Planned EU tax could kill mobile TV - chip maker

By Tarmo Virki

HELSINKI (Reuters) - European Commission plans to introduce a 14 percent tax on cellphones with TV receivers would kill the potentially lucrative market before it ever takes off, a senior official at the world's top mobile TV chip maker said.

On Dec. 10 the Commission sent member states a formal proposal to reclassify some phones as "multi-functional devices", which would trigger additional taxes on phones with TV receivers.

"It's crazy. This would definitely be a killer," said Azzedine Boubguira, head of marketing at Paris-based DiBcom.

Phone makers and operators are keen to tap the potentially lucrative market for mobile TV broadcasts, with the EU Commission citing a global market forecast of 7.8 billion euros ($10.9 billion) in 2013.

For mobile TV -- which so far has been launched in just a few countries, mostly in response to the high cost of the phones needed to show it -- an additional 14 percent tax would be another major blow.

"No-one will pick it up. No-one. We were thinking: will people be ready to pay for the subscription, but now they are not being able to buy even the handset," Boubguira told Reuters in an interview.

He said the problem will also put off handset makers who have so far introduced only a few models which can receive TV broadcasts.

"There won't be demand, there won't be phones and there won't be the market," he said.