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NBN Cross Subsidy Plan Not Working So Australians May Have To Pay Higher Taxes To Keep Government-Owned Broadband System Afloat

May 8, 2017

Readers of this blog are very familiar with the problems encountered by Australia’s nationwide, government-owned broadband system called NBN, or the National Broadband Network. Critics have called the system “broken beyond repair” and have accused government officials of focusing on outdated technology. Still, the government persists and, according to an ITNews report today, policymakers now are “pushing to introduce a $7.10 minimum monthly broadband tax for fixed-line NBN users.” 

Representatives from the national communications department began exploring the tax last December and, according to ITNews, have consulted industry. The results of that inquiry have not been released.

Lawmakers have come to this option “because of an expected shortfall in funds from a cross-subsidy that – until now – has been embedded in NBN Co’s wholesale prices.” (As ITNews explains, “The original NBN model intended that metro users would cross-subsidize the connections of regional and remote users.”) The revenues generated from the new tax would be used “to pay for the future cost of the fixed wireless and satellite portions of the NBN.”

The tax eventually will be passed on to Australians in the form of higher broadband prices. ITNews notes that while retail service providers “of ‘superfast’ fixed-line services will pay the tax,” policymakers acknowledge that the cost ultimately will be passed on to everyday consumers.

Policymakers also are not certain the new tax really will help. According to ITNews, “Questions remain on the efficacy of the broadband tax, including whether it would collect enough to cover the future costs of fixed wireless and satellite and prevent any future calls on the budget to help NBN Co.”

The Australian parliament is expected to consider the new tax before the end of June.