An article on Yahoo Tech news has posed an interesting question, over the last few days, and it’s one that may very well hold a lot of significance for the entire mobile phone industry.
Basically, they ask, when is a mobile phone not a mobile phone?
What may seem like a bit of nonsense that’s a pure set up for a joke, is a question that could become very, very important for anybody who likes their mobile phones big, powerful, and multifunctional. It’s that ‘multifunction’ part that’s the biggest issue, as the European Commission are set to vote on whether top-end mobile phones, big boys like the X1 Xperia or the upcoming Nokia N97, fall under the heading of ‘mobile phones’ or ‘multifunction devices that do mobile telephony’. It’s a big distinction, too, because if they are reclassified as the latter, their price may well be set to increase.
To understand the reason behind it, we need to look back about 12 years, to the formation of the Information Technology Agreement (better known as the ITA). Back then, the world’s leading trading parties all came to an agreement:
To help boost the global economy, all computer-related equipment would have zero import duties placed on them.
Or, in other words, no extra import tax was added on to things like PCs and mobile phones. There was no extra charge or tax to import those items, and because of that, they flourished.
The problem now, according to parties within the European Commission, is that they never expected things like mobile phones to explode in functionality like they have. Reading between the lines, it seems that they didn’t expect the huge wave of convergence that’s rapidly altering the world of mobile phones.
Put simply, tax officials within the Commission believe that the ITA is being stretched beyond its original purpose, and that mobile phones that let you watch TV or find your way with GPS aren’t actually just mobile phones any more, and therefore are liable for import duties.
There are a couple of issues with that, right off the bat. First of all, you can see how this undoubtedly ties in with the so-called credit crunch, currently going on round the world. We’ve seen various measures undertaken to try and rectify it, to stop the rot, as it were, including things like the drop in VAT to 15% (which may or may not be an utterly nonsensical idea, but it does beg the question of why the government aren’t doing something to sort out base rates and GDP, instead of encouraging people to consume more). We’re in a state of economic crisis, as the newspapers tell us every day, so it surely seems a simple equation that if the EU puts prices up on items, then sales of them to cash-strapped people, even to power users like me who badly want top-end mobile phones, will go down.
That drop in sales is going to lead to one inevitable conclusion: less sales, and less demand, leads to less innovation.
However, what this situation tells us about the European Commission itself is also interesting. It’s interesting to see that while part of the Commission is pushing for import duties to be added to top-end mobile phones, Telecoms Commissioner Viviane Reding is pushing for more features to be rolled out to more mobile phones, specifically, mobile TV. That ideal is very much at odds with what tax officials are pushing for, to the point where even Martin Selmayr, Reding’s spokesman has openly stated it. It’s eminently clear, from that, that not everyone in the Commission thinks the reclassifying of mobile phones is a good thing.
So, if people within the EU think the idea’s not sound, where, in fact, did it come from? Well, there are rumours but it should be made very apparent that these haven’t been proven, and at the moment, are just baseless rumours. However, there are rumblings that makers of GPS and technologies that mobile phones are starting to pack in aren’t happy about their own businesses being affected by sales of mobile phones. After all, the central principle of convergence is one box that does everything, which doesn’t leave much room for standalone GPS gadgets, for example.
With that in mind, it’s time to answer the question in the title of this post: is the price of top-end mobile phones really about to increase?
Well, fortunately, despite what Commission tax officials want, it’s by no means certain that it’ll actually happen. If you move out from the EU, you’ll find that the idea of adding import duty back on to mobile phones is not a particularly popular one, with both the US and Japan filing formal complaints with the EU and the World Trade Organisation.
Secondly, there is another ray of hope in the form of printers, since they’ve attracted the same change in import duties as is being proposed for mobile phones. However, Hewlett-Packard and Kip didn’t take it lying down, and took the matter to court, where the judicial verdict was that a multifunction device should be judged on its main feature. In the case of a printer, if it’s main function is printing, with copying stapled on, for example, it should be viewed as a printer, and thus be exempt from paying import duty.
Presumably, by the same logic, a multifunction device on which the main function is clearly mobile telephony (as it undoubtedly is on the X1 Xperia or Nokia N97… they may be convergence devices, but they’ll never not be mobile phones), then it should be classed as a mobile phones, and not, say, as a sat-nav.
Using that logic, and thinking rationally, we can answer that question in the title; whilst it is possible that the Commission may vote to make mobile phones more expensive, given the opposition round the world, and the fact that it’s very easy to prove a mobile phone is in fact a mobile phone, then it’s probable it won’t actually happen. At the moment, though, no-one can say for sure…
Want to get an incredible, top-end mobile phone before the EU even vote on this issue? Grab yourself the X1 Xperia today!
