The ACCC has tentatively rejected Telstra's (ASX:TLS) request to be exempted from providing certain regulated fixed line services to Optus.

Telstra had applied to be freed from its obligations to provide regulated services for Optus's Hybrid Fibre Coaxial [HFC] cable network.

But the ACCC released a draft decision which rejected this proposal, stating that the exemption would not be in the best interests of end users.

Singling out a particular competitor would result in a discriminatory access policy. This could discourage investment in the Australian telecomms industry, the ACCC said.

And Telstra's strong position in the pay-TV market, as represented in its interest in Foxtel, would likely limit any competitive benefits the exemption would provide.

On the other hand, the ACCC has proposed to grant Telstra exemptions from its obligation to supply certain domestic transmission capacity services.

These include inter-exchange transmission in 16 CBD and 70 metropolitan exchange service areas.

But under the draft decision, Telstra would still be obligated to provide tail-end transmission services in metropolitan and CBD areas.

The ACCC is seeking submissions on the draft decision from interested parties until October 13.