With the $36 billion network already behind schedule, the Government cannot afford any more delays, especially since the Telstra deal was supposed to .

But according to Ovum research director and telco analyst, David Kennedy, the ACCC is at a particularly advantageous position.

"Failure by Telstra to conclude an SSU by 31 December 2011 would activate the statutory requirements for a compulsory functional separation," he said in a statement.

If that occurs, the ACCC and Communications Minister, Senator Stephen Conroy, will be calling the shots in terms of how to separate Telstra's retail and wholesale business, leaving the telco with very little control on the matter, he said.

"Ultimately, Telstra must accept some form of separation, and a structural separation negotiated with the ACCC is the 'least worst' option," Kennedy said.