The government wants to impose an ‘NBN tax’ on superfast broadband competitors

The NBN. Picture: Getty Images

Both the Labor and Coalition governments have spent billions of dollars on the National Broadband Network as a public investment with equitable access in mind. So the prospect of private competitors coming in to steal customers away — while the NBN is still obliged to service the less profitable rural areas — has always been a sensitive issue.

Now the communications department is proposing to solve this with a levy on superfast broadband provided by companies other than the NBN.

In its NBN funding options report, the Bureau of Communications Research proposes that a tax levied on such competing services would help pay for a Regional Broadband Scheme, which would “sustainably fund the long term costs” of NBN for rural Australia.

The proposed tax would be in the form of a monthly charge to telcos competing with the NBN, with the amount depending on the number of users they provide for. Services liable for the levy would exclude wireless, satellite and DSL services delivered over a telephone exchange.

The monthly levy per high-speed line would be $7.30 in financial year 2018, going up to $8.00 by 2022. The report anticipated that the levy would be passed onto customers of those competing providers.

One high-profile target for such a tax would be TPG, which in 2013 started building its own fibre optic connections to inner city apartment blocks, leveraging loopholes in NBN regulations.

The Bureau of Communications Research anticipates there could be 380,000 connections by 2022 that could be eligible for the levy and that it may raise $40 to $60 million each year.

TPG, OptiComm and Vocus opposed the levy, while the NBN called for mobile networks that have comparable speeds to the NBN (like 5G) also be liable to the tax.

Meanwhile, iTnews reports that the Parliamentary Budget Office has estimated the Commonwealth’s net worth has dropped $8.8 billion due to the NBN. Among many factors, the PBO reportedly blamed NBN’s total losses of $8.3 billion and $1 billion asset revaluation for the negative effect, while the government’s latest loan $19.5 billion loan to NBN at an interest rate above the government’s cost of borrowing acted as a “partial offset”.