The Australian government is planning to end a subsidy for the national broadband network that it says is being used to promote the government’s controversial $7.9 billion merger with Telstra.
The Coalition’s Communications Minister Malcolm Turnbull has confirmed the change to the Coalition’s fibre-to-the-node network, which the Federal Government has been trying to get through the Senate for months.
Turnbull confirmed to reporters that the changes would be made to the Government’s NBN network.
“The Government will not be subsidising the NBN any more, so we will stop using it,” he said.
However, the announcement is not yet final, with the Government facing a final parliamentary vote before the end of the year to determine if it should continue to provide a subsidy to the network.
NBN Co CEO Bill Morrow has said the company would not pay the subsidy to NBN Co. The company will continue to offer fibre-coaxial technology, which allows NBN Co to provide faster broadband speeds than traditional copper network.
The changes are a significant blow to the NBN Co, which has been under pressure to improve its network, following revelations of poor speeds, congestion and network problems in parts of the country.
Malcolm Turnbull has promised to end the subsidy if the merger passes through Parliament.
He has already been criticised by NBN CEO Bill McKibben, who said that the company had already given up on a successful deal with Telcos in a deal that would cost taxpayers $2 billion and create “no net benefit”.
In December, the Federal Court ruled that the government had failed to provide adequate guarantees to NBN co that it would not be used to subsidise the network’s expansion.
A government spokesman said the changes to the subsidy were designed to allow the government to make a better informed decision about whether to continue supporting the network and would not affect the network or its business.