Abstract

News has emerged today that the Minister for Communications has approved an ACCC recommendation to reduce the Regional Broadband Levy from $8.46 to only $2.17 per month per broadband line for 2025-26. 

Despite its name, the Levy is actually paid by nbn Co’s urban fibre infrastructure competitors. In FY24, these competitors paid $25.5 million in levies under the Regional Broadband Scheme (RBS) that were transferred to nbn Co to support its regional fixed wireless and satellite networks, all in the name of competitive neutrality.

The revised levy will bring down that amount considerably. At the same time, some exemptions to the levy expired at the end of FY25 that will bring the total up. But even taking that into account, we think that the new level will be around $13 million.

This amount is a rounding error in nbn Co’s accounts. Yet the Scheme requires the involvement of the Department of Infrastructure, the ACCC and the ACMA, not to mention regulatory staff at every significant fixed broadband infrastructure provider in the country. This is a great example of a ‘nuisance tax’.

If the Government were minded to heed industry calls for streamlined regulation, then the removal of the RBS and the associated levy would be an excellent place to start.

How the RBS works

The Regional Broadband Scheme (RBS) was established to address the significant financial losses that NBN Co’s Fixed Wireless and Satellite networks were generating a decade ago. The 2013 Vertigan Review found that these losses were being funded by an opaque internal cross-subsidy from nbn Co’s profitable metropolitan markets.

The Government’s 2014 response set out new overarching principles for the sector, including the promotion of infrastructure-level competition and consistent regulatory treatment for all industry players. If competing fibre providers could “cherry-pick” NBN’s most profitable metropolitan customers, NBN’s ability to fund its regional obligations would be undermined.

The government replaced the “opaque” subsidy with a formal, transparent industry charge. The explicit purpose of the RBS is to ensure “long-term transparent and sustainable funding arrangements” are in place for these essential regional services. The scheme was designed to be “competitively-neutral,” ensuring that all players in the profitable fixed-line market contribute to the cost of regional services, regardless of who owns the networks. 

The levy is not a tax on profits, but a charge per customer. A carrier must pay a monthly charge for each “chargeable premise” on its network. In FY24, this levy was set at $8.46 per month per premise served.

However, the scheme’s first five years (FY21-FY25) included significant transitional concessions. Small networks of under 2,000 premises were also exempted permanently, but the RBS also exempted the first 25,000 premises (or 55,000 for greenfield networks) for each carrier. Large networks like Uniti’s and Vision’s (Vocus) benefitted from this exemption until recently.

A new levy and a new industry charge

Today, industry news source CommsDay reported that the Minister for Communications has signed a Determination re-setting the levy from $8.46 to only $2.17 per month per premise in FY26.

We can roughly calculate roughly the effect that this change (and the removal of exemptions) will have. We know that around 250,000 services were levied in FY24, just by dividing the total amount collected ($25.5 million) by the charge per premise ($8.46). 

Venture Insights estimates that there were around 400,000 non-nbn fibre services in operation at that time, which means around 150,000 were exempted in FY24.

If the new levy had applied in FY24, the amount collected would have been as little as $6.5 million. Removing all exemptions, this would have been boosted to $10.5m (a slight overestimate, because the exemption for small networks under 2,000 premises is permanent).

Looking forward to FY26, we estimate that around 100,000 new services have been added in the intervening two years, so our rough estimate for the FY26 levy is $13.0 million, around half of the FY24 amount.

A nuisance tax

At this level, the levy is a rounding error in nbn Co’s accounts. Yet the determination of the levy amount, the collection of monies, and their disbursement to the nbn Co involve:

• An ACCC evaluation
• A Departmental decision to recommend a Determination and the Minister’s decision.
• Administration by the ACMA
• Uncounted hours spent in fibre operator businesses collecting data and making submissions to the process.

Is the game worth the candle?

Why this matters – cutting red tape

The Australian Telecommunications Association (ATA) has documented obstacles to investment in digital infrastructure in Australia. A key obstacle is the growing complexity of telecommunications infrastructure regulation, including overlapping regulation of customer privacy, infrastructure security, and national security by multiple regulators.

In the case of the RBS, the principle of competitive neutrality is a good one to uphold, but we also think that regulation should pass a cost-benefit test. The RBS is the kind of nuisance regulation increasingly holding the sector back. Given the meagre impact of the Scheme on its intended beneficiary (the nbn Co), it is very hard to justify the costs that it imposes on government and industry alike. 

Our view is that the Scheme has served its purpose, and its abolition would help, not hinder, further investment in our country’s digital infrastructure. 

About Venture Insights

Venture Insights is an independent company providing research services to companies across the media, telco and tech sectors in Australia, New Zealand, and Europe.

For more information go to ventureinsights.com.au or contact us at contact@ventureinsights.com.au.