The telco had been using funds from the AU$157 million Higher Bandwidth Incentive Scheme (HiBIS) to subsidise the ADSL upgrades, which are taking place in areas of peak demand. HiBIS saw Internet service providers given incentives to supply broadband to the bush at city prices, and was replaced this year by the $878 million Broadband Connect scheme.
Telstra said it has so far enabled 800 exchanges using funding from HiBIS, and as late as September 18 was reported to have said it would continue the upgrade process. That has now changed.
"Wholesale customers were written towards the end of last year, saying that work had ceased on upgrading exchanges," a spokesperson for the telco told ZDNet Australia today.
"The government has an artificial 60 percent limit on the amount of funds Telstra could obtain under HiBIS and we had used up that amount of money."
"They weren't prepared to raise the artificial 60 percent barrier, therefore we couldn't continue with the work."
The spokesperson estimated the cessation would temporarily affect around 50 exchanges which his company's ADSL Demand Register lists as soon to be upgraded, although more accurate numbers could be obtained from the exhaustive register itself.
"I would say that I expect the funding issue to delay by some weeks the enabling of those exchanges," he said.
The register provides a mechanism for people to monitor the status of their local exchange and express their interest in having it upgraded for ADSL services.
Not getting a fair go?
The Department of Information Technology and the Arts (DCITA), who administers HiBIS and Broadband Connect, currently states on its Web site that the 60 percent funding cap is "in the interest of encouraging competition" and applies to any ISP in the HiBIS scheme, not just Telstra.
But the Telstra spokesperson claimed the 60 percent rule was "grossly unfair".
"I think it was dreamed up by some officials in the Department in Canberra," he said. "On what basis, I don't know. Perhaps that's what they feel that Telstra's market share should be."
He claimed the rule was unfair because Telstra is forced to give other telcos access to broadband infrastructure it installs, but "it's not the same the other way around".
"It's yet another rule that applies only to Telstra," he said.
The spokesperson recommended people continued to express their interest in services through the demand register, however.
The news comes as ZDNet Australia this morning revealed that Telstra's wholesale division will not participate in HiBIS's successor program Broadband Connect.
Telstra's decision will lock a number of ISPs out of getting access to the government funds unless they build their own regional infrastructure or gain access to alternative wholesale services, of which there are few available.