Sydney-based broadband ISP, Independent Service Providers, will lead a class action suit of aggrieved companies against Telstra's alleged anti-competitive practices.
The decision coincides with the ACCC announcing it was considering lifting the competition notice imposed on Telstra 10 months ago.
Independent Service Providers director, Roger Mangraviti, claims to have recruited 10 broadband ISPs so far.
Describing the ACCC as a "toothless tiger", Mangraviti said he was leading the class action because Telstra had not made sufficient efforts to be competitive in terms of wholesale broadband pricing.
On the advice of lawyers Maurice Blackburn Cashman, the company has issued an invitation to all broadband ISPs with a statement on its website that states the legal basis for the action: "Section 151cc of the Trade Practices Act that permits a person (including a company) to commence court proceedings within three years of a breach of the competition rule to recover loss and damage suffered as a result of the breach."
Mangraviti told ARN funding had been secured from a third-party litigation funder that would take 30 per cent of any damages awarded.
One industry source cautioned that it would be sensible to see if the ACCC removed the competition notice or advanced it to Part B, which would reverse the burden of proof for anyone wanting to take action.
But Mangraviti said he did not believe the ACCC would issue a Part B notice. CIA is one of the ISPs supporting the class action.
"I think we will do very well with it actually because there is a competition notice in effect," CIA director, Vic Sync, said. "Telstra has been in breach of competition rules for nearly a year now. We have complained to them for years about pricing but it is like talking to a brick wall."
However, CIA involvement is based on financial backing to take on the monolith.
"If we had to fund it I wouldn't be interested in taking Telstra on," Sync said.
Telstra spokesperson, Rod Bruem, claimed the vast majority of its ISP customers had experienced explosive growth.
"If there was any basis for the class action we would have seen some activity before now," he said.