Telstra has asked the Australian Competition and Consumer Commission (ACCC) to ease regulation in urban areas -- giving it the opportunity to put up prices on over five million phone lines.

According to Telstra, competition is booming in fixed line telecoms and, as a result, the ACCC can afford to ease off on the regulation. The telco believes that competition is now sufficient in wholesale line rental and local call services, and it should be "wound back across large areas of metropolitan Australia".

Telstra is hoping to persuade the ACCC to withdraw regulation principally across Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra, and to a lesser extent, Hobart, Darwin and regional centres including Geelong, Ballarat, the Gold Coast and Launceston.

In a submission to the ACCC this week, Telstra cites the growth in deployments of DSLAM infrastructure by rivals as evidence of increased competition in the space. A recent report by the ACCC and ACMA found that Australia now has 19 companies supplying DSLAMs, a number which has not increased since the previous year.

"The level of access regulation -- which seeks to simulate a competitive market outcome -- should be inversely proportional to the level of competition. Yet this principle does not seem to hold for access regulation administered by the ACCC within the Australian telecommunications industry. Indeed, despite the intense growth in competition within the industry over the last 10 years, Telstra is now required to supply more regulated access services than it did when the competitive regime was established in 1997," the telco said in its submission to the regulator.

Should the ACCC grant Telstra's requests, the telco would be able to set its own wholesale fees for 371 exchanges covering 5.2 million phone lines -- and potentially increase prices.

However, the telco has hinted that removing the regulation that allows the watchdog to set the wholesale pricing could potentially lead to cheaper prices.

"Unnecessary regulation results in unnecessary costs, market distortions and inefficient outcomes, and will disincent [sic] innovation and investment," the submission said.