Telstra's tough new approach to the resale of its services to competitors and uncertainty over the regulated price of access to its phone network threaten the survival of smaller rivals and could trigger consolidation in the sector.

The share prices of Telstra's major competitors have slumped by as much as 50 per cent over the past six months, and fund managers and analysts warn further falls will occur before the release of crucial regulatory decisions on the cost of accessing Telstra's network.