We've seen protests over the price of bread and protests over the price of milk, but we might want to prepare ourselves for something new: protests over the price of a gigabyte, like we're seeing in Hungary, where thousands have marched through downtown Budapest to protest a proposed tax on Internet use and have even taken to throwing old computers at government buildings.
The Internet tax is part of Prime Minister Viktor Orbán's 2015 budget proposal, and it would add a surcharge of 150 forints — about 60 cents — to the cost of every gigabyte uploaded and downloaded in Hungary. Orbán, head of the conservative Fidesz Party, has tried selling the tax as a reasonable one. It will, his government has pointed out, be charged not directly to end users — you and me — but to Internet service providers. And those companies, the government has pointed out, are highly profitable. The tax follows along the lines of an existing, less-controversial tariff on telephone services. And the Orbán government is playing up the idea that the accumulated funds, which would add up to billions of forints, could go to building out broadband access in rural Hungary. Already, after initial protests this week, the Orbán government began what one European Commission spokesperson called "polishing it a bit," adding a monthly cap on the proposed tax that is rumored to be 1,000 forints ($4 U.S.).
Hungarians, through, are already paying quite a high price for Internet access, at least compared to other Europeans, and are concerned that ISPs will pass on the cost of the tax to them. Data from the Finland-based telecom analyst firm Rewheel, which pushes for competitive broadband markets, says the price per incremental gigabyte in Hungary is up to $13. Compare that to Finland, where the price hovers around $0.25.
But the real worry is that even a small increase in Internet costs would be enough to keep some Hungarians from using the Internet more. Pál Zarándy is a senior partner at Rewheel. One concern, as Zarándy sees it, is that Orbán's plan will matter more for mobile broadband usage than it does for fixed broadband use. That's because consumers connecting to the Internet from their home or business will find it harder to curtail their Internet usage and avoid hitting the cap. They'll grumble, pay it and be done.
Mobile broadband users, though, are younger and more likely to closely track how much data they are using. According to a Rewheel analysis, mobile data consumption in Hungary is less than a fifth of a gigabyte per month per person, among the lowest in Europe, compared to 1 GB in Estonia and 1.5 GB in Sweden, Europe's mobile-data-hungriest country. Mobile broadband growth is a sign of young people getting online: According to data from the Pew Research Internet Project, 79 percent of those 18 to 24 in the United States say that they have a smartphone, while that number drops to 18 percent of those older than 65. One in four Hungarians is under 25. Mobile data is likely key to that country's Internet future.
Reagan McDonald of the international digital rights group Access argues that Orbán is simply rent-seeking with no larger social purpose. "It's not a first for Hungary," she writes in an e-mail, "who has similarly taxed phone communications and other such networks and is now trying to harness a growing market — note that at the same time, taxes on personal income are going down, so the new fiscal regime adds a burden on the poorer segment of the population to connect."
Of course, there's more than mere gigabyte-pricing angst going on in the streets of Budapest. Orbán is considered pro-Russia, and the protests are read by some to be part of a general rejection of his administration and his Fidesz party — especially what's seen as its anti-populist tendencies. But none of that overrides that some Hungarians think that they're simply paying too much to get online. And that sentiment is being voiced by others. A spokesperson for Neelie Kroes, the outgoing European Commission vice president in charge of Europe's "digital agenda," has called Orbán's proposed tax "a terrible idea," and Kroes has supported the protests.
Zarándy, the Rewheel analyst, finds Europe's outrage over Hungary's proposed Internet tax myopic. The European Commission hasn't come out against zero-rating, which is when telecoms and content providers cover the costs of data so that their services don't count against users' data caps.
"There is a fundamental conflict of interest between selling open Internet gigabytes and promoting their own online non-Internet content," argues Zarandy. When it's far less expensive for a content provider to buy gigabytes than it is for the average consumer to do it, the incentives are for the creation of a non-neutral network where some content providers are in a great position to sell cheap content. In countries like Finland, where the costs for Internet access are low for everyone, there's less incentive to embrace the sponsored Internet. In countries like Hungary, where the data costs are relatively high, the natural tendency is for consumers to look for places where their data consumption can be subsidized by others.
If you accept that idea, then it follows that what the protesters in Budapest are rallying for isn't just cheap online access but an Internet where they are free to roam where they want. Which might explain why there are so many of them in the streets.