The outgoing boss of the national competition watchdog said Telstra's original broadband proposal was an "illusion" in terms of its cost and speed targets.
Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel said Telstra's proposal for a fibre-to-the-node (FTTN) broadband network, or fibre to the street corner, was never going to work.
"I can now summarise that 2006 proposal, which Telstra unilaterally abandoned midway through talks with us as an illusion," he said in his last appearance as ACCC chairman at the National Press Club in Canberra on Wednesday.
"It was an illusion on cost and on the capacity to truly deliver high-speed broadband to end users."
In 2005, Telstra planned to upgrade its ageing copper network with an FTTN network but dropped the proposal following "an impasse" with the ACCC a year later.
Debate during the past two years gave the nation an opportunity to create a more competitive communications sector, Samuel said.
The Federal Government is in the early stages of building a $35.9 billion fibre-to-the-premises (FTTP) national broadband network, through NBN Co, to serve 93 per cent of Australians. The rest will be met with a mixture of wireless and satellite technologies.
Under an $11 billion deal between NBN Co and Telstra expected to be finalised soon, NBN Co will lease Telstra's existing pits and ducts, and Telstra will decommission its copper network and move customers onto the NBN.
"That foundation is based on getting the industry structural settings right and ensuring the regulatory settings in the transition to the NBN deliver to improve competition in the short term as well," he said.
"Over coming months, the ACCC will be responsible for assessing key proposed undertakings for both Telstra and NBN Co on the way forward.
"The challenge for the ACCC is to ensure that we play our role in setting in concrete lasting foundations for vigorous telecommunications competition in concrete, not in quicksand."
Samuel warned that it would be important to maintain competition for content to be delivered over this new network.
"Content control is paramount. We might have a series of pipes to distribute content to consumers, but if the compelling content is controlled by too few many a players they will have a stranglehold over the competitive landscape in this important area," he said.