"[iiNet ADSL product] broadband2 is currently unavailable for sale at exchanges in regional and rural areas," a statement on the ISP's Web site reads.
"We have been in discussions with Telstra for some time regarding access to their wholesale ADSL and long distance fibre services to regional locations. At the moment, we're having difficulty locking in realistic pricing from Telstra with any long term certainty."
"Until we have confidence on this pricing, we have temporarily suspended new registrations from customers in the affected areas," iiNet said.
While iiNet has ADSL infrastructure in a few of Telstra's exchanges, it primarily relies on Telstra's wholesale services in regional areas since it isn't commercially viable for the ISP to dip into its own pocket.
iiNet also moved to speculate on Telstra's pricing strategy, saying: "We're guessing [Telstra's current pricing] may be due to the upcoming release of Telstra's strategic plan to be finalised in November."
The iiNet statement is echoed in a document provided to the Australian Stock Exchange yesterday. That document gave further background to iiNet's decision, repeating the carrier's August claim that the cost of paying Telstra to pipe data from regional areas back to the cities (known as 'backhaul') was also stopping ISPs from competing effectively in rural areas.
The document also raised the possibility that iiNet would stop selling broadband to metropolitan customers whose telephones were connected to one of Telstra's Remote Integrated Multiplexer (RIM) devices instead of a normal telephone exchange.
The RIM devices are essentially telephone exchanges that are much smaller than the norm and often housed in metal cabinets on the street. They are generally incompatible with the ADSL technology used by iiNet.