Net providers angry at preferential tax rates for cyber space access
By : Anna Kocińska
Internet providers last week reacted angrily to a bill being discussed in the Senate that promises to give preferential value added tax (VAT) rates only to the limited number of businesses offering access to the Net through slow data transmission technology. Many in the industry said that if the bill is approved it could seriously affect the competitive edge of many companies.
Under the bill, a preferential 7% VAT rate will only refer to what legislators described as narrowband services providing slower data transmission compared to broadband, which offer faster Internet access. Cable TV operators, who are looking to Internet access services for business growth, will have to continue to pay the regular 22% rate, as the access they provide through their cable networks is faster than the usual dial-up service.
We have no definition of what broadband is in Poland and thats why were afraid that all services that are not dial-up services wont get a preferential 7% rate, said Ryszard Wojtaszek, vice president of the National Chamber of Cable Communication (OIGKK). Such a bill would strengthen the market position of some Internet providers against others, who will have to pay the regular 22% rate.
Wojtaszek said Telekomunikacja Polska (TPSA) will benefit the most from the bill, if it goes through. It will only solidify their dominant position on the market because the majority of their customers are using slow Internet access, he said. Its not the senators that we should thank for this bill. If its accepted, it will be due to a powerful lobby by TPSA, which is influential in the Senates and the Sejms political clubs.
TPSAs press office refused to answer to the accusations. We (TPSA) are not going to comment in any way, said Michał Potocki from TPSAs press office.
Wojciech Kruk, a senator from the Senates Democratic Club and a member of the Senates Economic Committee, said he had not noticed any lobbying concerning the bill in question. True, today, I got a fax from OIGKK, but I wont reveal my opinions about that bill, he said. If I say something now, the press will write about it claiming that Im under the influence of some lobbying group. Kruk said it would be wrong to introduce a bill that would impact the market so seriously only two weeks before the parliamentary elections. You will find here practically no one who would think about such bills now, he said.
Meanwhile, telecom market insiders said legislators should not be introducing bills containing terminology that cannot be properly defined. Today when you talk about broadband, its transmission at more than one megabyte, but in a few years it may change because its been changing all the time, said Stanisław Kurpieski, an IT specialist. In a few years there might be no provider offering access to the Internet at speed lower than one megabyte.
Wojtaszek said if a preferential VAT rate is introduced it should refer to all Internet providers regardless of what transmission technology they are using. I can understand that the government is trying to tap the budgetary gap, he said. But in that case we should all pay 22%.
Cable TV competitors are currently introducing fast Internet access services. Last year United Pan-Europe Communications (UPC) introduced broadband unlimited Internet access at 512 kilobytes per second, a speed 8-10 times faster than dial-up data transmission. TV cable operator Aster City, part of the Elektrim group, plans to hook up 25,000 subscribers to the Internet in Warsaw. Telewizja Kablowa Vectra (TVK Vectra), a cable operator based in Gdynia, with 370,000 subscribers, wants to expand through providing new services via its cable network, including access to the Internet, video on demand, high-density TV and virtual private network.
Meanwhile, TPSA, a provider of a slower dial-up analog connection to the Internet, also plans to introduce NEOSTRADA, a faster way of accessing the Net. NEOSTRADA, now available only in Warsaw, offers four speeds: 256 kilobytes per second, 512 kilobytes per second, one megabyte per second, and two megabytes per second. NEOSTRADA is based on Asymmetric Digital Subscriber Line (ASDL) technology, which provides broadband access to the Internet through an ordinary telephone line.
