proposal to form a European telecom super-regulator. The Commissioner’s efforts to push mobile media and broadband access through lower consumer costs and more content have run squarely into the entrenched incumbent national telecom operators and regulators. The only way to move them is to go over their heads.

But first, she’s threatened to shame them. "I will look at all the tariffs available and put them on a website," she told the assembled multitudes last Thursday. "That way, people will be able to see which ones have not lowered their prices."

Mobile phone charges in Asia, particularly per-megabyte charges for broadband, are a fraction of the cost in Europe. Mobile services beyond the simple phone call are the rage in Asia. It is the economics; consumer economics, that it. Commissioner Reding said she’s not ready to impose caps on retail data transmission, just to lower wholesale charges from about €7 per megabyte to €0.35. Her primary criticism of mobile telecom rates is with cross-border charges and, arguably, her biggest success in budging the telecoms has been reductions in roaming charges.

With Euro 2008 just weeks away, mobile TV supporters – Commissioner Reding included – hope to see a break-through. Sports coverage might provide the tipping point, they say. And they’ve said it before, just ahead of every major sporting event this century. Aside from Italians, most consumers have yawned.

An unnamed France Télévisions executive told Reuters (March 20) that ad sales for the public TV channels had fallen “20 percent in January-February when compared to the same period for 2006.” And the Sarkozy plan hasn’t come into effect. Is it possible they just stopped selling ads?

Commissioner Reding did not mention Sweden’s proposed internet tax to benefit public broadcaster Sveriges Television (SVT). The new Swedish add-on tax would effectively double the broadcasting license fee where broadband penetration is the highest in Europe at 82%.  Because so many Swedes view TV content through the web, said SVT CEO Eva Hamilton, those with broadband access must make a contribution to public television.  Because costs have risen and the current license fee tax isn’t keeping the money drawer full Hamilton announced (April 3) a proposal to cut 400 employees. 

Not all are convinced that pulling the ads from French public TV will benefit commercial television. Commercial broadcasters’ share prices jumped initially on the zero-sum expectation of new revenue. That cooled as less excitable analysts took a deeper look at ad market reality. “If France Télévisions ceases to trade airtime,” wrote Broadband Intelligence, the total French advertising pie is expected to shrink, because we believe only 60% to 80% of revenues will be diverted to other channels. The rest will be spent by advertisers on other media.”