[1] Once privatised, Telstra operation became subject to the Trade Practices Act 1974 which requires that competitors be given access to the PSTN and related services, and empowered The Australian Competition & Consumer Commission (ACCC) to make determinations about the terms and conditions of access obligations and the pricing principles applicable to services relating to the PSTN, and in this case ULLS and LSS.

Telstra rejected the regulation of ULLS and LSS under Part XIC of the Trade Practices Act, alleging that the wholesale access price caps imposed on it by the ACCC do not allow it to recover the operating costs of the actual service being accessed and retailed by a competitor, alleging that this amounted to a compulsory acquisition of Telstra property by the Commonwealth, and access-seeking competitors, on unjust terms contrary to section 51(xxxi) of the Constitution.

Therefore, rejecting the validity of Sections 152AL(3) and 152AR which it claimed affect an unconstitutional acquisition of Telstra property by the Commonwealth on unjust terms.

The High Court also pointed to the fact that Telstra's argument involves a dispute about the terms and conditions of complying with the service access obligations fixed by ACCC determinations, thus enabling the operation of Section 152EB.

[5] As a result of the High Court's position, Telstra next suggested that the impugned provisions do effect an acquisition of property, and just terms must then be afforded by the operation of Section 152EB, removing any claim of invalidity so long as the Commonwealth pays reasonable compensation.

[1][5] In Australian courts Section 51(xxxi) of the Constitution focuses on matters of substance rather than form, and therefore the definitions of "acquisition" and "property" are to be interpreted liberally.

[1][5] The competing carriers, listed as defending parties, chose to shift the argument from the physical steps in connecting and disconnecting ULL and LLS to that of whether there had ever been any actual "possession" on their part, since Telstra installs, repairs, and maintain the network at all times.

[1] The defendant's arguments sought to invoke certain elements of the long line of cases in the Australian High Court in which Section 51(xxxi) has been considered.

In addressing these arguments the Court decided that rather than begin from the classification of rule and its exceptions, it would instead recognise observations made by Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ in Victoria v. The Commonwealth (Industrial Relations Act Case):[1] "It is well established that the guarantee effected by s 51(xxxi) of the Constitution extends to protect against the acquisition, other than on just terms, of "every species of valuable right and interest including ... choses in action".

[9]" The High Court held that there were three key factors on the history of the Australian communications industry that led to the conclusion that operation of the access regime did not result in an acquisition of property on unjust terms.

[1] In a media release on its website, dated 8 March 2008, Telstra announced that it accepted the High Court's ruling and stood by its decision to challenge the ACCC's powers under Section 51(xxxi) of the Constitution, though believes Australia lost an opportunity for further broadband investment when the regulatory regime that rewards competitors who "ride on Telstra’s network rather than invest in Australia" was upheld.

[10] Other commentators believed this outcome to be a clear rebuttal to Telstra's "obsession with privatisation for its own sake" and protection of its remaining monopoly under the direction of CEO at the time Sol Trujillo, a United States telecommunications executive with a history of aggressive litigation towards the US government and its regulators, who was hired by the Telstra board for his ability to uphold a "culture of litigating in order to protect its monopoly privileges".

Exploitation of such monopoly control would result in increased access costs for competitors, their private and business customers, and eventually, all Australian online services.

[12] After Trujillo's resignation from Telstra in February 2009, new CEO David Thodey reached out to the Australian Government and regulators such as the ACCC in an effort to repair the relationships damaged during his predecessor's reign.

The taking down of its propaganda website nowweretalking.com.au, which the company used to criticise regulators and competitors, marked the removal of one of the final vestiges of the Trujillo era.