Telstra Corp will not roll-out its digital cable network until the "horrendous powers" of the competition watchdog are muzzled.
In a draft submission to the Productivity Commission, Bruce Akhurst, Telstra's group managing director legal and regulatory, said the company could not invest in telecommunications infrastructure while there was uncertainty over regulatory plans.
Last month Federal Communications Minister Senator Richard Alston flagged greater powers for the Australian Competition and Consumer Commission (ACCC), saying Telstra was able to use existing rules to get the edge over competitors.
"No investor would ever be confident of their investment return, or even the criteria on which the ACCC decided to value the use of their asset," Akhurst told the hearing.
That would threaten the digital upgrade of Telstra's Hybrid Fibre Coaxial (HFC) network to expand the broadcast capacity for its half-owned cable TV provider Foxtel.
"Telstra cannot build a compelling business case for digitising the HFC network so long as the threat of regulation remains."
A draft report from the commission has already found the existing laws to be slow and inefficient, giving the ACCC too much discretion.
However, the commission's final report isn't due until September.
Telstra said the only way to attract investment to telecommunication projects will be for the regulator to guarantee a ruling on projects for three years.
Telstra will provide a more detailed submission by June 1, 2001.