A hearing in a Committee of the Australian Senate highlighted the need to redefine the scope of the tax which is intended to fund broadband services in rural and remote areas.
Background: In November 2019, the Australian Government set out a Regional Broadband Scheme (RBS) to ensure there are long-term sustainable funding arrangements in place to provide essential broadband services to Australians in regional, rural, and remote areas. The scheme addresses the need to fund the fixed-wireless and satellite network operated by the NBN in those areas, which is foreseen to incur a net loss of AUD9.8bn over 30 years. The intention of the RBS is to spread the cost across all ‘NBN-comparable’ networks (i.e. other Australian operators), with NBN Co continuing to pay around 95% of it. As a result, in parallel with the RBS, the Government introduced the Telecommunications (Regional Broadband Scheme) Charge Bill. This was immediately dubbed a ‘broadband tax’. The bill is currently under discussion in Parliament.
The tax needs a clearer scope of application: On 30 January 2020, the Environment and Communications Legislation Committee in the Australian Senate held a hearing, during which stakeholders commented on how the tax is going to be levied. One of the key issues to address is that, in its current form, the tax will apply to premises rather than services (a charge of AUD7.10 per month would apply for each premises on a network with a superfast broadband service on a fixed line). Telstra submitted that such a definition generates confusion, because there is no perfect overlap between premises and services – especially in the enterprise market. Telstra notes the Government suggested that, in the absence of information about the number of premises served, carriers could obtain this information from their broadband customers. This would result in a disproportionate administrative burden, without providing the necessary clarity.
The possible solution: In its submission, Telstra proposes that the tax apply to the residential market only. Should that not be possible, the tax should apply to services rather than premises. The operator also called for a pushback of the tax by a year (from 1 July 2021 instead of 1 July 2020), in order to make the necessary legislative changes. Other operators called for the tax to apply to mobile services too, so that competition is not distorted, and noted that the tax risks becoming a duplicate of the Universal Service Obligation Levy scheme.
