A broadband tax for the UK?

Further to my previous post suggesting that the UK isn’t going to institute a “3 strikes” law, there is speculation that the government might instead introduce a broadband tax, where ISPs’ customers will pay and the money going to the music industry to compensate for the loses they’ve suffered through P2P filesharing. According to The Times:

Lord Carter [...] may suggest additional charges on customers’ broadband bills to compensate the music industry.

There are a number of issues with any such proposal:

Who gets the money? Obviously it should go to the musicians who actually create the music rather than to the fat cats at the big four record companies to spend on “fruit and flowers” (an industry euphemism for prostitutes and illegal drugs). And unsigned bands if they have a significant following are just as deserving of a share of the money as anyone else.

Open Content: The whole point of this proposal is as a quid-pro-quo for P2P downloads, making P2P downloads legal. Since the distinction between a legal and an illegal download will no longer exist, it follows that musicians that publish under an open content license (such as one of the Creative Commons licenses) are equally deserving of being rewarded as those who have hitherto published under a more restrictive copyright license.

Gaming the system: Should musicians be compensated strictly according to a measure of how often their work gets downloaded? If so, people might try to game the system, e.g. a musician might pay a botnet to download multiple copies of their work.

Content other than music: It is not just music that appears on P2P networks. Other material shared includes movies, TV programmes, computer software (particularly games), and books. Clearly if one deserves compensation, they all do.

Paying for what you don’t get: People are entitled to ask “why should I pay for stuff that I don’t get?” As Dave Perry, a commenter to the Times article puts it:

I don’t download ANY music, so why should I have to pay a levy on my broadband connection because other people (who I cannot influence) do? The basis of fair taxation (because that is what this proposed levy is) would be breached by this proposal.

Where does the BBC fit in? The last remark is something often said by people who don’t feel they should have to pay for the BBC since they don’t watch BBC TV programmes.  Looking ahead, television is over the long term (next 5-20 years) going to merge with the Internet, and many people watch BBC (and other) TV programmes over the Internet anyway, which brings the future of the TV license into question.

*   *   *

If these are the issues, what sort of broadband tax regime is the solution? One possible solution would involve the creation of a series of Content Compensation Funds. A CCF would be a special type of legal entity that would be authorised to spend the money raised by a broadband tax. I envisage that legislation would be needed to create the legal basis for CCFs.

A CCF might be an existing entity repurposed to the task, such as the big four music companies, performance rights organisations, and TV companies such the BBC or ITV. Maybe the Free Software Foundation could act as a CCF to fund software. Perhaps an authors’ society could fund money towards authors. It may be that new organisations are created to be CCFs. I envisage that there might be between 20 and 100 CCFs.

A CCF would be authorised to spend its budget funding content creators either for works that have already been created (the “funding post creation” model) or commissioning new works to be created (the “funding pre creation” model).

The clever bit is how the broadband tax would be distributed among CCFs. Everyone with broadband would be required to pay a monthly broadband tax. This might be a fixed amount for everyone (e.g. £5 a month) or it might vary according to the size of the broadband bill or the speed of connection. But either way, each taxpayer would decide which CCF or CCFs their payment goes to.

So Alice who likes music might channel 100% of her payment to a music-based CCF. Bob, who likes TV programmes and computer games, may channel 50% of his payment to an audiovisual CCF and 50% to a games software CCF. And Carol, who likes reading SF, may channel her payment to a science fiction CCF that commissions new science fiction works (which may be books, films, etc).

It’s often said, particularly in the USA, that the newspaper industry is dying. That may be true of newspapers printed on dead trees, but there’s still an important role in organisations that gather news. One can imagine newspaper CCFs (perhaps based on existing newspapers) that perform this role. They’ll be web-based, and their output won’t be restricted to text and still pictures.

Because there will be lots of money in the system (if 15 million broadband subscribers each pay £5 a month, that’s £900 million a year) there is the potential for fraud and waste. The “payer decides” system minimises that: if a CCF gets a reputation for being corrupt or for wasting most of its income, its income stream will quickly dry up. (Payers will be able to easily change the allocation of their payment every month via an Internet-based system). In this way CCFs will be responsive to market forces.

There would need to be other safeguards against people trying to game the system. For example a CCF might offer to give a taxpayer a reward of £2.50 for every £5 channeled their way. Any such inducement would have to be illegal. More broadly, a detailed record of a CCF’s accounts should be public and on the web (because essentially all large transactions are done electronically, this could be done without extra administrative cost, because it would be built into the accounts software the CCF uses). If a CCF knows their dealings are public, they will be less willing to commit fraud, and more likely to be caught if they do.

Another safeguard against fraud is that all CCFs would be monitored by the relevant government department. To set up a CCF one would have to pass various requirements. They shouldn’t be enormously difficult, but nor should they be absolutely trivial. The more CCFs, the better, because it gives payers more choice in where to channel their broadband tax, and makes CCFs work harder in attracting payers’ money. But also the more CCFs, the worse, because the more of them that there are, the harder they’ll be to regulate; in the extreme case if everyone is allowed to set up a CCF what’s to stop Alice setting up one and paying her £5 a month to it? Or if that’s banned, Alice and Bob could do a deal where they each pay into each other’s CCF. Where to draw the line between too easy creation of a CCF and too difficult is something that would have to be determined by trial and error.

(This article is also published at Liberal Conspiracy)

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11 Responses to A broadband tax for the UK?

  1. Pingback: UK rules out “3 strikes” « Amused Cynicism

  2. Robert says:

    How would this work internationally? A lot of the stuff I accquire via P2P networks originates in the USA and India.

  3. Pingback: Carter’s broadband tax proposal is crap « Amused Cynicism

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  9. George Nixon says:

    “eaxtreme” – Interesting blog, but reading three posts I came across four such obvious spelling errors. Doesn’t wordpress.com have a spell checker you can use? It would add professionalism to an otherwise eloquent blog.

  10. Pingback: Citizens hate copyright, admits EU Commissioner | Amused Cynicism

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