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11/12/2016

French minister pushes ‘Google tax’ to bridge telcos funding shortfall

Digital

French minister pushes ‘Google tax’ to bridge telcos funding shortfall

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The top five US-based internet companies are stifling European innovation in new technologies and should be more tightly regulated and taxed, the French minister for the digital economy, Fleur Pellerin, told a conference in Brussels yesterday (8 October).

Pellerin also joined industry leaders in claiming that the Commission’s proposals for a single market for telecommunications will not deliver the necessary investment into the sector.

“Europe is being relegated to second league in the digital economy,” Pellerin told delegates at the annual European Telecommunications Network Operators' (ETNO) Association summit.

The French minister reprised calls for a level playing field for European digital companies, including proposals to tax the large US-based internet companies.

Last month (24 September), she convened ministers from seven EU countries including Germany, Poland, Spain and the UK in Paris with digital affairs commissioner Neelie Kroes to discuss new proposals for a level playing field for European digital companies, and broached the subject of a so-called ‘Google-tax’.

Meeting with tax commissioner today in Paris

Such a tax would levy the largest US so-called "over-the-top" internet providers. Pellerin told the conference that she will discuss the  idea in Paris today with taxation commissioner Algirdas Šemeta, and on Friday at a meeting in Finland.

EurActiv understands that the idea received little support from other ministers at last month's Paris meeting, but Pellerin told EurActiv yesterday that all ministers had supported the idea of a level playing field for the European sector.

“With the rules that we have at the moment, the top five or so US companies are able to dominate and shape the market,” Pellerin said, stating that a new tax on the US over-the-top providers was an essential element of creating a level playing field.

The French minister also called for more European venture capital to support the establishment of big digital industry in Europe and joined industry chiefs in rounding on the Commission’s single market for telecommunications proposal, claiming that it would not deliver enough investment for the sector.

“I do not see what will help the sector deliver investment more rapidly, from a concrete point of view I cannot see the proposals will help investments,” Pellerin said.

Commission: "They have nothing to complain about"

Luigi Gambardella, the executive chairman of ETNO, welcomed the Commission’s proposals but echoed that the sector was suffering from declining profits.

“By 2020 the shortfall in investment [in the telecommunications sector] will be up to €170 billion, leading to enormous missed opportunities. We need a winning industrial policy and solutions based on rapid deregulation,” Gambardella said.

Ryan Heath, Neelie Kroes’ spokesman, said that the costing regulation which is part of the proposal, coming into force this week, will directly enable investment.

“The first beneficiaries of the package are the telecommunications companies. Yes, some of the benefits of the package only come in the longer term, but the incumbents are getting the first bite of the cherry, they have absolutely no right to or foundation for complaint,” Heath added.

Background

In June 2007, the European Commission introduced a regulation placing caps on prices of cross-border mobile calls in Europe, the so-called 'roaming regulation'.

The EU executive's intervention was limited to roaming because domestic calls remain a competence of national regulators. The first roaming regulation also excluded text messaging and data. A second regulation entered into force in 2009, introducing further steps to gradually lower caps for voice roaming, together with guarantees against "bill shocks" for data roaming.

In July 2011 the Commission proposed a third roaming regulation and announced plans to structurally reform the European market for roaming phone calls slashing wholesale prices and opening access to the market to new service providers.

The measures were supposed to eliminate differences for cross-border phone calls, saying that price caps will be no longer necessary as from 2016.

Timeline

  • 24th-25th October: EU heads of state and government to discuss Commission's proposals for a digital single market at summit in Brussels

Further Reading