The Australian Competition and Consumer Commission (ACCC) has given Telstra just 12 weeks to turn over a new leaf following what it deems as anti-competitive behaviour in the ADSL arena.

Telstra's broadband retail prices would rise if wholesale costs became more competitive, the telco heavyweight has implied on the back of a 12-week deadline it's been given to change its conduct.

"The ACCC alleges that wholesale prices are too close together," Graeme Salt of Telstra's wholesale division told ZDNet Australia. -If the ACCC wants us to increase the wholesale gap do they really want us to increase ADSL retail pricing?"

Salt declined to reveal how much it cost Telstra to produce ADSL and how much it was selling it on to competitors for, but claims wholesale prices are -around cost at the moment".

However, the ACCC claims that Telstra -supplies its wholesale ADSL highspeed Internet services at prices whereby competitors buying the wholesale service are unable to compete with Telstra's own BigPond retail prices".

The competition regulator also says that Telstra is anti-competitive in that it -refuses" to structure its wholesale ADSL service in a way that would allow its competitors to offer services substantially different from those Telstra offers its residential and small business customers.

Furthermore, the telco leader -refuses" to configure its wholesale ADSL service so as to allow for a high-speed Internet service to be provided to a residential customer at a different quality of service from what Telstra BigPond offers, according to the ACCC.

"Telstra has unrivalled access to Australian consumers by virtue of its ownership of the customer access network. It is the ACCC's view that Telstra is taking advantage of this ownership in not offering a true wholesale ADSL service but merely 're-badging' its BigPond products and then selling them to competitors at uncompetitive prices," the ACCC said in a statement.

Telstra has criticised the ACCC for serving it with a competition notice today, in which it sets out the 12-week deadline, ahead of meetings the telco giant claims to have already lined up with watchdog for later this afternoon and Monday, September 10. The ACCC stipulates that if Telstra doesn't cull its anti-competitive behaviour within this timeframe it risks being stung with penalties exceeding AU$10 million.

-This is the second time the Commission has come out with a statement ahead of a [scheduled] meeting," said Salt, who described the ACCC's action as "postulating" and a -very good grab for its media profile".

-We had already arranged to meet with the ACCC to discuss these issues," Salt said. -We'll work with them to ensure the industry's and consumer needs are met."

Of the penalties, Telstra said -it shouldn't come to that".

OzEmail said it welcomed the ACCC's action against Telstra, saying the retail price of Telstra's own service and the wholesale rate they charge competitors is so similar that no business could survive if they tried to match Telstra's retail price.

-The Competition Notice is definitely in the best interests of Australians," OzEmail CEO, Justin Milne, said.

-The current situation is retarding the takeup of broadband services in Australia, which is ultimately affecting our national productivity. While the slow, inefficient, unreliable and possibly uncompetitive rollout of DSL might suit the monopolist telco, it definitely does not serve the nation's best interests, nor those of organisations like OzEmail who would like to provide DSL services to all Australians in a competitive manner to Telstra."

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