NBN: HFC transition plan alarms telco coalition

Allowing NBN Co to carry out construction work on Telstra's HFC network before ownership of the network is transferred to the government-owned company risks giving Telstra an unfair advantage over its competitors, according to the Competitive Carriers Coalition.

The group, which comprises a group of Telstra's rivals, warned in a submission (DOC) to a government consultation on Telstra's migration plan for the National Broadband Network that this might allow the telco to pick up extra customers.

"If it is NBN Co’s intention to 'patch' the gaps in the HFC footprint before the ownership transfer to the extent of completing new customer lead ins, and for Telstra to be able to utilise these new lead ins to acquire new retail customers, it would, in effect, mean the taxpayer was funding an expansion of Telstra’s monopoly addressable market for HFC-based services and service bundles," the submission states.

"This is at odds with the policy intention and contrary to the objective of sustainable competition. It would also distort the market once the ownership transfer had been completed because Telstra would have enjoyed a 'running start' in terms of building market share."

Although the draft migration plan includes limits on the length of contracts Telstra can sign customers up to and a limit on termination costs, these measures are "inadequate" the CCC argued.

The CCC believes that NBN Co doesn't need to complete lead-ins to customer premises before taking ownership of the HFC network.

"The migration plan should preclude Telstra from acquiring customers on leads ins built by Telstra," the submission states. "Short of this, it should require Telstra to sign customer to contracts on a month-to-month basis and preclude it from bundling broadband with Foxtel services during the transition period."

"The length of contracts and termination fees that can be offered to end users, under Telstra provided HFC service prior to migration, should be limited so that end users are free to switch providers to NBN services without fearing termination fees and lengthy contracts," the Australian Communications Consumer Action Network (ACCAN) argued in its submission (DOC).

Another problem with the plan is a prohibition on Telstra offering wholesale services on the HFC network, the CCC argued.

"Telstra has shown strong resistance to offering any wholesale services on the HFC network throughout its history," the group's submission states.

"This suggests any proposal to wholesale HFC services are more likely to be a regulatory measure in response to evidence of serious anti-competitive conduct than a commercial decision by Telstra."

As part of the Coalition government's vision for the NBN, the HFC networks of Telstra and Optus will be integrated into the network. HFC forms part of the 'multi-technology mix' of the fixed line portion of the NBN. Along with HFC this will include fibre-to-the-node (FTTN) and fibre-to-the-premises (FTTP).

The government announced in December that NBN Co and Telstra had successfully re-negotiated the definitive agreements governing the transfer of customers from Telstra's legacy network to the NBN.

Under the revised agreements, NBN Co will progressively take ownership of Telstra's copper network in order to roll out FTTN. NBN Co the same day announced it had struck agreements for the purchase of the two HFC networks.

A December update to NBN Co's product roadmap included an estimated timeframe for HFC, with a customer pilot pegged for Q4 this year and a product launch in Q1 2016.