Australia’s Broadband Tax Starts on January 1, Here’s What You Need To Know

Australia’s Broadband Tax Starts on January 1, Here’s What You Need To Know
Image: Getty

Earlier this year the Australian government finalised its amendments to the upcoming Telecommunications (Regional Broadband Scheme) Charge Bill 2019. It ensures that regional Australians will have access to ‘essential broadband services’. To pay for this a ‘broadband tax’ will be introduced from January 1, but details on who will actually be paying this are still unclear.

What is the Broadband Tax?

The Regional Broadband Scheme (RBS), also known as the Broadband Tax, is $7.10 per user per month fee. It is being rolled out to help build networks in regional, rural and remote areas of Australia.

From January 1, 2021 it will be applied to most non-NBN fixed-in services that can go above 25Mbps, which the government considers to be ‘superfast’.

This includes fibre-to-the-premises (FTTP), fibre-to-the-node (FTTN), fibre-to-the-basement (FTTB), fibre-to-the-curb (FTTC) and hybrid fibre-coaxial (HFC) connections.

It does not include fixed-wireless or satellite connections.

Who will it impact?

According to NBN Co, the vast majority of homes currently connected to the NBN are subject to the levy.

“Approximately 7.8 million premises are currently connected to the NBN, however, approximately 300,000 premises are connected to the NBN by fixed wireless, and approximately 100,000 premises by satellite, which are excluded from the RBS levy – leaving approximately 7.4 million premises that are subject to the RBS levy,” an NBN Co spokesperson said in an email to Gizmodo Australia.

However, NBN users will not be impacted by the levy. Similarly, internet service providers will not need to pay the levy on their NBN-connected customers.

“The RBS does not impose a new cost on NBN users — the cost is already built into existing NBN pricing. After the RBS commences, around 95 per cent of the cost of funding NBN Co’s fixed wireless and satellite networks will continue to be paid for by NBN Co, whereas today it is 100 per cent,” the Department of Communications website reads.

“The remaining five per cent will be paid for by competing NBN-comparable wholesale networks. This establishes a competitively-neutral funding mechanism for broadband services in regional and remote Australia.”

NBN Co has supported this claim.

“Carriers would have to pay the industry levy for every fixed-line broadband connection on their own networks they provide that meets the speed requirements of the legislation. If a carriage service provider is providing 25 Mbps (or greater) services to end users over the NBN network, they are not liable to pay the levy in relation to those services. For those services, NBN Co pays the levy.”

Five per cent may not sound like much. But it still equates to around $490 million that now needs to be funded by telcos.

“For the remaining 5 per cent, many of these networks service medium and large businesses, which will for the first time contribute to funding regional broadband,” the government’s Regional Broadband fact sheet reads.

“It will be up to carriers serving the remaining 5 per cent of premises to decide whether some or all of the charge is passed on to their customers.”

This is something we haven’t been able to get much information on yet.

Exemptions to the Broadband Tax

In addition to NBN users, there are some further exemptions to the Regional Broadband Scheme.

According to the Department of Infrastructure, Transport, Regional Development and Communications, the first 25,000 residential and small business premises on a carrier’s network will not be subject to the levy for the first five financial years.

Alternatively, the first 55,000 “recently connected greenfield premises for carriers operating greenfield networks” will also be exempted for the first five years.

A greenfield premises is a new development that is either considered ‘broadacre’ or ‘infill’.

A broadacre premises is one that is built on undeveloped land where there are no pre-existing copper services available.

An infill premises is where a new premises or redevelopment occurs on land that already has established copper services in the area.

The department says this is to help smaller operators of these networks transition to paying the charge eventually.

The document adds that carriers covering less than 2,000 premises will also be exempt.

Telcos are still working the Broadband Tax out

At the time of writing, the Regional Broadband Scheme (RBS) is only a few weeks away. Despite this, some telcos are still finalising their approach.

“Our concern is that the RBS is a new levy on companies investing in broadband infrastructure for the benefit of Australian consumers. Not only will industry be hit with this ‘broadband’ tax, but NBN is free to overbuild the broadband networks these companies have built,” TPG Telecom Group Executive Legal & External Affairs, Trent Czinner, said in a statement to Gizmodo Australia.

“We are still working through how to manage the financial impact from the RBS.”

When questioned about this, NBN Co pointed to the overbuilding section of the Government Telecommunications in New Development policy:

To the extent market circumstances dictate an area is most efficiently serviced by one fixed-line network, this should be the outcome of normal commercial forces and does not need to be mandated by Government policy. Conversely, where an area may be profitably served by multiple competing networks, this should not be ruled out (and indeed cannot be ruled out under Australian law).

NBN Co also said that the RBS is only payable on active services. This means that if a home was served by two network providers, only the telco that was actively providing a service would pay the levy.

“NBN Co makes decisions on a commercial basis. While prevented from overbuilding in some locations under previous policy, now updated, it has also avoided a number of developments where there were no restrictions, but for which there was no commercial justification,” NBN Co said in a statement to Gizmodo Australia.

Other ISPs have remained quiet. Aussie Broadband said it was unable to provide a comment on the RBS. When pressed, the telco said it simply doesn’t have enough information to provide a comment at the present time.

We also weren’t able to secure a response from Telstra and Optus, or from a number of small independent fibre providers.

NBN Co also doesn’t seem to know how the funds from the RBS will be used to cover the cost of its fixed wireless and satellite networks.

“NBN Co will be subject to a contract between it and the Commonwealth in relation to the use of RBS funds. These arrangements are yet to be negotiated,” an NBN spokesperson said in an email to Gizmodo Australia.

To be fair, the RBS won’t impact every ISP in Australia. Any telco that is NBN-only already have their costs covered. But there are a handful that have customers on non-NBN fixed services that will need to pay up come January 1.

And despite how close this is, the question still remains: will that $7.10 per customer per month be passed on, in any way, to the end user?

Depending on the telco, the answer seems to be a resounding ‘maybe’.