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NBN broadband tax clears Parliament

After a number of false starts, the Regional Broadband Scheme is set to become law.
Written by Chris Duckett, Contributor

Australian fixed broadband users that are on networks capable of 25Mbps or quicker, and not connected to the National Broadband Network (NBN), will soon need to pay an extra AU$7.10 monthly charge to subsidise those connecting to NBN's loss-making fixed wireless and satellite technologies.

The Regional Broadband Scheme (RBS), also known as the broadband tax, was recommended to be passed by the Senate Environment and Communications Legislation Committee back in September 2017 and again in February, after the Bills previously lapsed.

Those Bills -- Telecommunications (Regional Broadband Scheme) Charge Bill 2019 and Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019 -- also put Statutory Infrastructure Provider (SIP) obligations on NBN to ensure it is the infrastructure provider of last resort.

"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," the government said previously in January 2018.

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

The broadband tax is set to commence in July and the charge will be indexed yearly.

Much of the debate surrounding the RBS had hinged on whether it should include mobile and fixed wireless broadband users, such as the Optus 5G Home product, with the committee stating in February that a later review should look into it.

"In the event of a material change to the NBN uptake rates, the committee agrees that the statutory review could consider expanding the levy base to include mobile services," it wrote.

Speaking at a hearing earlier this month, representatives from the Department of Communications had said fixed-line services were not directly substitutable for 5G services, and thus NBN would not lose a significant number of users to 5G.

"Our view is, and our view still remains, that mobile and fixed-line are complementary services," Department of Communications assistant secretary of broadband implementation Andrew Madsen said at the time.

"Most households have a fixed-line and they have mobile services. So there's strong growth in mobiles. There's strong growth in fixed-line, and the level of data that's being transmitted over fixed-line is growing rapidly.

"We don't see that that's going to change significantly."

As pointed out by critics, and Centre Alliance Senator Stirling Griff in the Senate on Tuesday, the RBS is based on five-year old modelling.

"The amount comes from modelling undertaken in 2015, five years ago, which relied on cost estimates and market assumptions that were true at the time. A lot has changed in five years," he said.

"The department assures us that nothing much has changed since then, but, if the original bill had passed in 2017, the charge would have been reviewed by the ACCC prior to implementation, and we would now be approaching its second review."

A Labor amendment to have the ACCC update the modelling within 150 days was passed by the Senate on Thursday, and agreed to by the House of Representatives.

Griff said the broadband tax would see users shift onto wireless networks.

"As customers go wireless, the RBS funding core will shrink, and eventually the government will have to recognise this funding method is not sustainable," the South Australian Senator said.

"I support the goal of the Regional Broadband Scheme but not the funding mechanism. I'm not alone in this. It is also the position of the Australian Competition and Consumer Commission, the Productivity Commission, Telstra, Optus, Vodafone, and Vocus. But unfortunately, it is not the position of this government."

On Thursday, NBN reported its results for the nine months to March 30, with revenue up 38%, and earnings before interest, tax, depreciation, and amortisation improving by 9% to a AU$732 million loss.

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