New Home Buyers Could Foot the Bill for NBN

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Tuesday, December 16th, 2014
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The cost of new homes could be pushed even higher with a Coalition proposal to charge developers and owners with fees for NBN installation.

The owners of new housing developments could be hit with extra fees to connect to the National Broadband Network (NBN) under proposed reforms of broadband pricing arrangements with the goal of fostering greater competition from private rivals

The confused nature of the NBN has been a point of fraught contention amongst policy-makers and commentators ever since the Coalition assumed office. Labor originally envisaged the NBN as nation-wide monopoly that would provide the best means of creating high-speed broadband infrastructure for the whole of Australia by cross-subsidising low cost marginal rural areas with high margin urban markets.

The presence of competition from other telecommunication players on the market such as TPN, however, has threatened to compromise this model, since private operators are capable of operating with greater flexibility and discretion, cherry-picking high margin areas while leaving unpromising markets alone.

A policy paper recently released by the Coalition government envisages giving an even greater edge to the NBN’s rivals by advocating the replacement of current market regulations with a set of more “competition-friendly settings.”

“This [current] model is unsustainable in the long term, and not in the interests of the consumers who ultimately fund the cost of the services under any model, and typically face higher costs where competition is reduced,” said the paper.

The reforms propose that the developers and home owners of new areas that are serviced by NBN Co provide an upfront payment to cover at least some of the expenses for broadband infrastructure.

The proposed reforms, which are slated to commence from March 1 2015, are expected to heighten the ability of private companies and network operators to compete against NBN Co.

The government has defended the decision as reasonable and not without precedent.

“NBN Co charging for infrastructure in new developments would be consistent with charging for new provision of other infrastructure in new developments,” said Minister of Communications Malcolm Turnbull and Minister of Finance Mathias Cormann in a joint statement. “it will foster competition, which will benefit developers and consumers by increasing choice and putting downward pressure on costs.”

Shadow Communications Minister Jason Clare points out, however, that the new policy proposal will have the effect of further raising home prices at a time when they’ve already reached unreasonable heights for many young Australians.

“Home prices are already very high,” said Clare. “This tax will hit those who can afford it the least – young families just starting out. The last thing new home buyers need is a new NBN tax.”

According to Clare new home owners will have to fork out AU$300 NBN connection fee as a result of the proposed reforms. Developers will be forced to pay an additional AU600 for NBN connections, which they will likely pass on to property purchasers.

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