The ACCC’s proposals would affect the costs facing both NBN Co and its competitors, while having price implications for broadband consumers
A levy to finance essential broadband services outside urban areas
On 15 November 2024, the Australian Competition and Consumer Commission (ACCC) published a consultation and position paper on its proposed approach to calculating the Regional Broadband Scheme (RBS) levy. The RBS levy was enacted through the Telecommunications Legislation Amendment (Competition and Consumer) Act 2020 and is imposed on all fixed-line superfast broadband network providers in Australia with more than 2,000 connections, requiring them to pay a monthly charge for each premises with an active 25Mbps+ service. Its aim is to ensure transparent and sustainable funding for essential broadband services in regional, rural and remote areas, offsetting the financial losses of fixed wireless access (FWA) and satellite communications services that NBN Co provides in those parts of the country. The legislated levy, which is capped at A$7.10 (£3.65) per month in the first eligible financial year and then indexed annually by CPI, can only be changed to an amount below the cap by the Minister for Communications. The current levy amount is $8.26 (£4.25) per month for each chargeable premises, which includes a base component and a negligible administrative fee.
The ACCC is seeking input on the appropriate cost model, time period and type of losses to compensate
The ACCC’s initial report and advice to the Minister on the RBS levy was provided in October 2020. In that report, the ACCC was required to use the financial model and methodology developed by the Bureau of Communications and Regional Research; however, future reporting provides the regulator the opportunity to consider other approaches to the calculation of the levy. The ACCC is obligated by law to review the RBS levy at least every five years. Consequently, its consultation seeks stakeholder comments on several threshold issues, specifically whether:
A building block model (BBM) is more appropriate for calculation of the base component than a discounted cash flow (DCF) model, which was required in 2020;
NBN Co’s historical losses incurred in the supply of FWA and satellite services should be excluded from the calculation (i.e. only forward-looking losses should be considered); and
The modelling period for the calculation should be five-years instead of the 20-year period the ACCC was required to adopt in 2020.
In parallel, the ACCC is also seeking comments on a range of more detailed modelling and forecasting issues. This includes how its advice could be adapted should the RBS levy be modified in light of a broader, ongoing government policy review of universal services, which is exploring changing market dynamics in Australia and the role of alternative technologies, such as satellite.
Widening the contribution base to include 4G/5G FWA services would reflect changing consumer preferences
Written submissions can be made until 13 December 2024 and will be used by the ACCC to develop its (non-binding) advice to the Minister, which must be delivered no later than 26 May 2025. One of the most notable aspects of the consultation is the question of whether to exclude historical losses from the RBS levy calculation. These losses, incurred since the NBN build phase began in 2010, are currently factored into the levy. However, the ACCC currently considers that historical losses should not be included in the calculation. It is concerned that including them would conflict with the promotion of market contestability and competitive neutrality, and could also disadvantage non-NBN providers and harm consumers. Another remarkable proposal – and one that may well please NBN Co – is for the Government to reconsider the RBS charge base. This currently only applies to chargeable premises supplied by fixed-line infrastructure and excludes 4G/5G FWA, which the ACCC notes has seen rising availability and adoption in metropolitan areas. The regulator therefore considers that a broader charge base could minimise market distortions and promote economic efficiency, reflecting changing consumers preferences, and should be adopted by the Government using a “measured approach”. While this could help distribute funding responsibilities across a larger number of consumers, the net effect may be that it introduces new costs for customers of non-NBN providers.
