Govt to introduce legislation for broadband tax

The government is pushing to introduce a $7.10 minimum monthly broadband tax for fixed-line NBN users to pay for the future cost of the fixed wireless and satellite portions of the NBN.

It plans to both introduce and pass the regional broadband scheme (RBS) charge bill, alongside a package of telecommunications changes, in parliament's winter sitting, which wraps up on June 22.

The Communications department began consulting on the tax in December last year, and took industry submissions until February 3.

However, the result of the consultation has not been released, and at the time of publication was still listed as being “under review” despite the government’s intention to pass the tax law by mid-year.

Users of “superfast” fixed-line services will pay the tax, which starts at $7.10 a month. The tax will be charged to retail service providers, who the government has admitted will pass on the cost to customers.

About 95 percent of those taxed will be NBN fixed-line customers, while the remainder will come from operators such as TPG, which has been deploying fibre-to-the-basement services in metro areas.

Lawmakers have acknowledged the charge will make broadband prices more expensive.

However, they argue the tax is needed because of an expected shortfall in funds from a cross-subsidy that – until now – has been embedded in NBN Co’s wholesale prices.

The original NBN model intended that metro users would cross-subsidise the connections of regional and remote users.

However, with 80 percent of the NBN rollout occurring in regional and rural areas to date, it is likely that very few NBN users today are contributing to the cross-subsidy.

In addition, as NBN Co faces competition from the likes of TPG, the government claims NBN Co is under pressure to drop its wholesale prices to remain competitive. In that situation, it would no longer be able to house a cross-subsidy in rates, if they were no longer uniform.

Questions remain on the efficacy of the broadband tax, including whether it would collect enough to cover the future costs of fixed wireless and satellite and prevent any future calls on the budget to help NBN Co.