After making international comparisons Australia Competition and Consumer Commission (ACCC) concluded Telstra was using its market power to overcharge competitors for use of its network for long distance and international calls.

The decision follows the ACCC's landmark ruling last month to open up Telstra's network so third parties could access Australia's local call market.

``If Telstra were to react substantially to the likely price reductions of its competitors, the savings to users of all kinds, including small business, could be in the vicinity of A$400 million per year,'' ACCC chairman Allan Fels told a media briefing.

Fels said halving inter-connect charges could reduce the prices of national long distance calls by up to 15 per cent. He said the decision also hadramifications for what Telstra could charge competitors to access its network for the local calls market.

``There is some overlap in the actual network costs for local, long distance and international, so it is of some relevance to local calls but there are a number of other elements,'' Fels said.

But investors shrugged off the negative ruling with Telstra stock closing 20 cents up at a record high of A$8.10 upgrade for the company from a major brokerage generated by UK-based Vodafone Plc's takeover of US-based AirTouch

``Investors are probably looking at those threats to Telstra's businesses as something they can overcome pretty quickly,'' said a broker Tony Russell at Brisbane-based Morgan Stockbroking.

Telstra blasted the decision which it claimed was bad for Australian phone users and a disincentive for industry expansion and competition.

``This draft determination leaves little incentive for Telstra to invest in its networks, which in the long run is detrimental for Australia, the industry andconsumers,'' Telstra's head of regulatory and external affairs, Graeme Ward said in a statement.

Telstra questioned whether its competitors were making a fair contribution towards the cost of providing a network which gave customers access to long distance telephone calls.

``There is no evidence that the ACCC's recommendations will mean that Australian consumers will get the benefit of lower retail prices. What is clear is that the shareholders of large multinationals will benefit,'' Ward said.

But Telstra's main competitor Cable & Wireless Optus Ltd said it expected the decision would reinforce the trend towards lower long distance call costs for Australian consumers.

A Cable & Wireless Optus spokesman said the company also believed the decision had ramifications for charges for access to Telstra's network for local calls.

``It is indicative of the fact that Telstra overstates its costs and if there is no reason why you wouldn't assume that it is doing it in relation to local calls as well,'' thespokesman said.

The ACCC's Fels said the timing of lower telecommunications inter-connect prices hinged on Telstra's response. He said the process could move quickly if Telstra came back with a new proposal more in line with the commission's requirements but could drag if Telstra was uncooperative.