Broadband tax, tax, tax!

France has long been considered to be one of the places in the world where you could get the best value for money when it comes to broadband. It's very likely that the summer of 2010 will mark a change in that respect.

In quick succession, at the end of August, we learn that:

To accomodate EU regulation, the VAT rate of triple-play will have to increase. It seems that triple-play being a combination of services that are taxed at different rates was split in half until now (half of the service was taxed at 5.5% and half at 19.6%.) According to the French government the EU is banging on the table saying that's a preferential treatment and everything should be taxed at 19.6%. At least that's how I read it (and there's a factual error in that article, it's not an increase by 19.6%).

SFR will increase its fiber baseline price from 30 to 35 EUR/m. They present it as a harmonization of their rates, since their service in Pau has always been 35 EUR/m, but that's really a thin veil on a price increase. Free is now the only provider left that offers FTTH for 30 EUR/m.

That may not last, since Free has repeatedly suggested in the press that it might increase it's baseline price for broadband anyway. They blame the multitude of taxes (including the infamous tax supposed to compensate the dissapearance of advertising on public service television) and Youtube. See this 01Net article for a full list of targeted taxes the French SPs are subjected to.

A French MP has proposed a fiber fund created on the basis of multiple sources: one third government, one third service providers and one third end-customers. End customers would pay 3 EUR/m to this fund as part of their subscription. This fund would be used to finance deloyment in our own version of the final third.

Let's add things up:

the current ex-VAT price for 30 EUR/m ADSL is roughly 26.5 EUR/m
a 19.6% VAT on that would take the price to 32 EUR
add to that a 5 EUR/m price increase that the operators want anyway to finance NGA deployment and pay the numerous taxes
add to that a 6 EUR/m tax on broadband for fiber deployment (3 from the consumer and 3 from the service provider)

Et voilà: expect French triple-play prices to be around 43 EUR/m within a few months. At least it's a distinct possibility.

How well would this go down with end-customers ? Probably not well, but if all service providers act in the same manner and if the government is conveniently there to be blamed, will they have a choice ?