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Telstra hits out at monthly premises reporting of broadband tax

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With the proposed Regional Broadband Scheme (RBS), also known as the broadband tax, set to pass a AU$7.10 monthly charge onto all fixed-line broadband customers to subsidise those connecting to NBN’s loss-making fixed wireless and satellite technologies, Australia’s largest telco has hit out at the definitions set to be used in the scheme.

Responding to questions taken on notice from Friday’s hearing into the Telecommunications (Regional Broadband Scheme) Charge Bill 2019 and Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019, Telstra said while it could easily report the number of services it provides, the same does not necessarily apply to the number of premises it serves.

To meet the Bill’s reporting standards, the telco said it was told by the Department of Communications that it could ask its customers if it did not have all the information it needed.

“Telstra notes this information would be needed on a monthly basis, given the RBS is a monthly levy,” it said.

“In Telstra’s view, this would be an unreasonable and unenforceable requirement which would add significant administrative burden for all participants (customers and carriers), without delivering the necessary clarity of information.”

Should any part of the implementation be unclear however, Telstra added that the department told it that the Australian Communications and Media Authority would be providing “clarity”.

“In Telstra’s view it is unreasonable for a tax to be so unclear in its application that the drafters foresee an ongoing need for clarification by a regulatory agency even after the tax has taken effect,” the telco said.

Responding to questions it took on notice, the Department of Communications defended the modelling used for the scheme, even though it was undertaken in 2015, but said it would not release specific figures due to commercial-in-confidence issues.

“The modelling forecasts that NBN Co would make up around 95% of the fixed-line broadband market by 2020, with non-NBN networks making up the remaining 5% of the market,” it said.

“A comparison of the model’s estimates for FY2020 and information in the public domain on the number of active services on NBN-comparable networks (including evidence given by OptiComm to the Committee Hearing held on 30 January 2020) indicates that the expected number of premises connected to non-NBN networks remains very close to what was forecast in the mode.”

Once the Bills are passed, the department said the ACCC would be best placed to update the models and review if the charge should need adjustment.

Speaking on Friday, broadband wholesaler for greenfield estates Opticomm echoed previous comments and said the RBS would be largest cost to its business.

“We consider the narrowly targeted RBS tax will fail to meet its objectives and will have distortionary effects on telecommunication markets. We consider the RBS fund should be provided from either consolidated revenue or a broader tax across participants in the telecommunications industry,” Opticomm CEO Paul Cross said.

“With NBN Co bearing 95% of the costs of funding regional networks under the current legislation, NBN Co has a clear incentive to minimise costs when delivering regional networks. This will result in second-rate regional networks, cementing the city and rural divide.”

Cross also pointed to Optus’ 5G Home service as a way carriers could bypass the NBN and eat into its market share. Should this prediction come to pass, the RBS would need to be raised to replace the revenue lost.

For its part, Optus said NBN’s business case takes into account that between 15% to 20% of households would be wireless only, and wireless operators already need to pay the Universal Service Obligation.

“I think it’s also important to note that the constant commentary by the ACCC, for example, where the threat or the potential of bypass — as, I think, they call it — as an important efficiency driver of NBN also needs to be remembered as well,” Optus economic regulations director Luke van Hooft said.

Officials from the department later on Friday stated that fixed lines services were not directly substitutable for 5G services, and thus NBN would not lose a significant number of users to 5G. But should that situation happen, the broadband tax could be expanded to mobile services.

“Our view is, and our view still remains, that mobile and fixed line are complementary services,” Department of Communications assistant secretary of broadband implementation Andrew Madsen said.

“Most households have a fixed line and they have mobile services. So there’s strong growth in mobiles. There’s strong growth in fixed line, and the level of data that’s being transmitted over fixed line is growing rapidly.

“We don’t see that that’s going to change significantly.”

Madsen added the legislation requires the government to do a review within the first four years of the RBS starting, after which the government would then decide how often to do further reviews.

Speaking at the end of the hearing, NBN chief development officer Gavin Williams spoke about NBN potentially using nanosats.

“NBN satellites have got a planned life of around about 15 years, at least. So we’re five years into that,” he said.

“We’ll need to make purchase decisions on what we do in anticipation of the expiry of the life of those satellites in around about five years … my view is there could be a great opportunity for NBN to support regional Australia.

“We could well become a buyer; I don’t see a particular religious zeal on our part to be owners of satellite infrastructure and if those constellations proved to offer better, faster, cheaper service for the bush, then in the context of the time frames I’m talking about, I think we’d be very interested in exploring those kinds of technologies.”

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