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According to a two-year review by a unit of the Productivity Commission, the federal government should abandon its alleged “broadband tax” and spend $750 million directly funding NBN Co’s loss-making remote satellite and wireless services.
In 2020, fiber installer Opticomm filed a complaint with the Australian Government Competitive Neutrality Complaints Office (AGCNCO), asking the office to investigate whether NBN Co’s debt accounting, tax treatment, and regulatory obligations violated the government’s competitive neutrality policies
The office discovered that NBN Co.’s government ownership, which gives the business access to affordable finance on circumstances that non-government-backed telecoms could not expect to replicate, gives the company a financial edge.
This was valued at over $150 million annually, according to AGCNCO.
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It further said that NBN Co should pay that to the government as opposed to keeping it.
However, paying that money to the government could “increase NBN Co’s costs and, in the absence of mitigating circumstances, put upward pressure on wholesale prices,” said the AGCNCO.
AGCNCO advised the government to intervene and directly pay the NBN’s loss-making components from the federal budget in order to balance pricing hikes.
AGCNCO wrote, “The Australian government could reduce [wholesale price] pressure if it acknowledged that NBN Co’s provision of loss-making fixed-wireless and satellite services qualifies as a community service obligation and it funded those losses directly from the budget (instead of mandating NBN Co fund those losses through an internal cross-subsidy supported by the regional broadband scheme (RBS) levy arrangements).”
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“Such alternative funding arrangements for those loss-making services would be competitively neutral.”
As a result, internet service providers would no longer be responsible for contributing to the $750 million annual maintenance costs for wireless and satellite services, according to AGCNCO.
The office said, “Under this… option, carriers would no longer pay an RBS levy, and an equivalent amount to the aggregate levy monies otherwise collected would be paid to NBN Co directly from the budget.”
The AGCNCO also said that although its responsibility is not “to second-guess how the government might respond to its report and to propose ‘what if’ solutions to address various scenarios”, it had decided to consider insights from other government agencies.
AGCNCO further claimed that the Low-impact Facilities Determination, a 2018 government policy, “is contrary to the objective of competitive neutrality policy.”
The report concluded that NBN Co’s commercial rate of return calculation has to be stronger and that the organization, as well as its shareholder agencies, should strengthen its competitive neutrality reporting.
Source: IT News
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
