Telstra withdraws support for broadband tax

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Telstra withdraws support for broadband tax

Corporate service scope creep alarms industry.

Telstra has withdrawn its support for the broadband tax as concerns mount that the charge has morphed into an “industry tax” on the telecommunications sector.

Australia’s number one telco stopped short of saying it had been blindsided by the government on the tax – known as the regional broadband scheme (RBS) – but said it could no longer support its introduction.

“Our support for a levy was predicated on it being introduced to create a level playing field and targeting the problem being addressed, i.e. revenue-leakage from networks competing with NBN Co,” Telstra said.

“Under that approach the levy would only be payable by those networks that had infrastructure competing with NBN infrastructure.

“However, the RBS has been broadened into a model that is more akin to an industry tax, which will include within its scope networks that are analogous to the NBN rather than just networks that subject NBN Co to revenue leakage via directly competing infrastructure.”

A major concern for the industry is that the broadband tax now appears to be aimed at protecting incursions by NBN Co into the lucrative enterprise market.

While NBN Co has some business services that fall within its mandate, it has also previously tested its boundaries, such as with a cellular backhaul service and connecting non-premises infrastructure like traffic lights.

Telcos are now worried that further tests of this mandate are being planned.

Telstra said taxing fixed-line enterprise services made no sense.

“It was always envisaged that if NBN Co chose to compete in that segment it would do so on a competitive basis and would have factored this into NBN Co’s business case,” Telstra said.

“Consequently, there has been no ‘revenue leakage’ from this segment.”

Vocus likewise did not support the tax, arguing that it is likely to net products that NBN Co does not even compete with, like “dark fibre running between two business premises” and “leased high capacity services between data centres and business premises”. 

Optus said it wanted to see corporate high-speed services removed from the scope of the tax.

Despite industry’s requests, there does not appear to be an exemption for corporate services in the current text of the proposed laws.

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