With the Australian government's multi-technology model for the National Broadband Network (NBN) set in stone, competitors to dominant carrier Telstra are concerned that proposed transition arrangements give the incumbent too much power while crimping the reach of regulator the Australian Competition and Consumer Commission.

The Competitive Carriers Coalition (CCC) has warned the Department of Communications of Telstra “leveraging incumbency” to lock in customers.

The CCC's fears are raised in a submission to the department's inquiry into regulatory arrangements for the Draft Migration Plan.

The government has made the HFC networks built by Telstra and Optus a key part of its model for the NBN rollout. However, as they currently stand, those networks pass a lot more homes than they can connect.

The migration plan calls for NBN Co to undertake construction work patching the gaps in the Telstra HFC network while it's still owned by the incumbent, and that's what worries the CCC.

“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.

Restricting Telstra to 24-month contracts and limiting the penalties it can apply to customers moving to another provider once the network is built is “wholly inadequate”, the submission says.

The draft migration plan also prohibits Telstra from offering wholesale services on its HFC network before ownership of the network passes to NBN Co. Since Telstra has always refused to let competitive retailers into its HFC network, the CCC argues an explicit prohibition on HFC wholesale services must be designed to block the Australian Competition and Consumer Commission (ACCC) from forcing the carrier to offer wholesale HFC broadband services.

Cutting the ACCC out of the picture, the CCC argues, “risks providing a signal to Telstra that opportunities to exploit market power opportunities in relation to its HFC network are likely to be profitable.”

Added to this, the submission notes, Telstra's relationship with Foxtel means it can lock-in HFC customers with broadband-pay-TV bundles, something the CCC argues should be forbidden during the transition.

In a separate submission, iiNet also raises concerns that arrangements letting NBN Co give Telstra information about its rollout plans that might not be available to retail service providers (RSPs).

In its submission, Optus echoes a concern raised by the CCC that the migration principles leave too many places where connection problems could fall in a gap between Telstra and NBN Co.

“It is conceivable that there will be issues in relation to migrating end-users from Telstra’s network to NBN Co’s network, that neither NBN Co nor Telstra claim to be responsible”, Optus says. ®