The ACCC thinks Testra has an anti competitive hold on the market, asking it to divest itself of its holding in Foxtel.

The national competition regulator called on Telstra to divest its shareholding in Foxtel, arguing the company' dominance of the telecommunications market continues to retard effective competition.

Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel said many aspects of the telecommunications market remained far from truly competitive.

"The continuing dominance of Telstra over virtually all aspects of the industry continues to retard effective competition, and industry initiatives to overcome this appear still to be concentrated in the central business districts," Mr Samuel told the Australian Council for Infrastructure Development in Sydney.

"Telstra owns two of the three major local access networks outside the CBDs or major cities, it owns the copper wire that connects virtually every household and business in Australia and it owns the largest cable network.

This is the problem with Telstra; it's a service company that also owns and controls the means of delivering the service. It's similar to having one trucking company owning all the roads. Makes competing against them rather difficult.

It's hard to see the remainder of Telstra being sold in the medium to long term. The company has a reputation for using its market advantage to stymie competition. This market power worries voters, particularly in the regions, who fear that they will miss out on obtaining new technology that is expensive to implement and which is not profitable for Telstra.

Politically, many of the National Party as well as Labor are opposed to the full privatisation. Then there's the Senate hurdle. Unless the government goes for a double dissolution election, it's unlikely that the Senate will agree to full privatisation for the forseeable future.

The sensible path is to break up the company into two divisions. One part delivers telephony services, the other maintains the exchanges and the network.

The first division, Telstra, would be made up of the 49% already in private hands, plus or minus the proportion of that part of the existing business.

The second part could remain in government hands or privatised with the restriction that it can't offer or have interests in service provision. By regulation, it would have obligations to provide infrastructure in the regions. Competition would be assured. For the organisation to be profitable, it would be to its advantage to make it as easy as possible for competing telcos to plug into and use its network.

Telstra's copper and cable network should be regarded and maintained as a national asset, to be used without restriction by competing service providers.