Australian Communications Minister Mitch Fifield announced today that the government aims to create a new Regional Broadband Scheme to raise roughly AUD40 million (USD30 million) a year to help pay for the expansion of the National Broadband Network (NBN) in rural areas, via a new levy on non-NBN-based telecommunications companies. According to the Sydney Morning Herald, the move goes against the advice of the government’s own expert panel, which warned that such a levy would cause ‘greater distortions than it is intended to remedy’, whilst the Department of Communications admits that the cost of the scheme would largely be passed on to consumers through higher prices.
The Morning Herald continues that the new Regional Broadband Scheme – if approved by Parliament – would see broadband network operators outside of the NBN programme pay a levy of AUD7.30 for each fixed connection in the first year, rising to AUD8.00 per connection by 2022. Exemptions would be granted for telcos with fewer than 2,000 customers as well as operators such as major providers Telstra and Optus, which are transitioning their networks to the NBN, but the levy would hit rivals such as TPG and Opticomm. Phil Smith, Opticomm’s chief regulatory officer, was quoted by the newspaper as saying that the proposed scheme would force the company to increase its prices or risk going out of business, stating: ‘This could cripple companies like us … This would take 30% of our revenue straight off our bottom line … This is a terrible instrument to enforce on a small number of players – it’s so anti-competitive it’s not funny.’ Mr Smith added that Opticomm could support a levy applied across the telecoms sector but not the narrow levy proposed by the government. According to the government’s calculations: ‘non-NBN fixed line networks are currently estimated to provide 10% of fixed line services in operation.’