Research and resources

Released April 2013

This report examines 64 Universal Service Funds, how they are currently meeting their objectives and what mobile’s role is in delivering universal service and access. It concludes that most funds are not achieving their stated goal of widening access to telecommunication services and that alternative market-based solutions are more effective. The study estimates that more than one-third of the 64 funds surveyed have yet to spend any of the contributions they have collected and that more than 11 billion USD remains undisbursed—money that could otherwise be used to extend rural coverage or lower the cost of mobile ownership.

Released December 2012

This latest tax report explores the economic impact of mobile telephony and mobile-specific taxation in nine Latin American countries: Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Panama, Peru and Uruguay. It shows that the mobile industry contributed an estimated $177 billion USD to the economy, representing 3.5 per cent of GDP.

However, despite these positive socio-economic contributions, mobile consumers and operators in Latin America face a significant taxation burden. The report highlights a number of cases where mobile telephony is taxed more heavily than other sectors of the economy; for example, Brazil and Colombia impose higher sales taxes upon mobile consumers compared to other sectors, and consumer taxes account for more than a third of call charges in Brazil. Additionally, operators in some countries are subject to license fees, turnover taxes and other government-mandated fees such as property taxes. In 2011, the mobile operators and the ecosystem in Latin America paid almost $54 billion USD to national governments in taxes and regulatory fees, an increase of 30 per cent compared to $42 billion USD in 2008. The study shows that the penetration and usage of mobile services in Ecuador and Uruguay dramatically increased following the removal of mobile-specific taxes in 2007 and 2008. Conversely, in Mexico and Panama, where taxation has recently increased, penetration and usage have both contracted.

Released November 2012

The report ‘What Is the Impact of Mobile Telephony on Economic Growth?’ provides the first estimates of the impact of mobile data usage on GDP growth in developed and developing markets. The report draws from research of data usage and economic growth across 14 countries provided by Cisco Systems based on their Visual Networking Index (VNI), as well as Deloitte studies on the productivity impact of mobile in 79 countries and the impact of 3G penetration across 96 countries.

Released May 2012

This report examines the economic impact of mobile telephony and the impact of mobile-specific taxation in Turkey. It highlights that mobile consumers in Turkey pay the highest taxation as a proportion of mobile service costs in the world. Taxes in 2011 represented 48.2 per cent of the Total Cost of Mobile Ownership (TCMO) 1 for the average Turkish consumer against a global average of just 18.2 per cent. As a result, mobile penetration in Turkey lags behind other European and neighbouring countries. An analysis of countries that had a lower penetration than Turkey in 2000 shows that penetration in all of these countries has outpaced Turkey by 2011.

The report indicates that lowering taxes would increase revenue for the government in the medium term. Modelling the impact of reducing a combination of taxes to 38 per cent of the TCMO in 2012, the report shows that the government would recoup more tax revenues in 2015 and thereafter, as the mobile market grows and the deployment of mobile broadband expands. The report also provides an analysis of the impact of mobile telephony on Turkish citizens and the economy.

Released November 2011

This global tax benchmark reviewed the application of tax to the mobile sector for 111 countries. The report found that the average increase in tax, as a proportion of mobile usage costs, rose by over one per cent from 16.9 in 2007 to 18.0 per cent today, and that taxation as a proportion of the total cost of mobile ownership, increased from 17.4 per cent in 2007 to 18.1 per cent today. Some 63 countries levy mobile-specific taxation in addition to general sales taxes.

Regionally, Europe shows the highest average tax as a proportion of TCMO, with Turkey maintaining the top spot as mobile consumers pay nearly 50 per cent in taxes. Asian consumers generally pay the lowest tax as a proportion of mobile service ownership, due to relatively low VAT rates and limited mobile-specific taxation, however Pakistan ranks third with tax as a proportion of TCMO of 32 per cent, due to high fixed and variable taxes on mobile ownership and usage. Of the ten countries with the highest tax as a proportion of TCMO, five are African nations.

Released September 2011

A new type of tax, a surtax on international inbound call termination or SIIT, has emerged in popularity in Africa. This tax centrally fixes the prices that operators can charge when terminating international inbound calls, which distorts price competition and negatively impacts on business and consumers. This report found that where the SIIT has been imposed, the level of inbound international traffic has fallen and prices of outbound calls have increased due to the reciprocation of higher termination prices by operators in other African countries.

