Impact of the Development of the Universal Mobile Telecommunications System in Europe
Laurent Guihéry, Universite LumiereLyon 2
In Europe, but especially in the US, many criticisms are leveled to question public management of UMTS’ development (Universal Mobile Telecommunications System). Criticisms are numerous and are directed as much towards the European Union, which initiated the latest standard, as towards telecom operators who have underestimated technical difficulties, as well as towards financial markets, which have been carried away by the scope of Internet’s financial appeal on the American markets, and last but not least towards public authorities of the EU member states, and more specifically France.
As far as criticisms towards public authorities are concerned - an issue placed at the center of this paper - it appears that the latter seem in some countries such as France to have been unable to manage an appropriate allocation process of this rare public good which is UMTS frequencies. Two processes have been implemented in Europe: comparative submission and auction sales of different types.
The impact of one process or other on both the innovation and public finance is not neutral. The first part of our communication will underscore public logic based on maximization of tax or revenues’ yield, typical in the field of public finance, taking place to the detriment of promotion of innovation through license’s high fees, more favorable to reducing competition and the number of newcomers on the network. This fiscal opportunity may well be the reflection of the State’s inability to progress in the field of fiscal reforms (E. Cohen, 2000). Our paper will try to highlight how taxation of UMTS’ flows would have been more appropriate at a collective level than taxation on newcomers before opening of the infrastructure (License).
In some cases, such as the French one, the State used this opportunity to levy a new tax on the ground of innovation, likely to finance numerous deficits (pensions, public debts) or new spending. Criticisms thus focus on the validity of such taxation which may well jeopardize the telecom operators’ viability, induce high access fees for high-value broadband Internet and more particularly limit the scope of future UMTS networks to densely populated urban areas. This taxation of the innovation, characteristic of most European countries may thus well induce a two-level of high-value broadband Internet, which will worsen inequalities between people. Fortified by this acknowledgement, our paper will then try to study the impact of such innovation in the field of high-value broadband networks on the public finance of most European member states. It appears clearly that implementation of a new network for mobile telecommunications and information flows intended at high-value broadband Internet - UMTS aiming without a doubt at developing a new network for the transfer of information - refers to a logic of the most European kind – at least as far as continental Europe is concerned- based on the creation ex nihilo of a new infrastructure implying mid- to long-term investments and a non-immediate profitability. Which lessons can we draw from the difficulties of UMTS’ first steps in Europe as far as a new perception of public finance and, more generally speaking, new taxation policies for public authorities?