The competition watchdog says it is planning to clamp down on wholesale copper phone services in CBD precincts, quoting evidence that Telstra was charging wholesale customers close to 40 per cent more in unregulated areas.

The Australian Competition and Consumer Commission said Telstra was charging approximately $31.77 per month for a basic telephone service with business access in “exempt” CBD areas, compared with $22.84 per month in regulated areas.

But Telstra argued that it is unnecessary to regulate its CBD copper networks because there are a number of strong competitors.

‘‘We agree some access regulation needs to continue but the decision to remove CBD exemptions flies in the face of the government’s commitment to reduce the burden of red tape and unnecessary regulation,’’ Telstra executive director of regulatory affairs Jane van Beelen said in a statement.

‘‘CBD markets for telco services are the most competitive in the country and these are products that have multiple substitutes. There is no case that these products should start to be regulated now,’’ Ms van Beelen said.

Optus, iiNet, Macquarie Telecom and AAPT all supported the ACCC proposal to remove the CBD exemptions on wholesale line rentals.

On Thursday, the ACCC finalised its inquiry into the regulation of fixed line services and also determined it will continue to regulate Telstra’s copper network for another five years.

“Regulating these services has promoted competition over bottleneck infrastructure. This has been fundamental to the development of competition in retail voice and broadband markets, which benefits Australian consumers,” ACCC Chairman Rod Sims said.

Regulation has allowed for increased data limits and much lower costs, Mr Sims said.

However, the National Broadband Network review panel led by Michael Vertigan has called into question the ACCC’s powers to regulate the telecommunications industry.

‘‘Australia is unusual in vesting responsibility for economic regulation of telecommunications in a generalist body whose responsibilities include administration of the competition laws,’’ the panel said in its regulatory issues framing paper.

‘‘Originally, the decision to transfer those powers to the ACCC was based on the view that telecommunications-specific provisions would merge over time into the national access regime established under Part IIIA of then Trade Practices Act.’’

No such merger has taken place and does not seem likely in the near future, so the panel has asked for submissions as to whether the ACCC should continue to regulate the industry, as it does now, or an alternative approach sought.

The Vertigan Review is due to submit its recommendations to the government by mid-2014.

Watchdog to clamp down on CBD copper phone services