Taxing troubles for mobile content

There’s little music in this year’s Budget for the nascent Rs 1,200 crore mobile content industry, which provides ring tones, wallpapers and movie clips to India’s 160 million mobile telephone subscribers. Content providers will now have to pay service tax and the education cess, which will total to around 12.24 percent on all services provided. Consumers generally bear these costs, but mobile content companies aren’t sure whether this will work in their case.

The average revenue per user (ARPU) for Indian mobile phone companies is Rs 300-350 a month, indicating that customers don’t-and wouldn’t like to-pay more.

Any price increase is bound to have an effect on consumers. A price increase could discourage users from downloading content, which in turn, will hurt the content providers.

By most accounts, in any deal, 50 percent of the revenue goes to the service provider, 30 percent to the content copyright holder and the rest is marked for content providers-companies, which buy rights to content from movie production houses, media firms and music companies, repackage them for use on mobile phones and market them.

The mobile content industry also have to live with another problem: according to a report by the Internet and Mobile Association of India (IAMAI), a large proportion of India’s mobile users are opting for low-end handsets that don’t support the products content providers offer.

Source: Mint