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Taxing Times
"After you Mr President"
Sarkozy plans big shake-up of French media (and Tony Blair)
While the British media concentrated on the few minutes or so when Nicolas Sarkozy hinted he may marry Carla Bruni, it's worth remembering that the President spoke about a few other things during his two-hour press conference yesterday.
Of particular interest are his plans for France's media. He proposed that France's main state-run broadcasters should become ad-free zones, with their funds for programming raised via taxation on other media sources. The internet is reportedly one of the areas the government is considering taxing.
Currently, all France's broadcasters carry advertising. There are strict limits as to the sort of advertising which can be shown and when they can be broadcast. The President's announcement that these should be ad-free sent shares in privately-owned broadcasters like TF1 and M6 soaring: The markets believe that denied advertising on the likes of F2 and F3, advertisers will flock to commercial channels. The fact that one of the means by which Sarkozy proposes to fund state channels is a tax on the profits of commercial broadcasters didn't outweigh shareholders' enthusiasm for the measure.
Some pundits will be concerned by his fund-raising proposal: an "infinitesimal" on internet access and mobile communications.
Even supposed liberals Sarkozy can't seem to resist the French instinct to tax anything that moves (and, worryingly, Britain's Gordon Brown is pondering what else he can plunder for his next round of spending). Few in France's governing elite understand the internet; the possibilities of mobile communications are a mystery to many too. What they do know is that the internet is an engine for growth, and that people are making money from it. Mobile phones, too, are used by millions of French citizens every day.
What does an "infinitesimal" tax mean? Will users be taxed on every connection, or will internet service providers and mobile communications companies be instructed to add a tax to user bills? Will light users be subject to the same level of taxation as those who sit online all day?
During the past decade of internet growth, the world's finest minds have been unable to figure out a way to persuade users to pay for content on the internet: Subscription charges for newspapers, "royalty funds" for writers and micropayments systems have all been proposed and fallen by the wayside. What makes the French state imagine it will succeed where others have failed?
One area where users did have to pay through the nose to access the internet was mobile browsing on portable phones. Browsers were slow and ungainly and data access unreliable. Data charges were exorbitant. The arrival of Apple's handheld browser iPhone, however, has encouraged a boom in mobile internet use. One statistic showed that nearly one in a thousand web pages browsed in the second half of 2007 were accessed using an iPhone - a staggeringly high figure.
Following the "unlimited browsing" plan of the phone in the US, European companies have competed to offer similar plans to phone users. The response has been positive, as users have broken out of the fenced-off web access previously offered. The possibilities of handheld browsing are immense: And for businesses, an entire new area of development has opened up.
Will a French tax on internet access hit this new knowledge-based industry as it prepares to take off the ground? It shows a worrying lack of understanding of new technology.
Also set to be shot down before it makes an impact is France's international English-language channel France 24.
Sarkozy announced that the news channel would cease broadcasting, to be replaced by a French language news broadcaster.
France 24 was Jacques Chirac's brainchild. Following what he believed to be Anglo-Saxon misrepresentation of the French case against the invasion of the Iraq in 2002, called for the creation of a Chaine Française d'Information Internationale (CFII) dedicated to putting a French perspective on the news in English and Arabic (as well as French).
France 24 was launched to largely positive reviews just over a year ago, in December 2006.
We don't have a date for the new French-language international channel which will replace it. However, we can't help but think that Sarkozy is missing the game here. He doesn't speak English so well himself, but it is the international language whether the French like it or not, and Chirac was probably right to believe that without a presence in the English-language news market, France was in danger of being excluded from the debate. Now, it will continue to be dominated by the BBC, CNN and new player Al-Jazeera in English.
There may well be a place for another international English-language news channel. Euronews, which is partly backed by the European Union, could be the subject of a funding drive to create a network which provides news from an EU perspective: Watch this space.
As for France's international channel in French, well, France already has a news channel, LCI. Will it be expanded to an international operation? Sarko will do himself no favours if this is the case: LCI is broadcast by TF1, the commercial broadcaster we discussed above. TF1 is part-owned by Bouygues Telecom, which is owned by Martin Bouygues - one of Sarkozy's best mates, who was best man at his wedding to Cécilia.
Jobs for the boys? The conspiracy theorists among you will have already noted the 7 percent rise in TF1's share price we noted when Sarkozy raised the prospect of television advertising being driven to his mate's channel.
Speaking of jobs for the boys. There's much speculation over Sarkozy's apparent support for Tony Blair's "appointment" to the European Presidency required by the new Constitution. Why should he do this?
Well, first Sarkozy likes Blair. The men genuinely liked one another and bonded over their mutual dislike of Jacques Chirac, who dedicated much of his second term in office to frustrating their schemes. A Blair Presidency would be a final nail in the coffin of Chirac's much-touted Paris-Berlin Axis of influence in Europe.
Second, Sarkozy is sure to be aware that any mention of T*** B**** sends Gordon Brown into a twitching fit. There is an uneasy truce between Paris and London at present, but relations could break down in the second half of the year when France takes the reins of the EU presidency. Much of Sarkozy's ambitions for the EU go against Brown's professed Anglo-Saxon, non-interventionist liberalism. An early salvo was fired when Sarkozy had a reference to competition struck from the text of the EU Treaty: Brown was reportedly incandescent. Pushing for a Blair Presidency will unnerve Sarkozy's potential rival.
Third, and most importantly, Paris sees the Presidency of the EU as a negotiable. Yes, Sarkozy will support Blair, but do any other nations seriously want to see the architect of the Iraq invasion as their President? Blair looks like a man of the past at home, his record is unclear and there remain shady legal issues over honours (not to mention activities carried out in the war on terror). He was unable to persuade Britain to join the Euro, to sign up for the cross-border zone or to support the old Constitution. Britain was semi-detached from the "core" EU and Blair's liberalism sits at odds with protectionist sentiments in many EU nations.
If Sarkozy somehow creates a groundswell of support among EU leaders for Blair, then there will be stiff resistance from rival claimants. That's when the bargaining begins. In return for placing some multi-billion euro institute on French soil, or a guarantee on agriculture funding, or interest rates, or other EU appointments, Sarkozy will drop Blair like a hot pomme de terre and support whichever Luxembourg nonentity rival EU leaders back for the Presidency.
Blair should watch himself where the French president is concerned. Again.