Released September 2011

Since the Kenyan government’s abolition of the VAT on handset sales, mobile penetration has increased from 50 per cent to 70 per cent. The mobile industry is a significant contributor to Kenya’s economy, contributing more than KES 400 billion annually, and employing almost 250,000. This case study explores how Kenya’s abolished mobile handset taxes have made mobile services more affordable for the wider population, boosting the Kenyan economy. The report shows that mobile operators will contribute 33 per cent more in tax this year than they did prior to the handset tax slash and will contribute around 8 per cent of Kenya’s GDP in 2011.

Released 2009

Mobile communications has a profound impact of social and economic development, including:

This report updates the quantification of the economic impact that the mobile industry has in each of the East Africa Community member states: Kenya, Rwanda, Tanzania and Uganda. It also assesses the taxation structure on the respective mobile industry and analyses the effects that lowering excise duties can have on the mobile industry and government tax receipts.

• delivers universal access
• delivers universal services, for example mobile phones account for around 95% of all telecoms connections in East Africa
• boosts GDP, as demonstrated through recent analysis by Deloitte that shows that a 10% increase in mobile penetration leads to a 1.2% increase in GDP in the long-run across developing countries.

Released 2008

This report estimates that, between 2000 and 2012, each dollar invested by the mobile industry will result in around $0.80 earned in tax revenues by governments. For the same period more than $70 billion in tax revenue is expected to be generated by the mobile industry however the potential tax revenues could be even greater.

While the majority of African governments levy luxury taxes on air time, handsets and equipment, these taxes are borne by consumers and have a negative impact on affordability. The report demonstrates why governments can afford to tax mobile phones as a common good and not a luxury.

Released 2007

International gateways (IGW) are the services through which international calls are sent and received. While most developed markets now have fully competitive international telecommunications markets, many countries in the Asia-Pacific, Middle East, Africa and Latin American regions have yet to liberalise IGWs and monopoly supply continues. For developing countries to fully share in the globalising economy, it is essential that their IGWs be fully liberalised to allow competition and private investment.

This report demonstrates how the introduction of competition into the international gateways market can reduce call prices by up to 90% and double call volumes. The study measured the overall outcome of liberalisation in terms of prices, traffic volumes, demand elasticity and the wider economic effects in addition to the relative success of different approaches to liberalisation.

Released 2009

Mobile communications has a profound impact of social and economic development, including:

This report updates the quantification of the economic impact that the mobile industry has in each of the East Africa Community member states: Kenya, Rwanda, Tanzania and Uganda. It also assesses the taxation structure on the respective mobile industry and analyses the effects that lowering excise duties can have on the mobile industry and government tax receipts.

• delivers universal access
• delivers universal services, for example mobile phones account for around 95% of all telecoms connections in East Africa
• boosts GDP, as demonstrated through recent analysis by Deloitte that shows that a 10% increase in mobile penetration leads to a 1.2% increase in GDP in the long-run across developing countries.

Released 2007

This report builds on a 2005 report Tax and the Digital Divide and extends the benchmark of taxes levied on the ownership and use of mobile phones to 101 countries, representing about 85% of the global population. From a sample of 57 developing countries, the report finds that a 10% increase in mobile penetration leads to a 1.2% increase in the annual growth rate in GDP.

It analyses the impact of reducing/removing consumer taxes on mobile services through considering the impact of tax changes on a reduction in the price charged to the end customer and the impact this change will have on mobile penetration and usage, and the subsequent impact on tax revenues and GDP.

Released 2006

This report examines how Universal Service Funds are currently meeting their objectives and what role mobile plays in delivering universal service and access. The report makes recommendations that governments regard market forces as the primary means to extend access and connections to mobile communications. Universal service funds should play a secondary, ‘last resort’ role in the provision of access to communications.

Released 2006

This report examines the impact of regulation on the development of the sector, looking specifically at the sub-Saharan region of Africa, and identifies the key elements required for a best practice regulatory environment.

Specific recommendations in the report include:

For governments:

• Establish a Telecommunications Act that enshrines the principles of fair competition, regulatory independence and reflects long term policy goals, linked to national, social and economic development targets
• Create an effective National Regulatory Authority, which is independent from both undue political and financial pressures and is staffed by appropriately trained professionals.

For regulators:

• Develop appropriate resources and skills, in particular with regards to economics, to assess the impact and appropriateness of regulatory policies, and develop and communicate a clear set of regulatory policy objectives and targets
• Implement consistent and transparent regulatory policy, and conduct regular consultation with stakeholders.