WAIA said other Internet service providers could not match up to BigPond's minimum AU$29.95 retail monthly prices without suffering losses on every account as Telstra charged wholesale buyers in excess of AU$40 per month to supply ADSL services to customers.
Charlie Stephens, a spokesman for WAIA, said the Australian ISP industry was "reeling in shock" after Telstra's announcement.
"There are two key issues to be considered here - fair competition by the incumbent telecommunications provider and also fairness to the consumer," said Stephens.
WAIA said the cheap broadband accounts offered by BigPond were not all they were cracked up to be, as the modest monthly download allowance could be difficult for new users to monitor, leading to customers paying high excess download fees.
"Inexperienced users could...be surprised by large download bills each month. For example, watching a single 700 megabyte movie would cost AU$105," Stephens said. "Viruses and spam can also lead to unexpected traffic bills".
Subscribers to the new "entry level" BigPond deals will be allotted a download quota of 200 megabytes per month, with all traffic thereafter being charged at 15 cents per megabyte.
Stephens urged customers to carefully examine their Internet provider's terms and conditions and to make themselves aware of any extra charges before entering into a contract with them.
"It is unfair to consumers to promote an account which charges a massive premium on downloads," said Stephens.
WAIA said it would be making a formal complaint to the Australian Competition and Consumer Commission (ACCC) and the Telecommunications Industry Ombudsman (TIO) on behalf of its members. The ACCC is already investigating the Telstra announcement.