‘Strategy to increase Internet usage may fail after mobile tax hike’

ICT experts cast doubt over the government’s ability to significantly increase Internet penetration in the Kingdom after it increased taxes on mobile phones and subscriptions.

They said the government’s decision to increase the special tax on mobile phones from 8 per cent to 16 per cent, and the tax on mobile subscriptions from 12 per cent to 24 per cent, will negatively affect the implementation of the ICT Strategy, which seeks to raise Internet penetration to 85 per cent by the end of 2017.

“The government contradicted itself by increasing the taxes on mobile phones and mobile subscriptions,” charged Abed Shamlawi, CEO of the ICT Association of Jordan.

“It says it seeks to encourage more people to use the Internet, but then it goes and increases taxes, forcing people to reconsider their spending on technology in general, including the Internet,” Shamlawi told The Jordan Times.

“Adoption of high-end smartphones that enable using high quality apps will drop in Jordan, as fewer people are expected to buy these phones after the new taxes,” he said.

“In addition, those who have Internet subscriptions on their mobiles will reconsider their spending, as prepaid card prices rose.”

Internet penetration in Jordan reached 69 per cent by the end of March, with about 4.4 million users, according to official figures. Smartphone penetration is estimated at about 50 per cent, according to the Arab Advisers Group.

An expert in the telecom sector agreed with Shamlawi’s prediction that fewer people will use smartphones, thus affecting Internet usage.

“Users are expected to spend less on the Internet after the new taxes, which will affect the government’s ICT strategy to boost Internet usage,” he said on condition of anonymity.

“Even those who use the Internet are expected to use low speeds and avoid paying more for higher Internet speeds, and this will affect the adoption of high speed Internet in Jordan,” said the expert.

“The government’s recent decision is illogical and will negatively affect the implementation of the ICT strategy. I don’t think Internet penetration will reach 85 per cent by the end of 2017,” he added.

But the ICT ministry’s secretary general, Nader Thneibat, disagreed.

“I don’t think [taxes on mobiles will affect Internet penetration] because the National Broadband Project, for which we floated the tender… will help increase Internet penetration significantly in Jordan,” he said.

About 35 per cent of the project has been completed so far at a total cost of $36 million.

Work on the project was halted in 2008 due to financial difficulties faced by the government.

In 2012, the government encouraged local telecom companies and others to form partnerships to complete the project, but none of them showed interest.

Later that year, the Cabinet approved floating a tender to go ahead with the project.

Work on the project started in 2003 with the aim of connecting all public schools and universities to a nationwide network of optical fibre cables. The project was expanded in 2007 to include government agencies, healthcare centres and hospitals.

Some 750 schools, as well as comprehensive and primary healthcare centres, will be connected to the network under the project.