Japan Ponders Wi-Fi Device Tax

The U.S. government is encouraging Japan to drop a proposal to tax users of
Wi-Fi devices and high-bandwidth wireless local area networks . Doing
so, it claims, would result in dampening demand and slowing development of wireless
Internet services.

Like most industrialized nations including the United States, Japan already
imposes fees on licensed, commercial providers of spectrum in order to
promote proper airwave management and to discourage the warehousing of
spectrum by exclusive holders.

In late July, the Japanese Telecommunications Ministry published a study
recommending extending the fee regime to products designed for unlicensed
radio use, including standards-based wireless devices. The agency said the
new fees will be used for spectrum administration and R&D costs.

The overarching goal of the plan, according to the agency, is to pave the
way to bridging the digital divide in Japan. An open comment period ended Aug. 27, and the Ministry plans to submit a final version to the Japanese legislature early next year.

Openly calling the proposed fee a tax, the U.S. comments, drafted by various
agencies of the Commerce and State Departments, urge Japan to “reject any
suggestion that unlicensed users … should be subject to usage fees.”

The U.S agreed with the commercial fees but said the “logic” should not
extend to unlicensed wireless devices.

“Such unlicensed device users have no ability to warehouse spectrum, since,
by definition, the spectrum is not dedicated to particular users,” the
comments state. “Furthermore, because spectrum tends to be intensively used,
incentives to maximize efficiency are already high.”

The Information Technology Industry Council (ITI), a U.S. trade group that includes
IBM, Cisco and Intel — major players in the Japanese wireless market —
followed the U.S. comments with its own remarks expressing strong concerns
about the proposal.

“Taxing unlicensed spectrum is inconsistent with common international
practices and, to date, no country has adopted such a tax,” said Rhett Dawson, ITI president
and CEO, in a statement. “If Japan creates a new system, it could
set a dangerous precedent for other countries and have a severe impact on
the growth and expansion of global markets.”

In its official comments, the ITI said it supports the right of any country
to establish and administer its own spectrum regulatory regime, but argued
that the new proposal is contrary to Japan’s national goal of creating a
ubiquitous networked society.

“ITI believes that the macroeconomic benefits of maximizing the deployment
of radio local area network (RLAN) devices will be far greater than the
potential revenue generated from imposing this proposed tax,” the comments

According to a U.S. Commerce Department report, the Japanese
telecommunications market is currently shifting from traditional wireline
services to broadband and wireless services. Commerce calls the wireless
sector of the Japanese telecommunications market “especially vibrant.”

The Commerce report also says Japan is unique because 70 percent of its
Internet users can access the Web through wireless devices.

“[The Japanese Telecommunications Ministry] has stated that the fees are
necessary to bridge the digital divide in Japan. ITI has as its goal the
maximization of broadband and Internet access for all consumers,” the ITI
states. “However, the method implemented to achieve this goal should not
have the unintended affect of stifling innovation and inhibiting the growth
of technologies that could help bridge the divide on their own.”

A Commerce Department official told internetnews.com that the
Japanese have been surprised at the reaction to the plan and that it is
being misinterpreted. The official said the Commerce Department expects to see a final version in mid-September.

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