nbn™ News: Will a New Tax be Imposed and Why?

February 24th, 2017 - Get new posts sent straight to your inbox, click here. AussieBB

The Australian Government is seeking to impose a fixed line levy on internet telcos that run their own high speed infrastructure.

According to itnews, the government expects the levy to raise around $40-$60 million a year to help pay for the Regional Broadband Network.

But the proposal flies in the face of recommendations made by the Vertigan review of the nbn™ back in October 2014, primarily due to its lack of scope.

Who’s affected?

The government only wants to levy providers who run their own high speed networks. Telcos such as Aussie Broadband and Telstra are exempt, as they are using the nbn co, but companies such as Opticomm and TPG – who run their own high speed broadband networks – would be hit with the charge.

Companies that have less than 2000 customers would also be exempt.

Why is it happening?

As  pointed out by Totaltel, the nbn co currently cross subsidies both fixed wireless and satellite services with revenue generated by fixed line operations. However, in metro areas nbn™ is facing more competition than anticipated by so called ‘Altnets’ ISPs that provide fixed line high speed internet but aren’t using nbn™ infrastructure.

We’re all familiar with the ongoing cost blowouts of the nbn™ rollout.  Under the new RBS scheme, nbn™ would cover about 90% of the costs, and levies raised from Altnets would cover about 10%.

Who recommended this levy?

Back in October 2014 the Vertigan review of the nbn™ recommended subsiding the rollout of the regional nbn™ under the condition that nbn™ was broken down into smaller business units.

This is not something the Turnbull Government has openly endorsed. Their answer to regional development can be found on the RBS reform package at the Dept. of Communications & The Arts website.

How much would the levy cost consumers ?

The proposed levy would start at $7.30 per fixed line connection for the ISPs, moving up to $8 by 2022.

What are the positives and negatives to consumers?

Both ISPs and the government admit the costs of this levy will likely be passed onto the end users. That’s certainly a downside for consumers choosing to go with non-nbn™ high speed internet service providers.

There’s a slight recoup on tax dollars, as the ISPs will cover 10% of the RBS implementation but, as already acknowledged, consumers will bear the brunt of this levy. It’s really just a segment of the population covering more of the tax bill, and that segment is the one choosing not to use the nbn™ network.

The positive outcome is that the Rural Broadband Scheme will ideally be implemented more quickly, providing internet to a regional areas of Australia.

When does the levy start?

It still needs to be passed by both bodies of Parliament, but if it does, the changes could be implemented as soon as the start of the next financial year, July 1 2017.

How likely is it that the levy will be implemented?

It’s still early days. The proposition has only just been released and there’s still further to go.

Stay tuned to Aussie Broadband for further developments.