Will NBN tax lead to higher broadband prices?

Alex Kidman 13 December 2016

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Government proposal would see a broadband levy to fund regional NBN rollouts.

The funding around the rollout of the National Broadband Network has long been a highly contentious issue, all the way back to the project’s initial implementation under the then-Rudd government, through to the Coalition switch to a mixed technology model and a begrudging admission that it would cost quite a lot more than the originally touted $29 billion.

The latest funding idea to cover the costs gap for the NBN being touted by the Turnbull government according to the SMH would see ISPs hit with a levy designed to subsidise the cost of regional NBN rollouts.

Currently the entire NBN scheme is nationally funded across the line, but under the scheme, the funds raised by the Regional Broadband Scheme would see any provider offering fixed line services hit with an introductory $7.30 charge for every fixed line service, rising over time to $8 per connection by 2022. Services that would dodge the charge include services under 25Mbps, fixed wireless and satellite services and services transitioning to the NBN such as Optus and Telstra’s cable networks. What it does encompass aside from NBN services would be any other provider in those areas, such as TPG’s existing fibre-to-the-basement services.

The government estimates that some 10% of fixed line non-NBN services would be affected by the levy. It’s expected to raise $370 million from NBN and $40 million from non-NBN providers.

The move comes despite recommendations of the Vertigan report, which specifically called out such a levy as a poor idea unless the NBN itself were to be split up into separate business units.

What will this mean for broadband prices?

In the immediate term, it’s not likely to change broadband pricing in Australia, if only because there’s a long road ahead of the government from proposing legislation to it actually passing parliament and being implemented in the real world.

That being said, the effect of such a levy would almost certainly be passed onto consumers, although it would be interesting to see if this leads to a two-tier NBN system, as some providers already do for ADSL services that distinguish between metropolitan and regional zones.

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