The Australian Competition and Consumer Commission (ACCC) has recommended Telstra reduce its interconnection charges to 1.6 cents a minute.
The commission released a discussion paper late Tuesday afternoon which suggested Telstra now has the scope to reduce the charges imposed on other carriers using its fixed network as a result of changes to price caps.
On July 1 the federal government introduced new retail price caps that provide Telstra with greater scope for line rentals and call charges.
According to the ACCC, Telstra's capacity to raise line rents to equal line costs was constrained by government price cap regulation. This meant there was a need for carriers to contribute to funding the access deficit in their interconnection payments, officials said.
In its preliminary analysis the ACCC suggested that interconnection charges can be reduced to between 1.4 and 1.8 cents a minute.
Under previous price cap arrangements the ACCC estimated Telstra could reduce its charges to about 2 cents a minute. Telstra proposed charges of around 4.73 cents a minute.
ACCC officials said, however, it will only make a final decision on the issue in assessing a new undertaking submitted by Telstra, or in arbitration.
The ACCC will accept public comment on the discussion paper until September 24.