The Secretary General of the International Telecommunications Union (ITU), Dr. Hamadoun Toure is calling on governments around the world to ease the tax burden on telecom services and consumer devices to enable more people have access to telecom devices and services.

Speaking at the Forum Opening Conversation at the ongoing 2013 edition of the ITU World Conference on International Telecommunication (WCIT-13) in Bangkok, Thailand, he said “governments have to recognize that high taxation and inordinately high license and license-renewal fees will lead to higher cost to consumer. And that eventually inhibits usage and denies the society the benefits of ICT.”

Dr. Toure also noted that the cost of spectrum also tend to be high in most countries because governments viewed it as a limited resource from which they need to maximize revenue.

He however suggested that whereas spectrum should not be given out for free to prevent misuse, the cost should not be too high to avoid the danger of it being passed on to the final consumer.

“There should be a careful balance,” he said.

The ITU had in the past said that developing countries needed tax revenues to develop so their governments could be excused from necessarily reducing taxes and charges on industry players. But in recent times, governments of developing countries like Ghana have come under huge criticism for inflicting high and numerous taxes on the telecom industry.

Ghana’s government has, for instance, imposed a 20% import tax on mobile handsets and accessories, with the argument that it is meant to encourage local handset assembling companies like RLG Communications and Tecno. But those two companies claim they are also affected by the import taxes because they import accessories and assemble locally.

Handset dealers have argued that the import tax would increase smuggling and phone snatching, and also reduce consumers’ ability to acquire phones but the government insist it would drive investment into local assembling plants and the use of locally assembled phones. 

The telecom service providers have also been slapped with a second component of a six percent Communication Service Tax (CST). The original CST had always been paid by the telco from whose network a call originates; and the second one is to be paid by the telco on whose network that same call terminates. The telcos have cried “double taxation” but the government would not hear any of that.

Beside those taxes, telecom operators are paying up to 37% corporate taxes to government, six cents out of the 19 cents charged on every minute of international traffic that come into the country, and several other charges by local government agencies and permitting bodies. They also contribute one percent of net revenue into a universal access fund and another one per cent to the regulator.

Meanwhile, the industry regulator in Ghana is also gearing up to start charging telcos for new block of numbers they require to increase subscriber base.

It is worse in some other countries.

The ITU Boss’ argument is that such numerous and high taxes and charges would eventually defeat the effort at increasing ICT and telephony access, particularly for the millions of under-served communities around the world because service providers would be forced to pass on the cost to poor consumers.  

He noted that the world is fast moving into the broadband age and every government would necessarily need to adopt policies that would make it easier for their peoples to come along.

Dr. Toure explained that whereas it took 125 years for fixed line phones reach the first one billion subscriptions around the world it took only nine years for mobile phone subscribers to reach one billion and only two years for the second one billion mobile phone users to be added on.

“But what is most phenomenal is that it took only one year for mobile broadband to gain its first one billion subscribers around the world. This is a clear sign that the future is not fixed but broadband so we need government to adopt policy to drive data consumption,” he said.

Dr. Toure believes ICT capacity building in the form of education and training across countries would drive innovation such and the development of relevant applications and content that people need in their respective countries.

He cited Kenya’s Mpesa Mobile Money product, which has spread in various shapes and forms across parts of Africa, as an example of innovation which resulted from ‘brainpower’, which is not limited to race, cultures, gender or nationality.

Another panelist in the Forum Opening Conversation, President and CEO of Norwegian telecoms giant, Telenor Group, Jon Fredrik Baksaas, insisted that “affordability drives adoption and usage”, saying that “whenever handset prices drop, such as in Thailand, where smartphones are sold for lower than US$25, there was mass adoption and government revenue would come from usages rather than high taxes.”

Indeed in Ghana, the removal of the handset import tax also reduced the prices of phones drastically and there was a proliferation of handset and usages increased tremendously.

Meanwhile, Dr. Toure paid a visit to the Ghana stand at the Exhibition hall at the WCIT-13, where he interacted to the Ghana government delegation leader and Director-General of National Communication Authority (NCA), Paarock VanPercy, other members of the delegation and Telecoms Chamber CEO, Kwaku Sakyi-Addo.

The Ghana delegation comprise of representatives from the Ministry of Communications, NCA, GIFEC (Ghana Investment Fund for Electronic Communication), GCNet, ITES (Information Technology Enabled Service), Omatek , RLG Communications, Ghana Chamber of Telecoms and Subah Infosolutions Limited.

Themed Embracing Change in a Digital World, WCIT-13 brings together policymakers, industry players and individual industries from across the world in four days of strategic debate, high-level networking, knowledge-sharing, and innovative showcasing.