It said any change should recognise that the levy "does not constitute a sustainable funding mechanism, and is better re-purposed as a level playing field competition measure".
The recommendation was one of 20 contained in the panel's second report; this time the focus was on regional and rural Australia.
The government proposed the industry levy in December 2016, and it was supposed to fund the costs of paying for provision of the NBN in unprofitable regional areas.
The committee recommended that the NBN Co should stop replicating wholesale fixed-line product tiers on fixed-wireless due to the increasing congestion on the fixed-wireless network.
It sought data from the government to show the number of premises formerly on ADSL which fell into the footprint of the NBN Co's Sky Muster satellite footprint.
The panel also called on the NBN Co to use expanded "layer 3" capabilities to increase the monthly data allowances for satellite users.
It asked the NBN Co to work with retail service providers to promote take-up of Sky Muster services in areas where there was no alternative connection option.