The Australian Competition and Consumer Commission (ACCC) is seeking for a $40 million penalty to be imposed on Telstra Corporation Ltd for alleged breaches of the company's competitive obligations under federal law.

ACCC is pushing for at least $1 million to be imposed on Telstra each time the telecommunications company refuses to give a competitor access to its telephone exchanges.

It has been reported that Telstra has denied competitors access at seven telephone exchanges, even though there was space to accommodate them.

Competitors are seeking access to telephone exchanges controlled by Telstra to install equipment to service broadband customers.

Under the Telecommunications Act and Trade Practices Act, the regulator could impose fines of up to $10 million for each of the alleged 27 contraventions.

A hearing presided by Justice John Middleton is ongoing in the Federal Court in Melbourne to decide whether Telstra should be fined.

Telstra is seeking for smaller penalty on the grounds that the company has mistakenly rejected access applications from competitors, saying that junior staff has inappropriately handled such applications.

In the final submission to Justice Middleton, the ACCC lawyers said Telstra should be fined because the telco giant acted with a "reckless disregard for its obligations".

Telstra said in a statement that it had since improved staff training and the processes of assessing telephone exchanges. Telstra also announced it would lower broadband prices for small and medium businesses and increase connection speeds. Excess data charges would be halved to 4¢ a megabyte and capped at $400 a month.