Labor pushes amendments to 'highly regrettable' NBN subsidy scheme

The AU$7-a-month levy to subsidise the satellite and fixed-wireless networks is 'immaterial' to the challenges facing NBN's business case, according to Labor, with amendments needing to be made to the RBS Bill.
Written by Corinne Reichert, Contributor

The federal opposition party has slammed the government's Bill to introduce a Regional Broadband Scheme (RBS) charge to subsidise the National Broadband Network (NBN) loss-making satellite and fixed-wireless services, calling it ineffective and poorly designed.

During the Bill's second reading debate in the Senate on Monday night, Senator Deborah O'Neill said Labor would be seeking two amendments to the draft legislation: Certainty that the charge cannot be increased from AU$7.10 per month; and a reduction in scope from affecting greenfields.

"Labor will seek to cap the government's levy charge to prevent the possibility that the base charge could increase to AU$10 per month, as currently allowed for under the draft legislation," O'Neill said, adding that any increase in the levy amount would be "unfair to families and distortionary to the telecommunications market".

"The revenue the levy raises is, in the broad sweep of things, immaterial to the challenges facing the NBN business case ... the government is seeking to apply the broadband levy to greenfield networks that have already been deployed. This is despite greenfield networks being in new development estates, where NBN Co has not spent money, has not deployed a network, is not required to deploy a network, and is not experiencing revenue leakage."

Senator O'Neill said Labor would additionally look to introduce "NBN-related transparency amendments" to increase public transparency of the network, business case, and rollout information.

O'Neill also accused Communications Minister Mitch Fifield of repeatedly delaying the Bill's passage so as to ensure that the implementation of the tax would fall into the next term of Parliament, with the levy to become effective as of July 1, 2019.

"The minister knows the revenue raised by this levy does not address the long-term economics of the multi-technology mix, nor does it establish a sustainable funding mechanism or do anything for regional investment," she argued.

"Labor considers the broadband levy to be poorly designed, the targeting of certain networks to be arbitrary, and the need to even contemplate its existence in this place to be highly regrettable."

The Telecommunications (Regional Broadband Scheme) Charge Bill 2017 proposes a AU$7 monthly charge to fixed-line broadband customers to subsidise those connecting to NBN's regional services, and was passed by the Lower House back in May.

A supplementary to the explanatory memorandum had been added by the House of Representatives at that time, prior to being passed on to the Senate, making a "minor adjustment" to the Bill by requiring greater Parliamentary scrutiny for changes to the subsidy charge amount.

The Bill had previously vested in the communications minister the power to change the cost above the AU$7-a-month amount, with the upper limit capped at AU$10 for the first financial year of its operations and thereafter to the consumer price index.

The Australian government had in January argued that the RBS and Universal Service Obligation (USO) replacement system -- the Universal Service Guarantee (USG) -- would form an "integrated package" providing both the funding for and access to regional telecommunications services.

Also being considered alongside the RBS Bill is the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017, which places Statutory Infrastructure Provider (SIP) obligations on NBN to ensure the company has a legislated obligation to connect all Australian premises.

According to the government, its decision to replace the USO with a USG underpinned by a SIP framework "highlights the importance of ensuring there is a mechanism in place to secure funding of NBN's loss-making networks".

"The proposed SIP obligations will ensure that all people in Australia are able to order a high-speed broadband service regardless of where they live, and that NBN becomes the default SIP as the network is rolled out. The RBS will provide equitable and transparent funding for the loss-making NBN fixed-wireless and satellite networks in regional Australia," it said.

"The SIP obligations and the RBS form an integrated package. One cannot proceed without the other."

The government at the time called the RBS "the most equitable and transparent way to fund broadband services" in regional areas across the nation.

"The RBS will adapt to changes in the telecommunications market over time," the government said, adding that the Australian Competition and Consumer Commission (ACCC) will be reviewing and advising the communications minister on the RBS charge amount every five years.

"The RBS has been purposefully designed to be dynamic, to adapt as the costs of regional broadband crystallise and as the market adjusts."

The committee had published its report in September, with the government at the time noting that the RBS is already built into existing NBN pricing, and that the Bill simply extends the cost to non-NBN competing wholesale broadband networks.

The Bill had come under criticism from multiple telcos, with TPG arguing that the proposed levy would be anti-competitive. The Electrical Trades Union (ETU) similarly said in its submission that NBN is placing economics ahead of consumers, arguing that the government should pay the AU$7 levy.

Telstra and Optus argued that the RBS should not apply to enterprise networks, wholesale data services, and services that are only "technically capable" of providing super-fast broadband but are not being used to do so.

Telstra claimed that the RBS had "transformed from its original intention as a 'anti-cherry picking measure' into an industry tax", and argued that telcos might not be able to determine the nature of services or the number of premises being supplied at a retail level, and that the government should change the metric to services in operation instead.

The government in April kicked off its three-yearly review of regional telecommunications services.

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