Tax on text would crash the internet’s next wave

23 Mar 2009

The suggestion by the Green Party of a one cent tax on every SMS message to be introduced in the forthcoming budget would represent a giant step backwards for Ireland in the digital race, according to Púca CEO, Eamon Hession.

Hession said the proposed tax would harm Ireland’s reputation as a leader in mobile usage internationally, disadvantage Irish mobile technology companies and ensure Irish leadership in the next wave’ of internet would be a lost opportunity.

“It would undermine Ireland’s status as the most advanced country in the use of mobile technologies in Europe and would reduce the competitive advantage of Ireland’s indigenous mobile technology sector.”

Hession said Ireland’s fixed-line broadband infrastructure is far behind the rest of Europe and the country has therefore missed out on many opportunities in the ‘first wave’ of internet growth, which was driven by PC computers.

“However, mobile technology and mobile usage is one area where Ireland is actually ahead of most other countries, and it therefore represents an enormous opportunity for Ireland to take a leading role in the next technology wave, which is being driven by mobile technologies and the convergence of the mobile phone with the PC.”

In a recent survey conducted by the Mobile Marketing Association across six European countries, Ireland scored highest in virtually all categories including text messaging volumes, mobile internet usage and adoption of new advanced mobile services.

“Ireland consistently scores highest in text message usage, as compared with other countries – we send virtually double the amount of texts per person than in the UK,” Hession said.

“The existence of such a sophisticated home market of mobile users provides an amazing opportunity for Irish companies to ‘road-test’ new mobile technologies and services with Irish consumers, before rolling them out internationally.

“Ireland has long enjoyed a reputation within the mobile industry globally for being a hotbed of innovation in mobile technology, and the mobile sector has been identified by Forfás as representing a key area of opportunity for Ireland.”

Enterprise Ireland estimates there are at least 70 companies working in the sector.

“The major global mobile players – Vodafone, O2 and 3 – all have a strong presence in Ireland, and this can be used to help develop a channel for Irish–developed products to be brought to international markets. This has already happened with some notable success stories such as Xiam and Changing Worlds – now, we just need more and bigger success stories.

“Any barriers that Irish mobile networks face in the introduction of new products from Irish companies need to be removed, as do any barriers that Irish mobile technology companies themselves face in scaling their companies, such as the availability of funding, and trained and qualified staff,” Hession explained.

“In order for Irish companies to realise the huge opportunities presented by the growth in mobile services and the convergence of the internet with the mobile phone, the Irish Government now needs to spearhead a major strategic drive aimed at claiming leadership in mobile technology and services. Some areas of potential include mobile banking, mobile payment and mobile government.

“Ireland could not just take worldwide leadership in m-government, but could make vast cost savings by integrating mobile technologies into public-sector processes. Think of just one example: how many letters from public-sector departments and agencies are posted out every day where the information could just as easily be sent by SMS? A huge amount could be saved on postage costs alone. The likely reduction in the amount of paper used would also benefit the environment.

“The phone of the future is going to be the primary device for making all kinds of transactions and payments – why not encourage and incentivise the Irish banks to offer these services to their customers first, working with some of the key players in the Irish market who provide technology in this area.”

“A tax on text messaging use in Ireland would not just have a negative impact on Irish consumers’ use of their mobile phones, thereby reducing the competitive advantage that this gives Irish mobile technology companies internationally, but it would send out completely the wrong signal about Ireland’s attitude and approach to mobile technology to the mobile industry community outside of Ireland,” Hession said.

“The potential long-term and sustainable benefits to Ireland’s economy from the flourishing of a home-grown mobile technology sector here, facilitated and enabled by a home market of sophisticated ‘cutting-edge’ mobile users – combined with the massive savings that could be made by the widespread introduction of m-government initiatives – would far exceed the likely amount of tax raised through the introduction of the proposed tax on Irish mobile customers’ SMS usage.

“If we do this, then, who knows, potentially the next ‘Google’ could be an Irish-owned company!,” Hession suggested.

By John Kennedy