TPG Telecom has warned it might spend more on mobile networks that compete against the national broadband network if the federal government goes through with proposals to tax internet users in the city for the cost of building broadband in the bush.

Prime Minister Malcolm Turnbull set up the Bureau of Communications Research (BCR) in 2014, which last month recommended a $6 monthly tax be levied on every single high-speed internet line running in Australia.

TPG shares have been savaged. Credit:Rob Homer

It claimed this was the best way to pay for the $9 billion cost of delivering satellite and fixed-wireless internet services in rural and regional areas.

The proposal is facing major opposition from companies such as TPG Telecom and Vocus Communications, which want to build high-speed broadband networks that can compete against the NBN in urban areas. The BCR said the tax could force networks competing against the NBN to raise their wholesale prices by 22 per cent.