Vodafone slams NBN tax amid "spider's web" of telco payments

Vodafone slams NBN tax amid "spider's web" of telco payments

Proposed legislation would establish additional fee for telcos to prop up the NBN

Credit: NBN Co

Vodafone Hutchison Australia (VHA) has slammed the government’s proposed National Broadband Network (NBN) levy scheme, suggesting it would merely add duplication to what already amounts to a “spider’s web” of “anti-competitive” payments in the telco industry. 

The federal government reintroduced its proposed Telecommunications (Regional Broadband Scheme) Charge Bill, sometimes referred to as an ‘NBN tax’, into Parliament in November last year as a legislative means to help subsidise unprofitable NBN fixed wireless and satellite services

The idea was first tabled in 2016, and if passed by both houses of Parliament, would establish a requirement for all telco carriers to contribute funding at a rate of approximately $7.10 per month, per chargeable premises -- a fee which would likely be passed onto end users. 

The legislation was initially introduced into Parliament in 2017 but lapsed and, while it was reintroduced late last year, it almost immediately was referred to a Parliamentary Committee inquiry.

In its submission to the inquiry, VHA criticised the proposed levy, suggesting it would only add a duplicate level of payment transfers to an already crowded system of such mechanisms throughout the telco sector.

“VHA has strong concerns with the (Regional Broadband Scheme) Charge Bill 2019 as it introduces yet another duplicative, complicated and inefficient subsidy scheme on top of a spider’s web of large, opaque and anti-competitive transfers which already plague the industry,” VHA chief strategy officer and corporate affairs director Dan Lloyd said in the submission, dated 20 December 2019.

“We find it surprising that the Government is proposing to introduce yet another tax on the telecommunications industry without following through on the Productivity Commission’s clear recommendations in its extensive review of the large, inefficient and anti-competitive subsidy regime already in place – the Universal Service Obligation (USO),” he added.

The submission goes on to suggest that the Regional Broadband Scheme (RBS) should be assessed against key principles of fair and efficient taxation. 

According to Lloyd, usually great care is taken to ensure that taxation and other subsidy mechanisms are designed so as to achieve their stated purpose in a targeted manner, to guard against inefficiencies and anti-competitive outcomes, and to ensure investment and competition can flourish.

However, Lloyd claims, the RBS itself does not pass these tests in isolation and cannot possibly pass these tests when added to the list of pre-existing “opaque subsidy and taxation mechanisms”.

“In light of the Government’s Deregulation Taskforce to drive improvements to the design, administration and effectiveness of government regulation to ensure it is fit for purposes, VHA believes the RBS is out of step and out of date,” the submission stated. 

“Not only will the RBS perpetuate the trend of opaque and anti-competitive telecommunications policy, it will chill investment in both fixed and mobile telecommunications infrastructure during a time of weak productivity and growth when investment projects are sorely needed.

“As well as the more obvious concerns that the proposed tax is based on 2015 costings and NBN will pay the majority of the RBS to itself, it is based on the false premise that NBN’s ‘commercial’ fixed-line networks are currently cross-subsidising its ‘non-commercial’ fixed wireless and satellite technologies,” Lloyd said.

The submission said VHA instead believes that reform of existing ineffective policies and subsidy schemes into aligned, coherent and efficient arrangements will deliver better outcomes for regional Australia and NBN’s regional services.

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