Government moves ahead with internet levy to fund regional broadband

Under the scheme, broadband providers will be required to pay a charge of $7.10 per month for each fixed-line connection they supply capable of providing average downloads speeds of 25Mbps.

In legislation introduced on Thursday, the government revealed the first 25,000 premises serviced by a company will be exempt from the charge for the first five years.

As part of the NBN rollout, homes and businesses in regional Australia will largely be serviced by fixed wireless towers and satellite broadband. However these networks are not commercially viable and are expected to incur losses of $9.8 billion over 30 years.

The government’s levy to help pay for them will come into effect in July 2018 and has prompted concerns it will lead to a hike in the cost of home broadband for many consumers.

In May, the Australian Competition and Consumer Commission (ACCC) granted permission for non-NBN networks to pass the charge onto their customers.

Provided the legislation passes, the draft laws introduced yesterday ultimately mean that Australians using fast broadband in cities could soon pay more than $7 extra a month to help deliver the internet to regional areas.

Urban Infrastructure Minister Paul Fletcher told parliament that customers on NBN networks will not experience price rises because the charge is already embedded in NBN’s pricing.

“For the remaining carriers, it will be up to these networks to decide whether some or all of the charges are passed on,” he said.

The legislation is seen as a critical part of moving away from the Universal Service Obligation agreement the government currently has with Telstra, which the Productivity Commission slammed as opaque and outdated this week.

Mr Fletcher said the scheme will provide certainty for regional Australians that their essential broadband services will be available into the future — a goal that has been praised by regional stakeholders.

“This is a significant first step to ensuring all premises across the country have access to broadband services, capable of at least 25Mbps per second download and 5Mbps upload speeds,”

National Farmers’ Federation chief executive Tony Mahar said.

Smaller providers should also be relatively happy with the exemption included in the legislation. When the government first announced the industry levy, many smaller telcos cried foul.

“We think it’s anti-competitive. We do not understand why we need to pay for our competitors,” head of operations at Melbourne based broadband provider DGtek Eli Bekker told news.com.au at the time.

But the exemption means the smallest players may not have to pay the levy at all until mid-2023.

The scheme will be subject to a review within the first four years.