Inquiry calls for changes to government’s ‘NBN tax’

Broadband levy should be updated to take into account increased fixed wireless investment by NBN Co

A parliamentary inquiry into the roll out of the National Broadband Network in regional and rural areas has called on the government to update the modelling used to underpin a levy scheme that has been dubbed an ‘NBN tax’.

The government’s Regional Broadband Scheme (RBS) is intended to help subsidise unprofitable NBN fixed wireless and satellite services. The RBS levy will be payable by telcos that deliver “NBN comparable” fixed line services that have theoretical maximum speeds of 25 megabits per second or faster.

The Australian Competition and Consumer Commission has previously indicated that telcos may pass the  $7.09 per service levy on to consumers.

The Telecommunications (Regional Broadband Scheme) Charge Bill 2018 has passed the lower house and is currently before the Senate.

In its report the Joint Standing Committee on the National Broadband Network noted that the cost of delivering fixed wireless, in particular, has increased substantially since the government prepared its original modelling for the RBS in 2015.

NBN Co in its updated corporate plan, released in August, said it will invest $800 million improving capacity on its fixed wireless network.

The inquiry’s report noted “evidence that the fixed wireless and satellite infrastructure is required to be subsidised by the fixed line network and that according to 2015 modelling the annual internal cross subsidy has been estimated at between $700 and $800 million upon rollout completion.”

It called for the government to within two weeks to provide it with an update to the levy amount to take into account costs increases since 2015. The report said that the legislation implementing the RBS should be passed incorporating the updated figure. However, it said that the legislation should first be amended “in recognition that the RBS levy does not constitute a sustainable funding mechanism, and is better re-purposed as a level playing field competition measure.”

In its findings, the committee said that the “the revenue raised by the proposed RBS levy is immaterial to the overall challenges facing the business case for the multi-technology mix or the cost of regional service delivery.”   

The report explains: “The committee is of the view that the most useful policy function the RBS levy can serve is to establish a price signal that deters the inefficient duplication of fixed-line infrastructure, deters cherry-picking of profitable parts of the NBN footprint, and establishes a more level playing field for nbn.”

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