The corporate watchdog has launched legal action against Telstra for refusing to allow competitors to access its copper-wire network, in an escalation of the on-going battle between the pair.
Telstra shares slumped to an all-time low of $2.93 on Thursday morning but recovered some of the losses, to close 7 cents, or 2.3pc, lower at $2.97.
The legal action is another blow to Telstra just two weeks before the Federal Government is expected to reveal its preferred tender for a $10 billion-plus national broadband network.
More than $13 billion has been wiped from Telstra's market value since it was excluded from the tender for the national broadband network in early December.
The Australian Competition and Consumer Commission launched legal action in the Federal Court in Melbourne today against Telstra for allegedly contravening the Trade Practices Act by refusing other telecommunication companies access to the copper-wire at seven key telephone exchanges in Australia's largest cities.
Telstra allegedly claimed the exchanges were "capped''.
The regulator said that Telstra claimed there was no room for competitors at its exchanges to allow them to interconnect their equipment to copper wires running to customers' homes.
However, the ACCC argues that there was in fact capacity available or that it could have been made available on Telstra's distribution frames.
It also alleges that Telstra engaged in misleading and deceptive conduct by posting on the website of Telstra's wholesale division, a document listing exchanges that were "capped''.
Under standard access obligations, Telstra is legally required to provide access to its telephone exchanges for competitors wanting to install equipment so that they can provide voice and broadband services to customers.
Telstra condemned the ACCC for taking it to court, calling the move an attempt to pave the way for further regulatory "shackles'' on the firm.
The company's head of communications, David Quilty, said the regulatory ACCC action related to a small number of inadvertent process issues, which the company fixed a year ago, and was a "complete waste of court time and taxpayer money''.
"Since we fixed the problem a year ago, the ACCC has not once suggested it had problems with our new processes,'' Mr Quilty said in a statement.
But iiNet, Australia's third biggest internet service provider, said the ACCC action was further evidence of Telstra's anti-competitive behaviour, and claimed there were numerous instances where Telstra had prevented it from accessing the network saying there was no capacity.
"Telstra's actions continue to hamper competition, reduce investment by competitive carriers and create blockages to innovative product delivery,'' iiNet chief regulatory officer Steve Dalby said.
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